Core Viewpoint - ArcBest has increased its share repurchase authorization to a total of $125 million, reflecting the board's confidence in the company's strategy and long-term outlook [1]. Group 1 - The board of directors approved the increase in share repurchase authorization [1]. - Judy R. McReynolds, Chairman and CEO, emphasized the company's commitment to a balanced and disciplined capital allocation approach [1].

Core Insights - ArcBest Corporation is recognized as one of the best freight stocks to invest in currently, despite mixed second-quarter results [1] - The company's CEO expresses confidence in growth potential, highlighting the need for flexible solutions in a rapidly evolving market [3] Financial Performance - In Q2 2025, ArcBest's revenue was $1 billion, down from $1.1 billion in the same period last year, indicating a revenue decline [2] - Net income from continuing operations decreased to $25.8 million compared to $46.9 million in Q2 2024, reflecting a significant profit decline [2] - Tonnage per day increased by 4.3%, and daily shipments rose by 5.6%, attributed to newly onboarded core LTL customers [2] Company Overview - ArcBest Corporation, founded in 1923 and headquartered in Arkansas, offers a variety of logistics and transportation services, including less-than-truckload (LTL) shipping through its ABF Freight subsidiary [4] - The company has modest institutional interest, with 22 hedge funds currently invested in its stock [3] - The stock has an attractive upside potential of 12.95% [3]

Core Insights - Several LTL (Less Than Truckload) firms are experiencing volume declines in August 2025 compared to the previous year, indicating a sluggish freight environment influenced by consumer hesitancy and mixed demand levels [3][4]. Group 1: Volume and Revenue Changes - Old Dominion Freight Line, XPO, and Saia reported year-over-year declines in tonnage, while ArcBest noted a 2% increase in its asset-based operating segment [8]. - Old Dominion experienced a 4.7% increase in billed revenue per hundredweight, reflecting the ongoing softness in the domestic economy [9]. - ArcBest reported a 1% increase in revenue per day, indicating some resilience amid the overall decline in volumes [9]. Group 2: Economic Factors and Company Strategies - Companies cited macroeconomic pressures such as continued softness in manufacturing and housing activity as reasons for the decline in weight per shipment [5]. - Old Dominion emphasized its long-term positioning to win freight despite current economic challenges [5]. - ArcBest is expected to benefit from approximately $25 million in net proceeds from real estate sales in Q3, which may help improve its margins [4]. Group 3: Shipment and Weight Trends - Shipments per day declined across most carriers, with Saia being the exception, posting a slight 0.1% increase in weight per shipment year-over-year [8]. - The decline in weight per shipment was attributed to reliance on outside freight haulers as hiring increases in new markets [5].

Core Viewpoint - The article discusses the current state of the freight market, highlighting the impact of political maneuvers and shifting trade flows on investment opportunities in freight stocks [1][2]. Industry Overview - The shipping industry accounts for nearly 3% of global CO2 emissions and facilitates about 90% of worldwide trade, indicating its significant role in the global economy [2]. - Recent U.S. political actions, including pressure on other countries regarding marine fuel emissions cuts, add uncertainty for investors in freight-related assets [2]. Investment Strategy - Investors in the freight sector must balance short-term regulatory changes with the long-term benefits of increasing trade volumes [3]. - A list of 13 freight stocks is compiled based on criteria such as hedge fund interest and potential upside, aiming to identify stocks that can deliver healthy returns [5][6]. Company Highlights - **Schneider National, Inc. (NYSE:SNDR)**: - Reported a 10% increase in enterprise revenues (excluding fuel surcharge) year-over-year and a 30% increase in truckload earnings [9]. - Faces inflationary pressures and trade uncertainties, but has 18 hedge funds invested and an upside potential of 9.98% [11]. - **ArcBest Corporation (NASDAQ:ARCB)**: - Q2 2025 revenue was $1 billion, down from $1.1 billion the previous year, with net income from continuing operations at $25.8 million [14]. - Experienced a 4.3% increase in tonnage per day and a 5.6% increase in daily shipments, with 22 hedge funds invested and an upside potential of 12.95% [15].

