ArcBest Corporation Stock

Good morning, and thank you for standing by. Welcome to the ArcBest Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn it over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Good morning. I'm here today with Seth Runser, our President and CEO; and Matt Beasley, our Chief Financial Officer. Other members of our executive leadership team will also be available during the Q&A session. Before we begin, please note that some of the comments we make today will include forward-looking statements. These statements are subject to risks and uncertainties, which are detailed in the forward-looking statements section of our earnings release and SEC filing. To provide meaningful comparisons, we will also discuss certain non-GAAP financial measures that are outlined and described in the tables of our earnings release. Reconciliations of GAAP to non-GAAP measures are provided in the additional information section of the presentation slides. You can access the conference call slide deck on our website at arcb.com in our 8-K filed earlier this morning or follow along on the webcast.

And now I will turn the call over to Seth.

Thank you, Amy, and good morning, everyone. I'm pleased to report a strong second quarter with meaningful improvement in both earnings and operating margin. These results demonstrate the progress we are making across ArcBest as we execute our strategy, improve the customer experience and operate with greater efficiency and discipline. Our performance reflects disciplined pricing, growth in tonnage from a heavier freight profile and efficiency gains. Just as important, we continue to advance the strategic priorities that will strengthen ArcBest for the long term from simplifying how we go to market and operate to expanding our digital capabilities and investing in the service and expertise our customers value. Matt will walk you through the financial results in a moment.

But before he does, I want to provide you some perspective on the market environment and highlight the actions we are taking to build on this momentum. Industry capacity has continued to tighten as truckload supply exits the market. Truckload spillover into LTL contributed to modest volume gains and higher fuel prices increased revenue across the industry. We have not yet seen a broad-based inflection in industrial demand. However, recent manufacturing indicators have been encouraging with PMI readings remaining in expansion territory.

Taken together these dynamics point to an environment that is gradually improving. And while conditions can shift quickly, we are optimistic about the direction of the market, while remaining disciplined in how we manage our business and allocate capital. Against this backdrop, we continue to prioritize growing profitably, maintaining yield discipline, improving productivity, enhancing the customer experience and advancing our technology road map. These efforts are contributing to our results today and reinforcing our confidence in the long-term targets we outlined at Investor Day.

None of this progress would be possible without the dedication of our employees. Throughout the quarter, our teams delivered the reliable service, responsiveness and expertise our customers depend on. Their focus and consistent execution helped customers navigate an evolving environment and reinforce the trust ArcBest has earned over more than a century. I want to thank each of them for their continued commitment to our customers and to one another. That commitment to customer experience and execution is central to our strategy, and it shaped how we designed and built ArcBest View. Launched during the quarter, ArcBest View is our new digital logistics platform, bringing quoting, booking, shipment visibility and reporting together in one intuitive experience.

The platform gives customers a streamlined, modern way to manage their logistics needs with access to our supply chain experts when those needs become more complex. Customer engagement continues to grow, reinforcing our belief that ArcBest View can improve the customer experience, increase digital adoption and enhance productivity for both customers and our teams. The same focus on customer experience and execution is also shaping how we operate internally. Earlier this month, we announced organizational changes designed to simplify how we go to market, strengthen coordination across the company and align our teams more closely around customer needs and operational effectiveness.

As part of these changes, we are consolidating our brand structure, streamlining our organizational structure and closing select service centers in smaller markets. The affected facilities represent approximately 1% of total doors in the ABF Freight network and their operations will be consolidated into nearby locations. Collectively, the organizational changes are expected to generate approximately $40 million in annualized cost savings, while improving our ability to serve customers and scale for future growth. These were difficult decisions, particularly where employees and communities are affected, but they are necessary to create a simpler, more efficient and more competitive ArcBest for the long term.

Taken together, these changes strengthen how we go to market, how we operate and how we serve our customers. Along with the launch of ArcBest View and the continued execution of our strategy, they position ArcBest to grow profitably, deliver premium experiences and build on more than a century of trusted service. I want to emphasize that these actions do not represent a change in our strategy or our long-term financial targets. Rather, they reflect the next step in delivering on them.

