ArcBest Misses Q2 Earnings Estimates, Sees 31% EPS Decline

ArcBest Q2 EPS fell 31% to $1.36, missing analyst forecasts, while GAAP revenue declined 5.2% to $1.02 billion. The Asset-Based segment saw tonnage and shipments growth but narrowed profit margins due to higher labor costs and reduced pricing. Technological investments drove productivity gains, returning the Asset-Light segment to non-GAAP profitability.

ArcBest Corporation (NASDAQ: ARCB) reported its Q2 2025 earnings on July 30, with significant declines in earnings per share (EPS) and revenue, reflecting the ongoing challenges in the freight market. The company’s stock fell sharply following the announcement, with investors expressing concern over the company’s performance and outlook.

ArcBest's Q2 2025 EPS decreased by 31% to $1.36, falling short of the expected $1.46. Revenue declined by 5.2% to $1.02 billion, missing the anticipated $1.04 billion. The company’s stock dropped by 11.39% in pre-market trading, reflecting investor disappointment with the earnings miss and revenue shortfall [2].

The Asset-Based segment, which represents the majority of ArcBest’s business, saw a 1% increase in revenue to $713 million. However, the operating ratio deteriorated by 300 basis points to 92.8%, and profit margins narrowed due to higher labor costs and reduced pricing. The company achieved a 4.0% average increase on contract renewals and deferred pricing agreements [1].

The Asset-Light segment reported revenue of $342 million, a 13% per-day decrease compared to the prior year. Despite the revenue decline, the company improved productivity with shipments per employee per day increasing by 15%. Technological investments, including AI and predictive analytics, drove these productivity gains and returned the Asset-Light segment to non-GAAP profitability [1].

ArcBest’s presentation emphasized its three-point strategy focused on accelerating growth, increasing efficiency, and driving innovation. The company highlighted its customer-led approach, which has resulted in significantly higher revenue and profit from cross-sold accounts compared to single-solution customers [1].

The company continues to invest in technology and operational improvements to enhance efficiency. City route optimization initiatives have generated increasing savings, growing from $50,000 per year in 2021 to over $13 million per year in 2024. ArcBest is also expanding its physical capacity, having added approximately 800 doors since 2021 [1].

ArcBest’s CEO Judy McReynolds will retire effective January 1, 2026, while retaining her position as Chairman of the Board. Seth Runser, currently serving as President, will assume the role of CEO and President and join the Board of Directors [1].

The company expects Q3 non-GAAP operating income in its Asset Light segment to range from breakeven to $1 million. ArcBest plans to host its first Investor Day in a decade on September 29, which may provide further insights into its strategic direction [2].

Despite current market challenges, ArcBest highlighted its strong foundation and market position, with a debt-to-equity ratio of 0.31, indicating moderate debt levels [1].

References:
[1] https://www.investing.com/news/company-news/arcbest-q2-2025-slides-revenue-down-5-announces-ceo-transition-amid-freight-recession-93CH-4159875
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-arcbest-q2-2025-misses-forecasts-stock-drops-93CH-4160708