Transportation and logistics provider ArcBest reported a modest earnings miss for the first quarter on Tuesday before the market opened.

ArcBest (NASDAQ: ARCB) reported adjusted earnings per share of 51 cents, 1 cent light of the consensus estimate but 83 cents lower year over year. The consensus EPS number came down 30 cents in the 90 days leading up to the Tuesday report as analysts cut forecasts due to soft demand trends in March.

The adjusted result excluded 38 cents in one-offs like costs from technology pilot programs and acquisition-related expenses.

ArcBest’s asset-based unit, which includes results from less-than-truckload subsidiary ABF Freight, reported a 3.7% y/y revenue decline to $646 million. Tonnage per day was off 4.3% as daily shipments fell 0.4% and weight per shipment was down 3.9%.

Revenue per hundredweight, or yield, increased 1.7% y/y and was up by a low- to mid-single-digit percentage excluding fuel surcharges. The lower shipment weights were a tailwind to the yield metrics in the quarter. Contractual agreements saw a 4.9% average price increase as “LTL industry pricing remains rational,” according to a news release.

The y/y tonnage declines lessened as the quarter progressed from down 9.2% in January to just 1.6% lower by March. April tonnage inflected positively, up 1% y/y. However, the prior-year comps were much easier (mid- to high-teen declines) and the company began taking on more truckload freight in February to improve throughput at its service centers. That has had a negative impact on yields, which were 7% higher y/y in January but off by 1.8% by March. (April was down 2% y/y and slightly negative excluding fuel.)

ArcBest also said a mix shift to “easier-to-handle freight” from some of its core customers, which likely garner fewer accessorial charges, has been a drag on yields. Fewer shipments from the manufacturing sector was cited as a headwind as well.

The LTL unit reported a 95.9% adjusted operating ratio (inverse of operating margin), 390 basis points worse y/y and sequentially, and within the normal sequential range of 350 to 400 bps of deterioration.

Salaries, wages and benefits expenses (as a percentage of revenue) were up 190 bps y/y.

The company normally sees 300 to 400 bps of OR improvement from the first to the second quarter and said it expects to perform within that range this year. That implies a 92.4% OR at the midpoint of the range, which would be 260 bps worse y/y.

The asset-light unit, which includes truck brokerage, reported a $1.2 million adjusted operating loss, the seventh consecutive loss in the unit. ArcBest forecast a similar loss in the second quarter.  

Shares of ARCB were down 3.1% in premarket trading on Tuesday.

The company will host a conference call at 9:30 a.m. EDT on Tuesday to discuss first-quarter results.

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