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ARCBEST CORP /DE/ (ARCB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue fell to $1.00B (−8.1% YoY; −5.8% QoQ) as industrial softness and mode-shift to TL reduced tonnage; GAAP diluted EPS was $1.24, non-GAAP EPS was $1.33 .
  • Asset-Based OR deteriorated to 92.0% from 91.0% in Q3 and 87.7% in Q4’23 as lower tonnage and higher insurance/labor costs offset productivity gains; Asset-Light posted a GAAP operating loss of $1.6M and non-GAAP loss of $5.9M amid a soft brokerage rate environment .
  • Management guided 2025 capex down to $225–$275M (from $288M actual in 2024), a 27–28% non-GAAP tax rate, and expects Q1’25 Asset-Light non-GAAP operating loss of ~$4–$6M; ABF OR seasonality (Q4→Q1) to be +350–400 bps increase, consistent with history .
  • Strategic themes: disciplined pricing (Q4 renewals +4.5%), AI-driven network optimization, and enhanced service (best on-time in 5 years in 2024) underpin long-term margin goals; near-term headwinds include TL oversupply, lower weight per shipment, and January weather impacts .

What Went Well and What Went Wrong

What Went Well

  • Pricing discipline held: contract renewals averaged +4.5% in Q4, with revenue/CWT up YoY; mgmt reiterated rational industry pricing and improved revenue/CWT ex fuel in mid-single digits YoY .
  • Productivity improvements mitigated headwinds: shipments per DSY hour +2.3% YoY in Q4; city route optimization Phase 1 saving $13M+ annually; ongoing AI initiatives (appointment scheduling, TL quote augmentation) .
  • Capital allocation balanced: 2024 shareholder returns >$85M via buybacks/dividends; liquidity ~$450M supports organic investments and opportunistic repurchases .

What Went Wrong

  • Asset-Based margin compression: OR worsened sequentially to 92.0% (from 91.0%), driven by lower tonnage (−7.3% YoY) and higher insurance/labor costs; weight/shipment −6.3% YoY .
  • Asset-Light profitability remained negative: non-GAAP operating loss −$5.9M and adjusted EBITDA −$4.2M, with purchased transportation costs at 86.6–87.4% of revenue and soft TL pricing .
  • Weather elevated Q1 risk: January 2025 saw the highest service center closures since 2014, pressuring tonnage and shipments, with ABF OR expected to increase within typical +350–400 bps seasonality .

Financial Results

Consolidated trends and YoY comparison

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,089.5 $1,077.8 $1,063.1 $1,001.6
Operating Income ($USD Millions)$64.3 $48.8 $135.0 $38.2
Diluted EPS (GAAP) ($)$2.01 $1.96 $4.23 $1.24
Diluted EPS (Non-GAAP) ($)$2.47 $1.98 $1.64 $1.33

Segment breakdown (GAAP)

SegmentQ4 2023Q3 2024Q4 2024
Asset-Based Revenue ($MM)$710.0 $709.7 $656.2
Asset-Based Operating Income ($MM)$87.5 $64.0 $52.3
Asset-Based Operating Ratio (%)87.7% 91.0% 92.0%
Asset-Light Revenue ($MM)$413.4 $385.3 $375.4
Asset-Light Operating Income ($MM)$(7.7) $84.8 (earnout benefit) $(1.6)
Asset-Light Adjusted EBITDA ($MM)$0.7 $(2.1) $(4.2)

Note: Q3’24 Asset-Light GAAP operating income includes a $91.9M pre-tax reduction in earnout fair value; non-GAAP operating loss was $(3.9)M .

Asset-Based KPIs

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Billed Revenue/CWT ($)$48.98 $50.09 $50.76 $49.27
Billed Revenue/Shipment ($)$570.64 $562.17 $551.34 $538.20
Tonnage/Day11,602 11,186 10,983 10,758
Shipments/Day19,915 19,934 20,221 19,698
Weight/Shipment (lbs)1,165 1,122 1,086 1,092

