[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) [Overall Financial Performance](index=1&type=section&id=Overall%20Financial%20Performance) ArcBest faced macroeconomic challenges in Q2 2025 but achieved solid operations through team efforts and integrated services, with total revenue, GAAP and non-GAAP net income, and diluted EPS all decreasing year-over-year Overall Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | **Revenue** | $1.0 billion | $1.1 billion | -9.1% | | **Net Income from Continuing Operations (GAAP)** | $25.8 million | $46.9 million | -45.0% | | **Diluted EPS (GAAP)** | $1.12 | $1.96 | -42.8% | | **Net Income from Continuing Operations (Non-GAAP)** | $31.2 million | $47.4 million | -34.2% | | **Diluted EPS (Non-GAAP)** | $1.36 | $1.98 | -31.3% | - The company returned over **$47 million** to shareholders through share repurchases and dividends in the first half of 2025[6](index=6&type=chunk) - CEO Judy R. McReynolds emphasized the team's commitment to meeting customer needs and achieving solid results despite macroeconomic challenges, providing flexible, forward-thinking solutions through deep expertise and integrated services[3](index=3&type=chunk) - CEO-elect Seth Runser stated the company is executing with discipline and agility, leveraging integrated capabilities to create value across markets and building momentum for long-term growth by optimizing operations and deepening customer relationships[3](index=3&type=chunk) [Results of Operations Comparisons](index=1&type=section&id=Results%20of%20Operations%20Comparisons) [Asset-Based Segment](index=1&type=section&id=Asset-Based%20Segment) The Asset-Based segment saw growth in shipments and tonnage in Q2 2025, driven by new LTL core customers, despite a decline in average weight per shipment, while operating income and operating ratio deteriorated year-over-year but improved sequentially Asset-Based Segment Key Operating Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change | | :-------------------------------- | :------------- | :------------- | :------- | | Revenue ($ millions) | $713.3 | $712.7 | +0.1% | | Average Daily Revenue Growth | - | - | +0.9% | | Average Daily Total Tonnage Growth | - | - | +4.3% | | Average Daily Total Shipments Growth | - | - | +5.6% | | Total Billed Revenue per Hundredweight Decline | - | - | -3.1% | | Operating Income ($ millions) | $51.0 | $72.8 | -30.0% | | Operating Ratio | 92.8% | 89.8% | +300 bps | - Tonnage growth was primarily driven by a **5.6% increase in average daily shipments**, mainly from new core LTL customers, partially offset by a **1.2% decrease in average total weight per shipment**[4](index=4&type=chunk) - To support shipment growth, the company proactively expanded its workforce and strategically utilized purchased transportation and local short-haul capacity to enhance peak season network capabilities; despite increased labor and purchased transportation costs, productivity improvements facilitated efficient new business intake and maintained high service standards, leading to year-over-year and sequential improvements in cost per shipment[5](index=5&type=chunk) Asset-Based Segment Key Operating Metrics (Q2 2025 vs. Q1 2025) | Metric | Sequential Change | | :-------------------------------- | :------- | | Average Daily Revenue Growth | +9.5% | | Average Daily Shipments Growth | +8.0% | | Average Weight per Shipment Growth | +3.2% | | Average Daily Tonnage Growth | +11.5% | | Revenue per Shipment Growth | +1.4% | | Billed Revenue per Hundredweight Decline | -1.7% | | Operating Ratio Improvement | 310 bps | - Customer contract renewals and deferred pricing agreements averaged a **4% increase** this quarter; revenue per hundredweight decreased **3.1% year-over-year**, primarily due to lower fuel surcharge revenue and changes in freight mix, with revenue per hundredweight excluding fuel surcharges decreasing in the low single digits year-over-year; a **5.9% general rate increase** announced on July 14 will take effect on August 4[8](index=8&type=chunk) [Asset-Light Segment](index=3&type=section&id=Asset-Light%20Segment) The Asset-Light segment experienced a revenue decline in Q2 2025 due to a soft rate environment and increased managed transportation business, but achieved non-GAAP operating income for the first time since Q2 2023, driven by margin expansion, strict cost control, and productivity improvements Asset-Light Segment Key Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change | | :-------------------------------- | :------------- | :------------- | :------- | | Revenue ($ millions) | $341.9 | $395.8 | -13.7% | | Average Daily Revenue Decline | - | - | -12.9% | | Operating Income ($ millions) | $0.6 | $(9.5) | Swung to Profit | | Non-GAAP Operating Income ($ millions) | $1.1 | $(2.5) | Swung to Profit | | Adjusted EBITDA ($ millions) | $2.5 | $(0.6) | Swung to Profit | - Revenue decline was primarily due to lower revenue per shipment from a soft rate