Now let me highlight the progress we made during the quarter against our key strategic priorities. In our Asset-Based business, we continue to execute with discipline, balancing service, freight selection, pricing and network efficiency to support profitable growth. Improving market conditions contributed to tonnage growth, while our teams remain focused on moving freight through the network more efficiently and delivering the reliable service our customers expect.

Technology and data are strengthening that execution. The continued expansion of our dynamic quote pool gives us greater visibility into demand and enables faster, more informed pricing and shipment decisions. This capability helps us be more selective about the freight entering our network, improve freight mix and align available capacity with the opportunities that create the most value. We also maintained strong pricing discipline during the quarter. Our general rate increase and negotiated customer renewals reflect the value of our service and our continued focus on revenue quality.

Importantly, pricing remained resilient despite higher weight per shipment, which typically places pressure on revenue per hundred weight. Managed Solutions delivered another exceptional quarter with daily shipments reaching a record high. Its performance reflects a strong pipeline, expanding customer relationships and growing demand for tailored integrated logistics support. Managed Solutions continues to differentiate ArcBest in the marketplace and represents an important source of growth across our portfolio. We are also making meaningful progress against our technology road map with AI playing an increasingly important role in how we operate and serve customers. Our approach is deliberate and closely aligned with our strategic priorities.

We are focused on practical applications that create differentiation, improve the customer experience and enable our people to accomplish more. Initiatives such as city route optimization and AI-enabled capacity sourcing are already delivering productivity benefit. As we expand these capabilities, we will continue to apply AI where it can strengthen our people and processes, improve decision-making and support profitable growth. As we move forward, we remain committed to making ArcBest simpler, faster and easier to do business with. That means continuously reducing complexity, improving how our teams work together and aligning resources around the priorities that will matter most to our customers. These actions are sharpening our execution today and enabling us to build a more agile, more scalable organization, one that is well positioned to deliver long-term shareholder value.

With that, I'll turn the call over to Matt to walk through the financial results.

Thanks, Seth, and good morning, everyone. Our second quarter results reflect an improving operating environment and disciplined execution of our strategy. Stronger pricing, higher weight per shipment, continued growth in managed solutions and efficiency gains drove meaningful sequential improvement in operating performance and reinforced our confidence in the long-term financial targets outlined at Investor Day. Higher fuel prices also benefited the quarter, although we view that as a near-term factor rather than a contributor to our long-term targets.

Before reviewing our operating results, I want to provide additional financial context on the actions Seth outlined to simplify our organization, improve our cost structure and strengthen our operating model. These actions include organizational and facility changes, consolidation of our brands and the discontinuation of the Vaux freight movement system. Collectively, we expect the action to generate approximately $40 million in annualized run rate cost savings. In connection with these actions, our second quarter GAAP results include $76.5 million of noncash impairment charges related to the Panther trade name and Vaux equipment and other assets.

Separately, GAAP results included an $8.8 million noncash impairment related to office space in our Asset-Light segment. We also expect to incur approximately $6 million to $7 million of cash costs primarily for severance and employee benefits and the disposal of Vaux equipment, with most of that expected to be recognized in the third quarter. These impairment charges and other related costs are excluded from the non-GAAP results I will discuss today.

Turning to our consolidated results. Second quarter revenue was $1.2 billion, up 16% year-over-year. Non-GAAP operating income was $74 million compared to $45 million in the prior year period, and adjusted earnings per share were $2.38 compared to $1.36 in the second quarter of 2025. At the segment level, Asset-Based non-GAAP operating income improved by $21 million year-over-year, while Asset-Light generated non-GAAP operating income of $6 million, a $5 million improvement from last year.

In the Asset-Based segment, second quarter revenue was $784 million, up 10% on a per day basis. ABF's adjusted operating ratio improved to 90.8%, 200 basis points better than the prior year period and 650 basis points better sequentially. Daily tonnage increased 5% year-over-year, reflecting an 8% increase in weight per shipment, offset in part by a 3% decrease in shipments per day. As Seth mentioned, the continued expansion of our digital quote pool is enabling greater selectivity in the freight we bring into our network, supporting higher weight, operationally efficient shipments that contribute meaningfully to profitability.