Estimates vs Actuals

Wall Street consensus (S&P Global) was unavailable during retrieval; therefore, estimates comparisons could not be performed. Values would normally be sourced from S&P Global consensus.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Asset-Light Non-GAAP Operating Loss ($MM)Q1 2025N/A$(4) to $(6) New
ABF Operating Ratio sequential changeQ1 2025 vs Q4 2024Historical +350–400 bps Expect +350–400 bps Maintained
Non-GAAP Effective Tax Rate (%)FY 2025N/A27%–28% New
Total Net Capex ($MM)FY 2025~$300M FY’24 plan revised lower in Q3 $225–$275 Lower vs FY’24
Depreciation & Amortization (PPE) ($MM)FY 2025N/A~$164 New
Intangible Amortization ($MM)FY 2025~$13 FY’24 ~$13 Maintained
“Other & Eliminations” costs ($MM)Q1 2025 / FY 2025N/A$16 (Q1); $56 (FY) New
OI&E: Interest income/expense ($MM)Q1 2025 / FY 2025N/AQ1: $1 / $(3); FY: $4 / $(11) New
Quarterly Dividend ($/share)Ongoing$0.12 declared Oct‘24 $0.12 declared Jan 28, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Tech optimizationCity route optimization pilots; service visibility enhancements; TriumphPay integration Phase 1 savings $13M+; AI appointment scheduling; TL quote augmentation tools Accelerating deployment
Pricing disciplineQ2 renewals +5.1%; rational pricing Q3 GRI +5.9%; renewals +4.6%; Q4 renewals +4.5%; rational pricing Stable, slightly moderating
Macro/weight per shipmentQ2 W/S −16% YoY Q3 −11% YoY; Q4 −6.3% YoY; TL shift persists Pressured but stabilizing
TL vs LTL mode shiftTL oversupply moving heavy LTL to TL Continued TL capacity/low rates causing shift; expected to reverse when TL tightens Persisting near-term
Asset-Light profitabilityNon-GAAP loss −$2.5M (Q2); −$3.9M (Q3) Non-GAAP loss −$5.9M; focus on SMB mix and cost control Still negative; remediation ongoing
Weather impactsN/AJan’25: highest closures since 2014; OR seasonality intact Temporary headwind
Legal/SettlementQ4’23 FLSA settlement $9.5M Q4’24 $0.274M; paid Q1’25 Resolved/runoff
Capex/DoorsQ2: facility additions (Atlanta, Chicago, San Bernardino) 2025 capex down; continued network investments Balanced investment

Management Commentary

  • “Throughout 2024, we made significant progress on controlling costs, improving productivity, and enhancing our service quality…Together, we are well-positioned for continued growth and success.” — Judy McReynolds, CEO .
  • “In 2025, our focus is on enhancing execution and driving profitable growth…organizational changes designed to remove barriers to growth enable faster decision-making.” — Seth Runser, President .
  • “Adjusted earnings per share were $1.33…Asset-Light non-GAAP operating loss of $6 million shows our business continues to be impacted by current market conditions.” — Matt Beasley, CFO .

Q&A Highlights

  • OR seasonality and weather: ABF’s Q4→Q1 OR increase expected within historical +350–400 bps despite January closures; productivity improvements and incentive true-ups helped Q4 .
  • Pricing and yield: Growth in renewals; mgmt characterizes pricing as rational; aim to keep yields ex fuel positive through mix/efficiency .
  • Weight per shipment dynamics: Industrial softness and fewer household moves reduced weight; TL cheap rates drive mode-shift; improvements expected when TL tightens .
  • Asset-Light path to profitability: Actions on account-level profitability, SMB mix shift, cost control, and managed solutions growth; Q1’25 non-GAAP loss guided at $(4)–$(6)M .
  • Capex & doors: 2025 capex $225–$275M; continued real estate additions; balanced with $450M liquidity and ongoing buybacks/dividends .

Estimates Context

  • S&P Global consensus EPS/revenue/EBITDA for Q4 2024 and FY 2024 were unavailable at time of retrieval due to access limits; as a result, comparisons to Street estimates are not provided. Consensus would normally be sourced from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect seasonal ABF OR headwind in Q1 and continued Asset-Light losses; January weather complicates early Q1 reads—trade the stock on confirmation of sequential OR stability and pricing discipline in February/March .
  • Pricing remains rational: Q4 renewals +4.5% and revenue/CWT stability suggest ABF can sustain yield while awaiting volume recovery—monitor renewals and any Spring GRI .
  • Structural efficiency upside: $13M+ annual savings from city route optimization and broader AI initiatives provide tangible margin levers independent of macro—track project rollouts and OR impact .
  • Asset-Light inflection potential later in 2025: SMB mix shift and managed growth may improve margins as TL capacity exits accumulate; watch purchased transportation/revenue ratio and sequential net revenue dynamics .
  • Balanced capital allocation: Lower 2025 capex ($225–$275M), $0.12 dividend, liquidity ~$450M enable opportunistic buybacks while funding network upgrades—supportive for equity value accretion .
  • Narrative catalyst: Evidence of industrial rebound (weight/shipment up), TL tightening (mode-shift reversal), and ABF OR trending toward long-term 10–15% margin goal could re-rate the name .
  • Risk watch: Insurance costs, union wage/benefit inflation, TL oversupply, and macro-driven shipment/weight pressure remain key headwinds; mgmt’s cost/productivity actions mitigating but not fully offsetting near-term .