environment and an increased mix of managed transportation business, which typically involves smaller, lower-revenue shipments[10](index=10&type=chunk) - Average daily shipments decreased by **6.5%**, reflecting a strategic reduction in lower-margin full-truckload volumes, partially offset by continued growth in managed solutions[10](index=10&type=chunk) - Compared to Q1 2025, Q2 2025 saw a **4.7% decrease in average daily revenue**, a **4.3% decrease in average daily shipments**, and a **0.5% decrease in revenue per shipment**; however, margin expansion and strict cost management led to improved operating performance[12](index=12&type=chunk) [Company Information and Forward-Looking Statements](index=3&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) ArcBest will host a conference call on July 30, 2025, to discuss quarterly results, with details provided for dial-in, webcast, and replay access for interested parties - The conference call will be held on **July 30, 2025, at 9:00 a.m. ET (8:00 a.m. CT)**[13](index=13&type=chunk) - Participants can listen by dialing **(800) 715-9871** or accessing the webcast on ArcBest's website, arcb.com, with conference ID **6423434**[13](index=13&type=chunk) - Conference slides are available for download on the company's website and filed as Exhibit 99.3 to Form 8-K[13](index=13&type=chunk) [About ArcBest](index=3&type=section&id=About%20ArcBest) ArcBest, a comprehensive logistics company founded in 1923 with 14,000 employees and 250 service centers, offers solutions from ground, air, and ocean transportation to fully managed supply chains, leveraging technology like Vaux™ to address customer challenges - ArcBest (Nasdaq: ARCB) is a multi-billion dollar integrated logistics company founded in **1923**[14](index=14&type=chunk) - The company has **14,000 employees** across **250 campuses and service centers**, offering ground, air, and ocean transportation, as well as fully managed supply chain solutions[14](index=14&type=chunk) - ArcBest is committed to helping customers navigate supply chain challenges through innovative technology, such as **Vaux™**, recognized as one of TIME's Best Inventions of 2023[14](index=14&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, reflecting the company's outlook on growth, value creation, financial prospects, strategy, and expectations, which are subject to various risks and uncertainties that could cause actual results to differ materially - This press release contains forward-looking statements as defined by the **Private Securities Litigation Reform Act of 1995**, concerning the company's outlook on growth, value creation, financial prospects, strategy, and expectations[16](index=16&type=chunk) - These statements are based on management's beliefs, assumptions, and current information, are not guarantees of future performance, and involve various risks and uncertainties including data privacy breaches, cybersecurity incidents, information system failures, customer attrition, competitive pressures, fuel price volatility, labor relations, changes in laws and regulations, and economic conditions[16](index=16&type=chunk) - The company cautions readers not to place undue reliance on forward-looking statements and undertakes no obligation to publicly update or revise them after their release[18](index=18&type=chunk) [Financial Data and Operating Statistics](index=5&type=section&id=Financial%20Data%20and%20Operating%20Statistics) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) ArcBest's Q2 2025 consolidated statements of operations show a year-over-year decrease in total revenue, net income from continuing operations, and EPS, with operating expenses slightly reduced but operating income declining more significantly, reflecting pressure on profitability Consolidated Statements of Operations (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Revenue | $1,022,256 | $1,077,831 | -5.16% | | Operating Expenses | $984,947 | $1,028,986 | -4.28% | | Operating Income | $37,309 | $48,845 | -23.62% | | Income from Continuing Operations Before Income Taxes | $35,968 | $49,227 | -26.94% | | Provision for Income Taxes | $10,159 | $2,303 | +341.12% | | Net Income from Continuing Operations | $25,809 | $46,924 | -45.00% | | Net Income | $25,809 | $46,924 | -45.00% | | Diluted EPS (Continuing Operations) | $1.12 | $1.96 | -42.86% | Consolidated Statements of Operations (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Revenue | $1,989,333 | $2,114,250 | -5.91% | | Operating Expenses | $1,945,394 | $2,042,970 | -4.80% | | Operating Income | $43,939 | $71,280 | -38.36% | | Income from Continuing Operations Before Income Taxes | $40,142 | $44,550 | -9.89% | | Provision for Income Taxes | $11,202 | $538 | +1981.04% | | Net Income from Continuing Operations | $28,940 | $44,012 | -34.25% | | Net Income | $28,940 | $44,612 | -35.15% | | Diluted EPS (Continuing Operations) | $1.25 | $1.83 | -31.69% | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, ArcBest's