Core Insights - ArcBest reported a modest year-over-year revenue increase in its asset-based segment in August, following no change in July, but lowered its third-quarter margin outlook due to ongoing macro headwinds and higher costs [1] Revenue Performance - Asset-based revenue per day increased by 2% year-over-year in August, driven by a 2% increase in tonnage, with no change in average yield [2] - The August tonnage result included a 5% increase in daily shipments, partially offset by a 3% decline in weight per shipment [2] Demand and Market Conditions - The company is receiving more freight from core accounts; however, overall demand weakness in the manufacturing and housing sectors is leading to lower shipment weights [3] - Manufacturing activity remained in contraction territory in August, with a Purchasing Managers' Index (PMI) reading of 48.7, indicating negative territory for 32 of the past 34 months [4] - The PMI new orders subindex moved into expansion territory at 51.4 after six months of decline, but remained below the threshold of 52.1 needed for sustained increases in manufacturing orders [4] Year-over-Year Comparisons - On a two-year-stacked comparison, ArcBest's asset-based tonnage was down 7.9% in August, an improvement from an 11.2% decline in July and high-teens declines earlier in the year [5] Operating Ratio Guidance - The company revised its operating ratio guidance for the asset-based segment to be flat to 50 basis points worse in the third quarter compared to the second quarter, implying a 93.1% adjusted operating ratio at the midpoint, which is 210 basis points worse year-over-year [6] - The previous outlook anticipated a 70 basis points improvement, implying a 92.1% operating ratio, consistent with historical seasonal patterns [7] - The revised outlook excludes an expected $16 million pretax gain from real estate sales and cites higher cartage expenses and increased use of outside capacity as detractors for the third quarter [7]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents ArcBest Corporation's unaudited consolidated financial statements, including Balance Sheets, Operations, Cash Flows, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$2.47 billion** as of June 30, 2025, driven by property, plant, and equipment, with liabilities rising and equity at **$1.30 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $638,168 | $675,642 | | **Property, Plant and Equipment, net** | $1,113,157 | $1,066,046 | | **Total Assets** | **$2,467,436** | **$2,429,731** | | **Total Current Liabilities** | $661,402 | $665,985 | | **Long-Term Debt, less current portion** | $163,850 | $125,156 | | **Total Liabilities** | $1,167,010 | $1,115,369 | | **Total Stockholders' Equity** | $1,300,426 | $1,314,362 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 revenues decreased to **$1.02 billion** and net income fell to **$25.8 million** year-over-year, reflecting a challenging market for both quarterly and year-to-date periods Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,022,256 | $1,077,831 | $1,989,333 | $2,114,250 | | **Operating Income** | $37,309 | $48,845 | $43,939 | $71,280 | | **Net Income** | $25,809 | $46,924 | $28,940 | $44,612 | | **Diluted EPS** | $1.12 | $1.96 | $1.25 | $1.86 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the first six months of 2025 decreased to **$86.1 million**, with cash used in investing and financing leading to a **$12.6 million** decrease in cash Six Months Ended June 30 Cash Flow (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $86,111 | $140,202 | | **Net Cash Used in Investing Activities** | ($36,897) | ($87,079) | | **Net Cash Used in Financing Activities** | ($61,784) | ($99,759) | | **Net Decrease in Cash and Cash Equivalents** | ($12,570) | ($46,636) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's business structure, accounting policies, financial instruments, goodwill, income taxes, debt, leases, and segment performance - The company operates through two reportable segments: Asset-Based (ABF Freight) and Asset-Light (MoLo, Panther), with the Asset-Based segment accounting for approximately **66% of total revenues** for the first six months of 2025[18](index=18&type=chunk)[19](index=19&type=chunk) - The goodwill balance of **$304.8 million** relates entirely to the Asset-Light segment[39](index=39&type=chunk) - The company's effective tax rate for the first six months of 2025 was **27.9%**, significantly higher than the **1.6%** in the same period of 2024, which was impacted by a noncash impairment charge[42](index=42&type=chunk) - During the first six months of 2025, the company repurchased **565,562 shares** for **$41.7 million**[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **5.9% year-to-date revenue decline** due to lower market rates and shipment levels in the Asset-Light segment, covering segment results, liquidity, and capital resources [Consolidated Results](index=34&type=section&id=Consolidated%20Results) Consolidated revenues decreased **5.9%** year-to-date, primarily due to an **11.9% decline** in the Asset-Light segment, while operating income fell, positively impacted by a **$2.7 million** reduction in MoLo contingent consideration Consolidated Revenue and Operating Income (in thousands) | Metric | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $1,989,333 | $2,114,250 | (5.9)% | | **Operating Income** | $43,939 | $71,280 | (38.4)% | - The MoLo contingent consideration liability was reduced to zero in Q2 2025, resulting in a **$2.7 million** pre-tax gain, compared to an **$11.2 million** pre-tax expense in the first half of 2024[95](index=95&type=chunk) - The first half of 2024 included a one-time, noncash impairment charge of **$28.7 million** (pre-tax) to write off the equity investment in Phantom Auto[96](index=96&type=chunk) [Asset-Based Operations](index=38&type=section&id=Asset-Based%20Operations) The Asset-Based segment's year-to-date revenue was nearly flat, with operating income declining to **$77.4 million** and the operating ratio increasing to **94.3%** due to higher labor costs from the new collective bargaining agreement Asset-Based Segment Key Operating Statistics (% Change YTD 2025 vs YTD 2024) | Metric | % Change | | :--- | :--- | | Billed revenue per hundredweight | (0.8)% | | Tonnage per day | 0.1% | | Shipments per day | 2.6% | | Weight per shipment | (2.5)% | - Salaries, wages, and benefits as a percentage of revenue increased to **52.2%** year-to-date from **50.4%** in the prior year, reflecting contractual rate increases under the 2023 ABF NMFA[119](index=119&type=chunk) - A nominal general rate increase of **5.9%** on LTL base rate tariffs will take effect on August 4, 2025[116](index=116&type=chunk) [Asset-Light Operations](index=45&type=section&id=Asset-Light%20Operations) The Asset-Light segment's revenues decreased **11.9%** year-to-date due to a soft market and lower revenue per shipment, but its operating loss significantly narrowed to **$3.8 million** due to improved cost management Asset-Light Segment Key Operating Statistics (% Change YTD 2025 vs YTD 2024) | Metric | % Change | | :--- | :--- | | Revenue per shipment | (6.4)% | | Shipments per day | (5.1)% | | Shipments per employee per day | 19.2% | - The segment's operating loss for the first six months improved to **$(3.8) million** in 2025 from **$(24.8) million** in 2024[133](index=133&type=chunk) - Purchased transportation costs as a percentage of revenue decreased by **1.3 percentage points** year-to-date, reflecting improved cost management[135](index=135&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains solid liquidity with **$139.7 million** in cash and short-term investments, estimating 2025 capital expenditures at the lower end of **$225.0 million to $275.0 million**, while returning capital to shareholders - Total cash, cash equivalents, and short-term investments stood at **$139.7 million** as of June 30, 2025, down from **$157.2 million** at year-end 2024[158](index=158&type=chunk) - 2025 net capital expenditures are estimated to be at the lower end of the **$225.0 million to $275.0 million** range[168](index=168&type=chunk) - The company has **$225.0 million** available under its revolving credit facility and **$26.3 million** under its A/R Securitization Program as of June 30, 2025[163](index=163&type=chunk)[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is from interest rate fluctuations on variable-rate debt, with no significant changes reported since December 31, 2024 - The primary market risk is from interest rate fluctuations on variable-rate debt[189](index=189&type=chunk) - No significant changes in market risks were reported since the 2024 Annual Report on Form 10-K[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[191](index=191&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[192](index=192&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note J for details on legal proceedings, including an ongoing state sales and use tax audit with an estimated loss range of **$0.2 million to $14.2 million** - For details on legal proceedings, the report refers to Note J in Part I, Item 1[194](index=194&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the filing of its 2024 Annual Report on Form 10-K - No material changes to the company's risk factors have occurred since the 2024 Annual Report on Form 10-K was filed[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **306,797 shares** for approximately **$19.7 million** in Q2 2025, with **$14.8 million** remaining available under the share repurchase program as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining in Program (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | 117,859 | $62.36 | $27,236 | | May 2025 | 101,017 | $63.35 | $20,837 | | June 2025 | 87,921 | $68.22 | $14,838 | | **Total Q2** | **306,797** | **$64.37** | **$14,838** | - For the six months ended June 30, 2025, the company repurchased a total of **565,562 shares** for an aggregate cost of **$41.7 million**[199](index=199&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter[204](index=204&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including amendments to financing agreements, the company's change in control plan, and Sarbanes-Oxley Act certifications - Exhibits filed include the Fourth Amendment to the Receivables Loan Agreement, the Amended and Restated 2012 Change in Control Plan, and Sarbanes-Oxley Act certifications[205](index=205&type=chunk)

