ArcBest(US:ARCB)2025-11-05 16:31Revenue Performance - Consolidated revenues decreased by 1.4% and 4.4% for the three and nine months ended September 30, 2025, respectively, compared to the same prior year periods, primarily due to lower market rates and decreased shipment levels in the Asset-Light segment [89]. - Asset-Based segment revenues increased by 2.4% for the three months ended September 30, 2025, but decreased by 0.4% for the nine months ended September 30, 2025, compared to the same periods of 2024 [89]. - The Asset-Light segment generated approximately 33% and 34% of total revenues for the three and nine months ended September 30, 2025, respectively, down from 35% and 36% for the same periods of 2024 [93]. - Asset-Light segment revenues decreased by 7.6% to $356.0 million for the three months ended September 30, 2025, and by 10.5% to $1,053.9 million for the nine months ended September 30, 2025, compared to the same periods in 2024 [133]. Operating Income and Expenses - Consolidated operating income declined year-over-year, reflecting revenue decreases and increased salaries, wages, and benefits in the Asset-Based segment [94]. - Innovative technology costs related to the Vaux™ suite impacted consolidated operating results, decreasing results by $7.7 million (pre-tax) for the third quarter of 2025, compared to $8.5 million (pre-tax) for the same period in 2024 [95]. - Operating loss for the Asset-Light segment totaled $1.6 million for the three months and $5.4 million for the nine months ended September 30, 2025, compared to operating income of $84.8 million and $60.0 million for the same periods in 2024 [136]. - Operating expenses increased by $57.0 million for the three months ended September 30, 2025, while decreasing by $58.2 million for the nine months ended September 30, 2025, compared to the same prior year periods [137]. Net Income and Earnings Per Share - Net income from continuing operations was $39.3 million for the three months ended September 30, 2025, compared to $100.3 million for the same period in 2024 [87]. - Diluted earnings per share from continuing operations were $1.72 for the three months ended September 30, 2025, down from $4.23 for the same period in 2024 [87]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by $24.6 million from December 31, 2024, to September 30, 2025, primarily due to lower business levels and capital expenditures [165]. - Cash provided by operating activities was $184.3 million for the nine months ended September 30, 2025, down from $229.0 million in the same prior year period [166]. - Capital expenditures for 2025 are estimated to be approximately $200.0 million, including $130.0 million for revenue equipment purchases [174]. Debt and Tax Liabilities - Long-term debt increased by $25.0 million, driven by $87.2 million in equipment financing, offset by $62.3 million in payments on notes payable [184]. - Deferred income tax liabilities rose by $35.4 million, mainly due to tax deductions from the One Big Beautiful Bill Act, impacting depreciation and R&D expense capitalization [185]. - A one-time current tax benefit of $26.6 million was recognized due to the OBBB, related to $101.2 million of tax deductions for 100% expensing of fixed asset additions [186]. Market Conditions and Risks - The U.S. economy continued to expand during the third quarter of 2025, with the Federal Reserve cutting interest rates by 25 basis points in September and October [148]. - The manufacturing sector contracted for the eighth consecutive month in October 2025, contributing to a decrease in freight volumes [151]. - The primary market risk arises from fluctuations in interest rates, with fixed-rate notes payable mitigating some risks, while variable-rate borrowings expose the company to potential increases in interest costs [198].