consolidated balance sheets show a slight increase in total assets, primarily due to growth in net property, plant, and equipment, while total liabilities slightly decreased and total shareholders' equity marginally reduced, reflecting changes in asset structure and capital management Consolidated Balance Sheets (As of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------- | | **Assets** | | | | | Total Current Assets | $638,168 | $675,642 | -5.54% | | Property, Plant and Equipment, Net | $1,113,157 | $1,066,046 | +4.42% | | Goodwill | $304,753 | $304,753 | 0.00% | | Intangible Assets, Net | $82,449 | $88,615 | -6.96% | | Total Assets | $2,467,436 | $2,429,731 | +1.55% | | **Liabilities and Shareholders' Equity** | | | | | Total Current Liabilities | $661,402 | $665,985 | -0.69% | | Long-Term Debt, Less Current Portion | $163,850 | $125,156 | +30.92% | | Total Liabilities | $1,103,600 | $1,115,369 | -1.05% | | Total Shareholders' Equity | $1,300,426 | $1,314,362 | -1.06% | | Total Liabilities and Shareholders' Equity | $2,467,436 | $2,429,731 | +1.55% | - Cash and cash equivalents decreased from **$127,444 thousand** as of December 31, 2024, to **$114,874 thousand** as of June 30, 2025[22](index=22&type=chunk) - Treasury stock (at cost) increased from **$451,039 thousand** as of December 31, 2024, to **$492,776 thousand** as of June 30, 2025, reflecting share repurchase activities[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In the first half of 2025, ArcBest's net cash flow from operating activities significantly decreased year-over-year, while cash outflows from investing and financing activities also reduced, resulting in a net decrease in cash and cash equivalents and a lower ending cash balance compared to the prior year Consolidated Statements of Cash Flows (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Net Cash Provided by Operating Activities | $86,111 | $140,202 | -38.60% | | Net Cash Used in Investing Activities | $(36,897) | $(87,079) | -57.63% | | Net Cash Used in Financing Activities | $(61,784) | $(99,759) | -38.07% | | Net Decrease in Cash and Cash Equivalents | $(12,570) | $(46,636) | -73.09% | | Cash and Cash Equivalents at End of Period | $114,874 | $215,590 | -46.72% | - Expenditures for property, plant, and equipment (net of financing) decreased from **$104,909 thousand** in H1 2024 to **$42,007 thousand** in H1 2025[23](index=23&type=chunk) - Expenditures for treasury stock repurchases increased from **$31,627 thousand** in H1 2024 to **$41,737 thousand** in H1 2025[23](index=23&type=chunk) [Financial Statement Operating Segment Data and Operating Ratios](index=9&type=section&id=Financial%20Statement%20Operating%20Segment%20Data%20and%20Operating%20Ratios) This section provides detailed financial data and operating ratios for ArcBest's operating segments, showing slight revenue growth but deteriorating operating income and ratio for the Asset-Based segment, while the Asset-Light segment experienced significant revenue decline but successfully swung to operating income with substantial operating ratio improvement Revenue by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :------------------- | :-------------------- | :-------------------- | :----------- | | Asset-Based Segment | $713,312 | $712,725 | +0.08% | | Asset-Light Segment | $341,922 | $395,817 | -13.62% | | Other and Eliminations | $(32,978) | $(30,711) | +7.38% | | **Total Consolidated Revenue** | **$1,022,256** | **$1,077,831** | **-5.16%** | Operating Income by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :------------------- | :-------------------- | :-------------------- | :----------- | | Asset-Based Segment | $51,029 | $72,792 | -29.90% | | Asset-Light Segment | $591 | $(9,498) | Swung to Profit | | Other and Eliminations | $(14,311) | $(14,449) | -0.96% | | **Total Consolidated Operating Income** | **$37,309** | **$48,845** | **-23.62%** | Operating Ratios by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 Operating Ratio | Q2 2024 Operating Ratio | Change (bps) | | :------------------- | :-------------------- | :-------------------- | :--------- | | Asset-Based Segment | 92.8% | 89.8% | +300 | | Asset-Light Segment | 99.8% | 102.4% | -260 | | **Total Consolidated Operating Ratio** | **96.4%** | **95.5%** | **+90** | - The Asset-Light segment's operating ratio improved from **102.4%** in Q2 2024 to **99.8%** in Q2 2025, primarily due to margin expansion, strict cost control, and productivity improvements[11](index=11&type=chunk)[24](index=24&type=chunk) [Reconciliations of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=Reconciliations%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) ArcBest provides reconciliations of GAAP to non-GAAP financial measures to better reflect core operating performance, with adjustments primarily for innovative technology costs, acquisition accounting amortization, fair value changes of contingent