With their eyes on a target to possibly double revenues by 2025, ArcBest Corp.’s top executives on Feb. 1 said they are lifting their profitability forecasts and ramping up their capital spending plans.
Arkansas-based ArcBest finished the fourth quarter with $65.5 million in net profits, up from $23.9 million in the last three months of 2020, as the company was able to grow revenues to nearly $1.2 billion on the back of an average asset-based contract renewal of 10.2% and grow per-day asset-light revenues 80%. An operating ratio of 86.9% helped operating profits for the quarter more than double to $102 million.
ArcBest was the 26th largest for-hire carrier in the U.S., according to the 2021 FleetOwner For-Hire 500.
“2021 was a year of immense challenges—from the ongoing pandemic to extreme supply chain pressures—but our team stayed focused on our strategic initiatives and consistently exceeded expectations,” Judy McReynolds, company chairman, president, and CEO, said in a statement. “Investments in our people, our integrated logistics solutions, and our innovations and technology have provided ArcBest with a solid foundation and will continue to drive our company’s growth, success, and value-creation in 2022 and beyond.”
McReynolds and her team have put a few numbers on that “beyond,” saying they want ArcBest’s top line of $4 billion in 2021 to grow to between $7 billion and $8 billion in 2025. In that same time frame, they are looking to have the asset-based division lift its operating margins from the high single digits to between 10% and 15%. The asset-light business is now forecast to have margins of 4% to 6%, up from a little more than 3% in 2021.
ArcBest finished 2021 with more than 14,000 employees at more than 250 locations around the country. The company’s leaders are planning to grow that latter number this year and beyond and have allocated $45 million to $55 million in capital for real estate projects in 2022—although McReynolds pointed out “we always spend a little less than is in our plans.”
ArcBest spent a total of $104 million in capex last year, $79 million on revenue equipment, but plans to nearly triple that number to between $270 million and $290 million this year. About $160 million of that is earmarked for equipment, including a handful of Class 8 electric tractors later in the year. Some of that figure reflects a catching up on the purchases of tractors that couldn’t be acquired last year but executives pointed out that it’s an above-average number that it’s fair to assume will be a rough benchmark for 2023, 2024, and 2025.
Shares of ArcBest (Ticker: ARCB) were up more than 5% Tuesday afternoon to more than $93. Over the past six months, they have climbed more than 50%, pushing the company’s market value to about $2.3 billion.