Core Insights - ArcBest reported fiscal Q2 2025 results with GAAP revenue of $1.02 billion and non-GAAP EPS of $1.36, both missing Wall Street estimates [1][2] - The company experienced modest shipment growth and productivity gains from technology, but profitability in its core Asset-Based segment declined due to weak demand and elevated expenses [1][5] Financial Performance - Non-GAAP EPS decreased by 31.3% year-over-year from $1.98 to $1.36 [2] - GAAP revenue fell by 5.2% from $1.08 billion in Q2 2024 to $1.02 billion in Q2 2025 [2][5] - Operating income (non-GAAP) dropped by 29.9% to $44.97 million compared to Q2 2024 [2] - Net income (non-GAAP) decreased by 34.2% from $47.4 million in Q2 2024 to $31.2 million in Q2 2025 [2][8] Segment Performance - The Asset-Based segment generated $713 million in revenue, showing no growth year-over-year [2][5] - Daily shipments increased by 5.6%, while tonnage per day rose by 4.3% due to new LTL customer accounts [5] - The Asset-Light segment faced a 12.9% decrease in revenue per day, with shipments per day dropping by 6.5% [7] - Despite revenue declines, the Asset-Light segment achieved positive operating income on a non-GAAP basis for the first time since Q2 2023 [7] Strategic Initiatives - The company is focused on controlling labor costs, deploying advanced technology, and expanding its customer base [4] - Investments in digital tools like ArcBest View and AVA aim to improve service and reduce costs [4][12] - A 5.9% general rate increase was announced, effective August 4, to enhance long-term yield [13] Outlook - Management did not provide explicit financial guidance for Q3 or the full year but emphasized a focus on operational optimization and leveraging technology for efficiency gains [14] - Capital expenditure targets for fiscal 2025 are maintained at the low end of the $225 million to $275 million range [14]

