Many favorable revenue and cost initiatives had transportation and logistics provider ArcBest talking up long-term numbers on Monday. The Fort Smith, Arkansas-based company provided the outlook in New York during its first investor day in a decade.
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ArcBest (NASDAQ: ARCB) outlined a plan to generate adjusted earnings per share of $12 to $15 by 2028, which is more than double (at the midpoint of the range) the $6.40 it produced last year. The outlook assumes some recovery in the manufacturing and housing markets, which would alleviate downward pressure on truckload spot rates.
The bulk of the growth is expected to occur in its asset-based segment, which includes less-than-truckload subsidiary ABF Freight.
Shares of ARCB were up 1.4% on Monday compared to the S&P 500, which was up 0.3%.
Asset-based OR target now 87% to 90%
Management issued a new long-term adjusted operating ratio (inverse of operating margin) target of 87% to 90% by 2028. The bullish end of the range would put the carrier close to the 86.4% level it operated at during the last upcycle. (The segment’s adjusted OR was 91.2% last year and 90.4% in 2023.)
Several revenue and expense catalysts were outlined. Foremost, the company has embraced a singular marketing strategy, combining efforts around sales, yield and customer service under the same leadership.
On the asset-based side, the company is forecasting low-single-digit shipment growth annually, a portion of which is tethered to demand recovery in the industrial and housing markets. A sales campaign focused on core accounts has yielded approximately 2,000 incremental daily shipments, with a goal of reaching 4,000 new shipments per day from primary customers by 2028. An expanded daily quote pool is also helping it garner more shipments from small and midsize customers, a market segment where profit per load is 60% higher than national accounts.
High net promoter scores have allowed ArcBest to log 70% tonnage growth at new accounts between years one and two. Revenue per hundredweight, or yield, was up by low-double-digit percentages at these accounts over the same period. Proprietary costing and pricing tools, like its dynamic pricing engine, have allowed it to achieve yields 1.6 times higher than the industry average.
SONAR: Longhaul LTL Monthly Cost per Hundredweight, Class 50-65 Index. Less-than-truckload monthly indices are based on the median cost per hundredweight for four National Motor Freight Classification groupings and five different mileage bands. To learn more about SONAR, click here.
The company also has several cost-reduction initiatives in place, including 70 optimization projects, 45% of which have already been implemented with 25% in the pilot stage.
[SRC] https://finance.yahoo.com/news/arcbest-plans-double-earnings-2028-215356564.html