consideration, equity investment fair value changes, life insurance benefits, and RSU tax impacts, aiming for more comparable performance analysis - Management believes non-GAAP measures are useful for analysts, investors, and other parties to evaluate core operating performance and provide meaningful comparisons between current and prior period results[27](index=27&type=chunk) - Non-GAAP results are based on continuing operations and exclude the impact of discontinued operations from FleetNet, which was sold on **February 28, 2023**[27](index=27&type=chunk) [Consolidated Non-GAAP Measures](index=10&type=section&id=Consolidated%20Non-GAAP%20Measures) Consolidated non-GAAP measures show that after adjustments for innovative technology costs, acquisition accounting amortization, and fair value changes of contingent consideration, non-GAAP operating income and net income for Q2 2025 were higher than GAAP reported amounts but still decreased year-over-year Consolidated Non-GAAP Operating Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | GAAP Operating Income | $37,309 | $48,845 | -23.62% | | Innovative Technology Costs (Pre-tax) | $7,123 | $8,311 | -14.30% | | Acquisition Accounting Amortization (Pre-tax) | $3,192 | $3,192 | 0.00% | | Fair Value Change of Contingent Consideration (Pre-tax) | $(2,650) | $3,850 | -168.83% | | **Non-GAAP Operating Income** | **$44,974** | **$64,198** | **-29.95%** | Consolidated Non-GAAP Net Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | GAAP Net Income | $25,809 | $46,924 | -45.00% | | Innovative Technology Costs (After-tax) | $5,428 | $6,380 | -14.80% | | Acquisition Accounting Amortization (After-tax) | $2,398 | $2,400 | -0.08% | | Fair Value Change of Contingent Consideration (After-tax) | $(1,991) | $2,896 | -168.75% | | Life Insurance Benefits and Cash Value Changes | $(1,428) | $(440) | +224.55% | | Tax Impact of Restricted Stock Units (Benefit) | $995 | $(10,777) | -109.23% | | **Non-GAAP Net Income** | **$31,211** | **$47,383** | **-34.14%** | Consolidated Non-GAAP Diluted EPS (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change (%) | | :-------------------------------- | :------------- | :------------- | :----------- | | GAAP Diluted EPS | $1.12 | $1.96 | -42.86% | | **Non-GAAP Diluted EPS** | **$1.36** | **$1.98** | **-31.31%** | [Segment Operating Income (Loss) Reconciliations](index=11&type=section&id=Segment%20Operating%20Income%20(Loss)%20Reconciliations) This section provides GAAP to non-GAAP operating income (loss) reconciliations for the Asset-Light segment, showing that after adjusting for acquisition accounting amortization and fair value changes of contingent consideration, non-GAAP operating income for the Asset-Light segment swung from a loss to a profit, indicating an improvement in its core operations Asset-Light Segment Non-GAAP Operating Income (Loss) (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | GAAP Operating Income (Loss) | $591 | $(9,498) | Swung to Profit | | Acquisition Accounting Amortization (Pre-tax) | $3,192 | $3,192 | 0.00% | | Fair Value Change of Contingent Consideration (Pre-tax) | $(2,650) | $3,850 | -168.83% | | **Non-GAAP Operating Income (Loss)** | **$1,133** | **$(2,456)** | **Swung to Profit** | - The Asset-Light segment's non-GAAP operating ratio improved from **100.6%** in Q2 2024 to **99.7%** in Q2 2025[30](index=30&type=chunk) - The company reduced the contingent consideration liability for the MoLo acquisition to **zero** in Q2 2025, reflecting a zero probability of payment based on 2025 Adjusted EBITDA projections[25](index=25&type=chunk) [Effective Tax Rate Reconciliation](index=12&type=section&id=Effective%20Tax%20Rate%20Reconciliation) The effective tax rate reconciliation details the calculation of GAAP and non-GAAP pre-tax income, provision for income taxes, and net income, along with the impact of various adjustments on the effective tax rate, showing GAAP effective tax rate at 28.2% and non-GAAP at 26.2% for Q2 2025, both higher than the prior year Effective Tax Rate Reconciliation (Q2 2025) | Metric | GAAP Amount ($ thousands) | Non-GAAP Adjustments ($ thousands) | Non-GAAP Amount ($ thousands) | | :-------------------------------- | :-------------------- | :----------------------- | :-------------------- | | Income from Continuing Operations Before Income Taxes | $35,968 | $6,362 | $42,299 | | Provision for Income Taxes | $10,159 | $929 | $11,088 | | Net Income from Continuing Operations | $25,809 | $5,402 | $31,211 | | Effective Tax Rate | 28.2% | - | 26.2% | Effective Tax Rate Reconciliation (Q2 2024) | Metric | GAAP Amount ($ thousands) | Non-GAAP Adjustments ($ thousands) | Non-GAAP Amount ($ thousands) | | :-------------------------------- | :-------------------- | :----------------------- | :-------------------- | | Income from Continuing Operations Before Income Taxes | $49,227 | $15,085 | $64,312 | | Provision for Income Taxes | $2,303 | $14,626 | $16,929 | | Net Income