Company Participants - The conference call featured key executives including Judy McReynolds (Chairman & CEO), Seth Runser (President), and Matt Beasley (CFO) [1][3] - Other members of the executive leadership team were also present for the Q&A session [3] Conference Call Overview - The call was initiated by Amy Mendenhall, Vice President of Treasury and Investor Relations, who welcomed participants and provided instructions [2] - The call was recorded for future reference [2] Forward-Looking Statements - The company indicated that some comments made during the call would be forward-looking statements, which are subject to risks and uncertainties [4] - The company plans to discuss certain non-GAAP financial measures to provide meaningful comparisons [4]

Financial Data and Key Metrics Changes - The company generated over $1 billion in revenue for the quarter, down 5% year over year [23] - Non-GAAP operating income was $45 million, compared to $64 million in the prior year [24] - Adjusted earnings per share were $1.36, down from $1.98 in 2024 [24] Business Line Data and Key Metrics Changes - The Asset Based segment reported revenue of $713 million, a 1% increase year over year, with an operating ratio of 92.8, an increase of 300 basis points from 2024 [25] - Daily shipments in the Asset Based segment grew by 6%, while weight per shipment decreased by 1%, resulting in a 4% increase in tons per day [25] - The Asset Light segment saw revenue of $342 million, a 13% decrease year over year, with shipments per day down 7% [29] Market Data and Key Metrics Changes - The freight environment remained challenging with softness in manufacturing and a sluggish housing market [6] - Daily shipments in July 2025 grew by 2% year over year, indicating continued success in capturing new core business opportunities [28] Company Strategy and Development Direction - The company is focused on driving profitable growth, advancing premium service for customers, and optimizing efficiency [13] - Investments in technology and innovation are aimed at creating long-term value for customers, employees, and shareholders [5] - The company plans to host its first Investor Day in a decade on September 29, showcasing strategic priorities and long-term financial targets [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current soft freight market and emphasized the importance of strategic investments [34] - The company anticipates continued growth in its core business and is well-positioned to improve margins as demand grows and capacity tightens [52] Other Important Information - The company welcomed Tom Albrecht to the Board of Directors, bringing extensive industry experience [8] - Judy McReynolds plans to retire as CEO at the end of the year, with Seth Renser set to succeed her [11] Q&A Session Summary Question: Potential for revenue growth in August and September - Management indicated potential for outperforming historical trends due to ongoing commercial efforts [41] Question: Pricing strategy in the SMB market - Management noted that the SMB market is less price-sensitive and emphasized the importance of building long-term relationships [46] Question: Sustainability of outperformance in freight volumes - Management highlighted strong pipeline growth and the ability to provide value to customers as key factors for sustained outperformance [50] Question: Impact of the general rate increase (GRI) - Management explained that the timing of the GRI aligns with historical cycles and is necessary to cover inflationary costs [56] Question: Stickiness of new freight volumes - Management expressed confidence that new business is sticky, driven by strong customer relationships and service offerings [62] Question: Service levels and performance - Management emphasized ongoing investments in optimization initiatives and collaboration with customers to enhance service [70] Question: Context of tonnage drop in July - Management indicated that the drop was in line with historical performance and attributed it to seasonal factors [76]

Company Performance & Strategy - Judy McReynolds is retiring as CEO, retaining her position as Chairman of the Board, and Seth Runser will assume the role of CEO and President, effective January 1, 2026 [15] - The company is focused on a three-point strategy: increasing efficiency, driving innovation, and accelerating growth [11, 12] - ArcBest's integrated solutions expand market opportunity by seamlessly connecting modes, enabling growth with 5x larger deals [33] - Cross-sold accounts have over 3x higher revenue and profit compared to single-solution accounts [35, 36] - Over 70% of customers using asset-light services also utilize asset-based services, with 5% higher retention rates on cross-sold accounts [38, 39] Q2 2025 Financial Results - ArcBest's consolidated revenue for Q2 2025 was $1 billion [82] - Non-GAAP earnings per diluted share were $136, a decrease of 31% [83] - Non-GAAP operating income was $45 million [83] - Asset-Based revenue was $713 million, with a 30% decrease in operating income [86] - Asset-Light revenue decreased by 13% [101]