ArcBest(ARCB) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights Overall Financial Performance 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 $47 million to shareholders through share repurchases and dividends in the first half of 2025[6] - CEO Judy R. McReynolds emphasized the team's commitment to meeting customer needs and achieving solid results despite macroeconomic challenges, providing flexible, forward-thinking solutions through deep expertise and integrated services[3] - CEO-elect Seth Runser stated the company is executing with discipline and agility, leveraging integrated capabilities to create value across markets and building momentum for long-term growth by optimizing operations and deepening customer relationships[3] Results of Operations Comparisons Asset-Based Segment The Asset-Based segment saw growth in shipments and tonnage in Q2 2025, driven by new LTL core customers, despite a decline in average weight per shipment, while operating income and operating ratio deteriorated year-over-year but improved sequentially Asset-Based Segment Key Operating Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change | | :-------------------------------- | :------------- | :------------- | :------- | | Revenue ($ 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] - 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] 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] Asset-Light Segment 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] - 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] - 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] Company Information and Forward-Looking Statements Conference Call Details 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] - Participants can listen by dialing (800) 715-9871 or accessing the webcast on ArcBest's website, arcb.com, with conference ID 6423434[13] - Conference slides are available for download on the company's website and filed as Exhibit 99.3 to Form 8-K[13] About ArcBest 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] - 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] - 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] Safe Harbor Statement 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] - 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] - 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] Financial Data and Operating Statistics Consolidated Statements of Operations 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 | $1.83 | -31.69% | Consolidated Balance Sheets As of June 30, 2025, ArcBest's consolidated balance sheets show a slight increase in total assets, primarily due to growth in net property, plant, and equipment, while total liabilities slightly decreased and total shareholders' equity marginally reduced, reflecting changes in asset structure and capital management Consolidated Balance Sheets (As of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 ($ 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] - Treasury stock (at cost) increased from $451,039 thousand as of December 31, 2024, to $492,776 thousand as of June 30, 2025, reflecting share repurchase activities[22] Consolidated Statements of Cash Flows In the first half of 2025, ArcBest's net cash flow from operating activities significantly decreased year-over-year, while cash outflows from investing and financing activities also reduced, resulting in a net decrease in cash and cash equivalents and a lower ending cash balance compared to the prior year Consolidated Statements of Cash Flows (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ 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] - Expenditures for treasury stock repurchases increased from $31,627 thousand in H1 2024 to $41,737 thousand in H1 2025[23] Financial Statement Operating Segment Data and Operating Ratios This section provides detailed financial data and operating ratios for ArcBest's operating segments, showing slight revenue growth but deteriorating operating income and ratio for the Asset-Based segment, while the Asset-Light segment experienced significant revenue decline but successfully swung to operating income with substantial operating ratio improvement Revenue by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($ 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 | $48,845 | -23.62% | Operating Ratios by Segment (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 Operating Ratio | Q2 2024 Operating Ratio | Change (bps) | | :------------------- | :-------------------- | :-------------------- | :--------- | | Asset-Based Segment | 92.8% | 89.8% | +300 | | Asset-Light Segment | 99.8% | 102.4% | -260 | | Total Consolidated Operating Ratio | 96.4% | 95.5% | +90 | - The Asset-Light segment's operating ratio improved from 102.4% in Q2 2024 to 99.8% in Q2 2025, primarily due to margin expansion, strict cost control, and productivity improvements[11][24] Reconciliations of GAAP to Non-GAAP Financial Measures ArcBest provides reconciliations of GAAP to non-GAAP financial measures to better reflect core operating performance, with adjustments primarily for innovative technology costs, acquisition accounting amortization, fair value changes of contingent consideration, equity investment fair value changes, life insurance benefits, and RSU tax impacts, aiming for more comparable performance analysis - Management believes non-GAAP measures are useful for analysts, investors, and other parties to evaluate core operating performance and provide meaningful comparisons between current and prior period results[27] - Non-GAAP results are based on continuing operations and exclude the impact of discontinued operations from FleetNet, which was sold on February 28, 2023[27] Consolidated Non-GAAP Measures Consolidated non-GAAP measures show that after adjustments for innovative technology costs, acquisition accounting amortization, and fair value changes of contingent consideration, non-GAAP operating income and net income for Q2 2025 were higher than GAAP reported amounts but still decreased year-over-year Consolidated Non-GAAP Operating Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ 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 | $1.98 | -31.31% | Segment Operating Income (Loss) Reconciliations This section provides GAAP to non-GAAP operating income (loss) reconciliations for the Asset-Light segment, showing that after adjusting for acquisition accounting amortization and fair value changes of contingent consideration, non-GAAP operating income for the Asset-Light segment swung from a loss to a profit, indicating an improvement in its core operations Asset-Light Segment Non-GAAP Operating Income (Loss) (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ 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 | $(2,456) | Swung to Profit | - The Asset-Light segment's non-GAAP operating ratio improved from 100.6% in Q2 2024 to 99.7% in Q2 2025[30] - The company reduced the contingent consideration liability for the MoLo acquisition to zero in Q2 2025, reflecting a zero probability of payment based on 2025 Adjusted EBITDA projections[25] Effective Tax Rate Reconciliation The effective tax rate reconciliation details the calculation of GAAP and non-GAAP pre-tax income, provision for income taxes, and net income, along with the impact of various adjustments on the effective tax rate, showing GAAP effective tax rate at 28.2% and non-GAAP at 26.2% for Q2 2025, both higher than the prior year Effective Tax Rate Reconciliation (Q2 2025) | Metric | GAAP Amount ($ 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 | $47,383 | | Effective Tax Rate | 4.7% | - | 26.3% | - In Q2 2025, adjustments for innovative technology costs, acquisition accounting amortization, and fair value changes of contingent consideration resulted in a net increase to pre-tax income[32] Adjusted EBITDA Adjusted EBITDA, a key management metric for performance evaluation and business planning, excludes non-core operating items like acquisition intangible asset amortization and fair value changes of contingent consideration and equity investments; in Q2 2025, consolidated and Asset-Light Adjusted EBITDA both decreased year-over-year, though the Asset-Light segment achieved a positive value - Management uses Adjusted EBITDA as a key metric for performance evaluation and business planning, as it excludes non-core operating items such as amortization of acquired intangibles and software, and fair value changes of contingent consideration and equity investments[33] Consolidated Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ 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 | $(609) | Swung to Profit | Operating Statistics Operating statistics reveal key metrics for Asset-Based and Asset-Light segments, with the Asset-Based segment showing growth in average daily tonnage and shipments but a decline in billed revenue per hundredweight, while the Asset-Light segment experienced decreases in revenue per shipment and average daily shipments but a significant improvement in average daily shipments per employee Asset-Based Segment Operating Statistics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YOY Change (%) | | :-------------------------------- | :------------- | :------------- | :----------- | | Billed Revenue per Hundredweight ($) | $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% |