from Continuing Operations | $46,924 | $459 | $47,383 | | Effective Tax Rate | 4.7% | - | 26.3% | - In Q2 2025, adjustments for innovative technology costs, acquisition accounting amortization, and fair value changes of contingent consideration resulted in a net increase to pre-tax income[32](index=32&type=chunk) [Adjusted EBITDA](index=13&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a key management metric for performance evaluation and business planning, excludes non-core operating items like acquisition intangible asset amortization and fair value changes of contingent consideration and equity investments; in Q2 2025, consolidated and Asset-Light Adjusted EBITDA both decreased year-over-year, though the Asset-Light segment achieved a positive value - Management uses Adjusted EBITDA as a key metric for performance evaluation and business planning, as it excludes non-core operating items such as amortization of acquired intangibles and software, and fair value changes of contingent consideration and equity investments[33](index=33&type=chunk) Consolidated Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Net Income from Continuing Operations | $25,809 | $46,924 | -45.00% | | Interest and Other Related Financing Costs | $2,956 | $2,078 | +42.25% | | Provision for Income Taxes | $10,159 | $2,303 | +341.12% | | Depreciation and Amortization | $40,926 | $36,276 | +12.82% | | Stock-Based Compensation Amortization | $3,779 | $3,433 | +10.08% | | Fair Value Change of Contingent Consideration | $(2,650) | $3,850 | -168.83% | | **Consolidated Adjusted EBITDA** | **$80,979** | **$94,864** | **-14.64%** | Asset-Light Segment Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YOY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Operating Income (Loss) | $591 | $(9,498) | Swung to Profit | | Depreciation and Amortization | $4,605 | $5,039 | -8.61% | | Fair Value Change of Contingent Consideration | $(2,650) | $3,850 | -168.83% | | **Asset-Light Segment Adjusted EBITDA** | **$2,546** | **$(609)** | **Swung to Profit** | [Operating Statistics](index=15&type=section&id=Operating%20Statistics) Operating statistics reveal key metrics for Asset-Based and Asset-Light segments, with the Asset-Based segment showing growth in average daily tonnage and shipments but a decline in billed revenue per hundredweight, while the Asset-Light segment experienced decreases in revenue per shipment and average daily shipments but a significant improvement in average daily shipments per employee Asset-Based Segment Operating Statistics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change (%) | | :-------------------------------- | :------------- | :------------- | :----------- | | Billed Revenue per Hundredweight ($) | $48.54 | $50.09 | -3.1% | | Billed Revenue per Shipment ($) | $537.94 | $562.17 | -4.3% | | Average Daily Tonnage | 11,666 | 11,186 | +4.3% | | Average Daily Shipments | 21,051 | 19,934 | +5.6% | | Shipments per DSY Hour | 0.451 | 0.448 | +0.7% | | Weight per Shipment (lbs) | 1,108 | 1,122 | -1.2% | | Average Length of Haul (miles) | 1,131 | 1,135 | -0.4% | Asset-Light Segment Operating Statistics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 YOY Change (%) | | :-------------------------------- | :------------------------- | | Revenue per Shipment | -6.9% | | Average Daily Shipments | -6.5% | | Average Daily Shipments per Employee | +14.8% |

Company Overview - ArcBest (ARCB) is expected to report a year-over-year decline in earnings, with a projected EPS of $1.46, reflecting a decrease of 26.3% compared to the previous year [3] - Revenues for the upcoming quarter are anticipated to be $1.04 billion, down 3.7% from the same quarter last year [3] Earnings Estimates and Revisions - The consensus EPS estimate has been revised down by 5.67% over the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for ArcBest is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +2.23% [12] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10] - ArcBest currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [12] Historical Performance - In the last reported quarter, ArcBest was expected to post earnings of $0.52 per share but delivered $0.51, resulting in a surprise of -1.92% [13] - Over the past four quarters, ArcBest has only beaten consensus EPS estimates once [14] Industry Context - In the Zacks Transportation - Truck industry, Landstar System (LSTR) is also expected to report a decline in earnings, with an EPS estimate of $1.16, down 21.6% year-over-year [18] - Landstar's revenue is projected to be $1.21 billion, a decrease of 1.5% from the previous year [18] - The consensus EPS estimate for Landstar has been revised down by 1.4% in the last 30 days, and it has a negative Earnings ESP of -0.54% combined with a Zacks Rank of 4, indicating difficulty in predicting an earnings beat [19]

Leadership Transition - ArcBest's longtime leader, Judy McReynolds, will retire on December 31 [1] - Seth Runser, the company's president, will succeed Judy McReynolds [1]

