Financial Data and Key Metrics Changes - Revenue, excluding fuel surcharge, increased by 2.4% year over year, while operating income declined by $31.1 million or 38.2% year over year due to $58 million of unusual items [16][18] - Adjusted EPS was $0.32 for 2025 compared to $0.34 for 2024, reflecting a 5.9% year over year decrease primarily due to a $10 negative impact from loss contingency and claims accrual [17][18] - The consolidated adjusted operating ratio was 93.8%, flat year over year and sequentially [17] Business Line Data and Key Metrics Changes - Truckload segment revenue declined by 2.1% year over year, driven by a 2.3% decrease in loaded miles, while adjusted operating income declined by $7.3 million or 15% year over year [21][24] - LTL business grew revenue, excluding fuel surcharge, by 21.5% year over year, with shipments per day up 14.2% [25][26] - Logistics segment revenue declined by 2.2% year over year, driven by a 6.2% decline in load count, but adjusted operating income grew by 1.9% year over year [29] Market Data and Key Metrics Changes - The LTL segment held steady at 20% of consolidated revenue, its highest share since entering this segment in 2021 [19] - Intermodal segment revenue declined by 8.4% year over year on an 11.5% decrease in load count, but adjusted operating ratio improved by 160 basis points year over year [31] Company Strategy and Development Direction - The company is adopting the AAA Cooper brand across its entire LTL business to enhance cohesion and operational efficiency [12] - The strategy includes leveraging technology to foster connectivity and increase market share by addressing network imbalances [19] - The company anticipates ongoing attrition in capacity due to regulatory enforcement and market dynamics, which could create favorable conditions for its truckload business in 2026 [11] Management's Comments on Operating Environment and Future Outlook - Management noted that freight markets are experiencing uncertainty, with shippers hesitant to take risks, but proactive discussions around peak season projects have increased [6][7] - The company is taking a cautious approach to expectations for the fourth quarter due to uncertainties in volume build [7] - Management expressed confidence in the potential for margin growth due to improvements in cost structure and operational efficiencies [11][12] Other Important Information - The company reported significant unusual items impacting GAAP results, including trade name impairments and higher insurance costs [14][15] - The effective tax rate on GAAP results was 47%, significantly higher year over year, while the effective tax rate on non-GAAP results was 29.6% [17] Q&A Session Summary Question: Clarification on adjusted EPS and fourth quarter demand - Management confirmed that the adjusted EPS of $0.32 reflects historical reporting practices and clarified that while there are peak projects underway, overall demand growth has not met typical seasonal expectations [88][90] Question: Insights on regulatory impacts on capacity - Management indicated that regulatory enforcement is beginning to affect capacity availability, with some states revoking non-domiciled CDLs, which could lead to tighter market conditions [43][46] Question: Discussion on LTL margins and future synergies - Management acknowledged softness in LTL demand but expressed optimism about upcoming bid opportunities and the potential for synergies between truckload and LTL operations [55][58]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 8.3% to $1.44 in the second quarter and by 7.2% for the first half [19] - Adjusted operating companies income in the Smokable Products segment grew by 4.2% to $2.9 billion in the second quarter and by 3.5% to $5.5 billion in the first half [19] - Adjusted OCI margins expanded to 64.5% for both the second quarter and the first half [20] Business Line Data and Key Metrics Changes - In the Smokable Products segment, domestic cigarette volumes declined by 10.2% in the second quarter and 11.9% for the first half [20] - Oral nicotine pouches, particularly ON!, reported a shipment volume increase of 26.5% to 52.1 million cans in the second quarter [11] - Adjusted OCI for the Oral Tobacco Products segment grew by 10.9% in the second quarter and 5.5% in the first half [23] Market Data and Key Metrics Changes - The e-vapor category included over 20.5 million vapers, up by over 1.9 million year over year [14] - Disposable vapers increased by an estimated 2.7 million to approximately 14.4 million, representing over 60% of the e-vapor category [14] - Domestic cigarette volumes at the industry level declined by an estimated 8.5% in the second quarter [20] Company Strategy and Development Direction - The company aims to shape a fully regulated industry and provide expanded product choices for adult nicotine consumers [8] - Continued focus on driving trial, building long-term equity, and increasing profitability in the ON! brand [12] - The company is actively exploring potential next steps regarding the nJoy e-vapor product line, including an appeal against patent disputes [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong performance of operating companies despite challenging market conditions [18] - The macroeconomic environment remains dynamic, with inflation and consumer confidence being key factors to monitor [32] - The company raised the lower end of its 2025 guidance range, expecting adjusted diluted EPS in the range of $5.35 to $5.45 [25] Other Important Information - The company returned over $4 billion to shareholders through dividends and share repurchases in the first half of the year [8] - The total debt to EBITDA ratio as of June 30 was 2.0 times, in line with the target [26] - The company is advocating for more coordinated actions against illicit e-vapor products to clean up the marketplace [16] Q&A Session Summary Question: Insights on the raised guidance range and consumer environment - Management highlighted the dynamic market and the need to monitor adult tobacco consumer behaviors due to inflationary pressures [31] Question: Update on nJoy e-vapor product development - Management confirmed that product development for the nJoy ACE device is progressing, with plans to file for FDA approval [35] Question: Long-term EPS growth outlook - Management remains confident in achieving mid-single-digit EPS growth through FY 2028, despite economic strains on consumers [44] Question: Strategy for the Basic brand - The company is using targeted analytics to maintain consumer loyalty and expand the Basic brand's presence in discount segments [49] Question: Impact of illicit vape crackdowns - Management noted that while enforcement actions are increasing, it is too early to determine their overall impact on the market [58] Question: Tariff impacts on business - Tariffs have had some impact on costs, particularly in supply chain materials, but are not viewed as material to overall business performance [98]