We are also seeing a modest increase in truckload-rated shipments, which is further contributing to the higher weight per shipment during the quarter. Billed revenue per shipment increased 13% year-over-year, supported by the heavier freight profile and a 4% increase in revenue per hundredweight, which primarily reflects higher fuel surcharge revenue. On the cost side, operating expenses increased for several reasons, including annual contract increases in union wage rates, higher fuel prices and purchase transportation expense and increased depreciation expense associated with our equipment investments.

In July, Asset-Based daily tonnage increased 8% year-over-year, driven by an 11% increase in weight per shipment and partially offset by a 3% decrease in shipments per day. The higher weight per shipment continues to reflect changes in freight profile. Billed revenue per shipment increased 10% year-over-year, primarily reflecting the heavier freight profile, partially offset by a 1% decrease in billed revenue per hundredweight. Excluding fuel surcharge, revenue per hundredweight declined in the low single digits, primarily due to changes in freight profile. Historically, ABF's adjusted operating ratio has, on average, remained relatively consistent from the second quarter to the third quarter, excluding periods affected by the COVID-19 pandemic and the bankruptcy of a large LTL competitor.

Based on current trends, we expect ABF's third quarter 2026 adjusted operating ratio to be generally in line with the second quarter. Our outlook assumes lower fuel surcharge revenue, partially offset by expected savings from the restructuring actions.

Turning to Asset-Light. Second quarter revenue was $439 million, up 28% on a daily basis year-over-year. Shipments per day increased 15% as strong growth in Managed Solutions continued. Revenue per shipment improved 12%, reflecting higher rates associated with tightening capacity and increased fuel costs. We also made meaningful progress on productivity and costs. Selling, general and administrative expense per shipment declined 12%, driven by productivity initiatives and the higher mix of managed business, which carries a lower cost to serve.

Employee productivity reached another record with shipments per person per day increasing 35%. Together, the improvements in revenue, yield and productivity resulted in Asset-Light non-GAAP operating income of $6 million for the quarter, a $5 million improvement from the prior year period. In July, Asset-light daily revenue increased approximately 28% year-over-year, driven by a 19% increase in revenue per shipment and a 7% increase in shipments per day. Higher revenue per shipment reflects a stronger pricing environment, including the effects of higher fuel surcharge revenue and tightening truckload market capacity. Shipment growth was led by the Managed Solutions business.

Looking ahead, we expect third quarter non-GAAP operating income of approximately $6 million to $8 million. This outlook reflects continued pricing discipline, productivity improvements and anticipated cost savings from our restructuring actions.

Turning to capital allocation. Our priorities remain unchanged. We will continue to invest selectively in opportunities that support profitable growth and attractive long-term returns, while maintaining a strong balance sheet and financial flexibility. Returning capital to the shareholders also remains an important part of our balanced approach. Overall, our second quarter performance demonstrates the progress we can make as market conditions improve and we execute with greater efficiency and discipline. We are encouraged by the improvement in industry fundamentals, the progress across both operating segments and the actions underway to improve our cost structure. Combined with our strong balance sheet, these factors reinforce our confidence in our ability to drive profitable growth and make continued progress towards the financial targets outlined at Investor Day.

With that, operator, we are ready to open the call for questions.

So your first question comes from the line of Brian Ossenbeck of JPMorgan.

Just a quick clarification first for Matt. I know the fuel impact is transitory, but what was the impact in the quarter for ABS OR? And sort of where do you expect that to be in 3Q? Has that sort of wash itself out? And then just stepping back, looking at the trends into July, it seems like they're accelerating across the board for ABS. So it doesn't sound like you're seeing or expecting a big inflection or getting a lot of truckload spillover just yet. So what do you think is causing that? And how do you feel about your ability, capacity to continue to grow here while maintaining service or even improving it?

Yes. Thanks, Brian. I'll get started on your second question and then turn it over to Matt on fuel to answer some of that. So the way I think about July and just our third quarter outlook is really we look at our historical trends and tonnage generally sequentially from June to July decreases about 4.6%. We're down only about 1%. Shipments generally decreased less than 0.5%, right around 0.5%. We're in line with that. Weight per shipment generally goes down about 4.1% in our history, and we're down about 1%. So that's all good signs that we're seeing improvement in the sequential trends versus history.