Core Viewpoint - ArcBest (ARCB) is currently identified as a strong value stock, supported by its favorable valuation metrics and earnings outlook [4][9]. Valuation Metrics - ArcBest has a P/E ratio of 11.62, significantly lower than the industry average of 26.27 [4]. - The company holds a PEG ratio of 0.64, compared to the industry's average of 1.18, indicating potential undervaluation [5]. - ArcBest's P/B ratio is 1.35, which is attractive against the industry's average P/B of 3.60 [6]. - The P/S ratio for ArcBest is 0.43, while the industry average is 0.97, suggesting a favorable valuation [7]. - The P/CF ratio for ArcBest is 5.30, compared to the industry's average of 13.65, indicating strong cash flow relative to its market value [8]. Investment Outlook - The combination of these metrics suggests that ArcBest is likely undervalued, making it an appealing option for value investors [9].

Market Overview - The first half of 2025 experienced increased volatility and uncertainty due to President Trump's tariffs and a faster-than-expected cooling of inflation, leading to market recovery [1] - Recent months have shown favorable market conditions with easing trade tensions and a reduction in the Middle East crisis [1] Stock Performance and Recommendations - Optimism regarding artificial intelligence is expected to continue supporting stock prices, particularly in technology sectors [2] - Cooling inflation raises expectations for potential rate cuts starting in September 2025, contributing to a positive market outlook [2] - Stocks such as Cracker Barrel Old Country Store (CBRL), BGSF, ArcBest Corporation (ARCB), Cardinal Health (CAH), and AutoNation (AN) are recommended for monitoring as the second half of 2025 begins [2][6] Screening Strategy - A screening strategy has been developed to identify stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks [3] - The price/sales ratio is included as a valuation metric, focusing on companies with strong top-line performance [3] Screening Criteria - The top 75 companies with net upgrades in broker ratings over the last four weeks are identified [4] - The top 10 stocks with the highest percentage change in earnings estimates for the upcoming quarter are highlighted [4] - Companies in the bottom 10% of price-to-sales ratios are included for better valuation [4] Company Highlights - Cracker Barrel is focusing on menu innovation and pricing strategies to drive growth, introducing new offerings to attract customers [5] - BGSF has seen a 25% increase in shares over the past month and has a Zacks Rank 1, with earnings estimates rising over 300% in the last 60 days [7] - ArcBest is improving productivity and service quality, expecting a 52.1% increase in earnings per share for 2026 compared to 2025 [8] - Cardinal Health is undergoing strategic improvements to revitalize its business model, with its Medical segment expected to drive growth [9][10] - AutoNation's diversified product portfolio and strategic acquisitions support its market position, currently holding a Zacks Rank 3 [11]

Group 1 - ArcBest Corporation (NASDAQ: ARCB) is experiencing positive revenue growth momentum, with tonnage per day turning positive in April and May [1] - The expectation is for continued growth due to improving macroeconomic conditions and effective execution by the company [1] Group 2 - The analyst has over 15 years of investment experience, focusing on mid-sized hedge funds and has a background in sell-side analysis [1] - The investment strategy is medium-term, targeting ideas with catalysts for value unlocking or short selling in case of downside catalysts [1] - The analyst has a generalist approach but has primarily analyzed industrial, consumer, and technology sectors, where higher conviction in investments is noted [1]

Core Insights - BofA Securities analyst Ken Hoexter upgraded ArcBest Corporation from Underperform to Neutral, raising the price target from $63 to $74, citing momentum in gaining market share among core customers [1] - The analyst increased the 2Q25 and full-year 2025 EPS estimates by 1% to $1.60 and $5.85, respectively, reflecting stronger-than-expected second-quarter volume trends driven by growth in the core LTL business [2] - ArcBest's tons per day rose 5% over April, exceeding the typical 3% increase, while shipments per day were up 2%, compared to the usual 1%, attributed to gains in core and new accounts [3] Performance Metrics - ArcBest's performance is outpacing the industry, which is experiencing high-single-digit declines in volumes, while ArcBest's tons per day are up 5% year-over-year for the quarter to date [3] - The company typically sees a sequential margin improvement of 70 basis points from the second to third quarter, but Hoexter estimates a stronger 160-basis-point gain, projecting 3Q margins at 90.4% [7] - For the fourth quarter, Hoexter expects a 100-basis-point drop in margins, forecasting 4Q margins at 91.4% [7] Market Reaction - ArcBest shares are trading higher by 4.9% to $70.57 at the last check [8]

Investment Rating - The report does not explicitly state an investment rating for the transportation and logistics industry Core Insights - The report highlights a positive trend in U.S. imports, with a 6.1% week-over-week increase as of May 18, outperforming seasonal expectations by 980 basis points and showing a 2.8% year-over-year increase [2] - Spot rates for truckload transportation have surged, with dry van rates increasing by 6.1% week-over-week, outperforming historical averages [3] - There are concerns regarding potential freight demand impacts due to tariffs, with expectations of a flat outlook for dry van spot rates in 2026 [6] Summary by Sections Import & Congestion Monitor - Container bookings from China to the U.S. are at five-year lows, down 27% compared to 2023, indicating subdued future demand [2] - The report notes a recovery in container imports at the Port of LA/LB, which increased by 24% week-over-week [2] Truckload and Rail Data - Spot rates for dry van, reefers, and flatbed have all increased week-over-week, with dry van rates now 4% higher year-over-year [3] - The dry van load-to-truck ratio increased by 57% week-over-week, indicating a tightening market [6] - Rail management teams express skepticism about the feasibility of transcontinental mergers due to regulatory barriers [7] Airfreight & Surface Transportation - Airfreight rates have been monitored closely due to tariff implications, with significant declines observed in key freight lanes, particularly the China-U.S. lane, which fell by 6% week-over-week [10] - The overall airfreight market is experiencing broad-based weakness, with all major lanes underperforming seasonal expectations year-to-date [10] Rail Performance - The report card for railroads indicates varying performance levels, with some railroads rated as excellent while others are fair or poor [9] - Regulatory challenges are highlighted as a significant barrier to potential mergers in the rail industry, with environmental impact studies being particularly burdensome [7]

Financial Performance - Consolidated revenues for the three months ended March 31, 2025, decreased by 6.7% to $967,077,000 compared to $1,036,419,000 in the same period of 2024[81]. - Total consolidated operating income fell to $6,630,000 from $22,435,000 year-over-year, reflecting the revenue decline[81]. - Net income from continuing operations was $3,131,000, a significant improvement from a net loss of $2,912,000 in the prior year[81]. - Adjusted EBITDA from continuing operations decreased to $49,276,000 from $73,332,000 year-over-year[93]. Revenue Breakdown - Asset-Based revenues declined by 3.7% to $646,294,000, while Asset-Light revenues decreased by 10.2% to $356,012,000 for the same period[83]. - The Asset-Light segment accounted for approximately 36% of total revenues in Q1 2025, down from 37% in Q1 2024[85]. - The Asset-Based segment revenues for Q1 2025 totaled $646.3 million, a decrease of 3.9% from $671.5 million in Q1 2024, primarily due to a 4.3% decrease in tonnage per day[104]. - The Asset-Light segment revenues decreased by 10.2% to $356.0 million in Q1 2025 from $396.4 million in Q1 2024, impacted by lower average revenue per shipment and a decrease in average daily shipments[124]. Operating Results - Innovative technology costs related to the Vaux™ program decreased operating results by $7.5 million (pre-tax) for Q1 2025, compared to $9.7 million (pre-tax) in Q1 2024[87]. - Operating income for the Asset-Based segment was $26.4 million in Q1 2025, down from $53.5 million in Q1 2024, reflecting a decline in revenues while operating expenses remained consistent[109]. - The Asset-Light segment operating loss improved to $4.4 million in Q1 2025 from a loss of $15.3 million in Q1 2024, driven by decreased operating expenses despite lower revenues[125]. - The Asset-Based segment's operating ratio increased to 95.9% in Q1 2025 from 92.0% in Q1 2024, with salaries, wages, and benefits rising to 53.2% of revenues from 51.4%[101]. Expenses and Costs - Purchased transportation costs decreased by $39.5 million, resulting in a 1.2 percentage point reduction as a percentage of revenue for Q1 2025 compared to Q1 2024[127]. - Salaries, wages, and benefits decreased by $4.8 million, with a 0.4 percentage point reduction as a percentage of revenue for Q1 2025 compared to Q1 2024[129]. - The Asset-Light segment's operating expenses decreased by $51.2 million in Q1 2025 compared to the prior year, with a reduction in the operating ratio to 101.2% from 103.8%[126]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by $58.5 million from December 31, 2024, to March 31, 2025, totaling $74.1 million[148]. - Cash used in operating activities was $22.3 million in Q1 2025, compared to $6.5 million of cash provided in Q1 2024[150]. - Cash used in investing activities was $11.2 million in Q1 2025, down from $53.8 million in Q1 2024[151]. - Total capital expenditures for 2025 are estimated to range from $225.0 million to $275.0 million, including $130.0 million to $140.0 million for revenue equipment purchases and $60.0 million to $80.0 million for real estate and facility upgrades[159]. Debt and Obligations - Future payments due under notes payable totaled $233.1 million as of March 31, 2025, an increase of $27.6 million from December 31, 2024[153]. - The company reported a $25.1 million increase in long-term debt from December 31, 2024, primarily due to a $25.0 million borrowing on the Credit Facility during the first quarter of 2025[166]. - Contractual obligations for operating lease liabilities totaled $307.4 million as of March 31, 2025, reflecting an increase of $39.8 million from December 31, 2024[156]. Market Risks - The economic environment remains uncertain, with increased recession risk and challenges from inflation and supply chain disruptions impacting demand for services[133]. - The company's primary market risk arises from fluctuations in interest rates due to its debt portfolio, which includes fixed-rate notes payable[181]. - Future issuances of long-term debt may be affected by rising interest rates, potentially leading to increased interest costs[181]. - Borrowings under the revolving credit facility and accounts receivable securitization program are subject to variable interest rates, exposing the company to interest rate risk[181].

Financial Data and Key Metrics Changes - Consolidated revenue decreased by 7% year-over-year to $967 million, with non-GAAP operating income from continuing operations at $17 million compared to $43 million in the prior year [22] - Adjusted earnings per share were $0.51, down from $1.34 in Q1 2024 [22] - The Asset Based segment saw a $27 million decrease in operating income, while the Asset Light segment's non-GAAP operating loss improved by $4 million year-over-year [22] Business Line Data and Key Metrics Changes - Asset Based business revenue was $646 million, a daily decrease of 3%, with an operating ratio of 95.9%, an increase of 390 basis points year-over-year [23] - Daily shipments in the Asset Based segment were flat year-over-year, while weight per shipment decreased by 4%, leading to a 4% decrease in tons per day [23] - Asset Light segment revenue was $356 million, a daily decrease of 9%, with shipments per day down 4% [28] Market Data and Key Metrics Changes - In April 2025, the Asset Based business achieved a 4% year-over-year increase in daily shipments, despite a 3% decrease in weight per shipment [26] - The pricing environment remains rational, with a 4.9% average increase on contract renewals during the quarter [25][51] - The company anticipates a non-GAAP operating loss for the Asset Light segment of between $1 million and $2 million for Q2 2025 [30] Company Strategy and Development Direction - The company is focused on driving profitable growth, advancing premium service for customers, and optimizing efficiency [11] - Investments in technology and operational efficiency are expected to enhance service levels and reduce costs [89] - The company is adapting to changes in trade policies and tariffs, aiming to support customers in navigating these challenges [5][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver long-term value despite challenges in the freight environment [10] - The leadership team highlighted a disciplined approach to pricing and operational efficiency to outpace rising costs [25][66] - Management noted that customer relationships remain strong, with 80% of revenue coming from long-term customers [67] Other Important Information - The company has a capital expenditure guidance of $225 million to $275 million for 2025, focusing on maintenance and strategic investments [30] - Approximately $350 million in available liquidity is reported, indicating a strong balance sheet [31] Q&A Session Summary Question: Near term setup and profitability outlook - Management expects normal seasonality to drive revenue increases and continues to target cost reductions aligned with business levels [34][36] Question: Tonnage and revenue per hundredweight trends - Management noted a 1% sequential increase in tonnage but a 1% decrease in revenue per hundredweight, attributing this to a mix of easier-to-handle shipments [38][66] Question: Pricing environment and competitive landscape - Management indicated that the pricing environment remains rational, with no significant pressure from competitors to lower prices [51][52] Question: Retail exposure and inbound traffic from China - The company has around 10% exposure to the retail sector, with varying impacts from inbound traffic from China [78] Question: Strategies in a stagflation environment - Management emphasized operational efficiencies and strategic investments to navigate inflationary pressures while maintaining service levels [88][91]