When we look at our dynamic shipments, they are trending a little heavier, which is contributing to that stronger tonnage. A lot of that has to do with the mix that we've seen as we've expanded that quote pool like we talked about at Investor Day. So, we really expect ABF's third quarter adjusted OR to be generally in line with the second quarter, which aligns with history. And like we said in our prepared remarks, that outlook really reflects lower fuel surcharge revenue. We have unionized wage increases in HWP in July. We have some nonunion increases going in as well. So -- but it also reflects the savings from those restructuring changes that we talked about. Really, the reason that we did the restructuring changes is to simplify how we operate, make it easier for customers to do business with and ultimately accelerate that profitable growth and the cross-sell opportunities that we have.

When I look at our pipeline, it continues to be strong. When we see PMI and the different indexes, it's showing some underlying positive things, but we just haven't seen that demand show up yet. But really, the way I look at it is we focus on things in our control, and we're positioned to take advantage in any environment. So I'll turn it over to Matt to talk about fuel.

Yes. Hey, Brian, so just thinking about the first quarter to the second quarter sequential change, just looking back at continued history, we always see meaningful improvement from the first quarter to the second quarter, about a 350 basis point improvement on average. Certainly, with the dramatic rise in diesel prices during the second quarter, that did have an impact on our revenue, but certainly also had an impact on our cost structure as well. And it does impact items even above and beyond the -- just the cost of fuel certainly carries over to purchase transportation, other maintenance costs that we're seeing. There were also other nice drivers for the quarter, including the improvement in weight per shipment that we talked about on the call, certainly pleased to see that trend. The nice pricing performance that we saw for the quarter was also an impact.

And then just saw continued improvements on the productivity side, if you look on a sequential basis from the first quarter to the second quarter, which is generally what you see just as we move out of weather impacts in the first quarter and see just more shipment density in the second quarter. So a number of different contributions for the quarter that I would highlight, but fuel was definitely one of them.

And sorry, how should we think about that in 3Q? Just kind of a similar factor just going the opposite direction where fuel maybe becomes a bit of a headwind, but you still have all these other tailwinds. So, just thinking it more holistically.

Yes. So we're always looking at the outlook for fuel prices. So we look at the short-term energy outlook from the Department of Energy. We also look at futures prices just to get an idea of where the market is headed. Certainly, that has moved back and forth here over the last couple of months. Just based on our latest read as we were setting guidance, it looked like we're going to be down a little bit in the third quarter on prices versus what we realized in the second quarter. We did bake that into our outlook. But even when you take that into account, we still feel comfortable with the flat guide that we gave for flat sequential performance for the Asset-Based business.

Your next question comes from the line of Ravi Shanker.

This maybe a 2-parter as well. Seth, first for you, can you just unpack the trigger for the action -- the restructuring actions right now on the cusp of the cycle and especially focus on the Vaux retirement because I know that was a big initiative for you guys. And kind of Matt, as a follow-up, just with the PL talking about the potential for getting the biggest rate increases ever, what do you think is the opportunity for you guys to kind of push on yield? Do you think you can get maybe pushing double-digit rate increases kind of going in the next bid cycle?

Hey, Ravi, thanks for the question. This is Seth. So the organizational changes that we announced a few weeks ago, really, they were designed to simplify ArcBest improve efficiency, enhance the customer experience and really allow us to deliver on long-term profitable growth. So, I said it in my prepared remarks, it's not a change in strategy. It's really an acceleration of what we outlined at Investor Day and really reflects that next phase in building a more integrated, scalable and efficient company. So, over our history and throughout this entire freight recession, we've continued to invest in technology, process improvement, commercial transformation and our people alike. So these recent actions really allow us to capture the full value of those investments by simplifying how we go to market, and we believe it's also going to improve the customer experience.

We're bringing the brands together like we talked about. We're also streamlining portions of our organizational structure really to reduce duplication, improve decision-making, standardize some of those best practices and really better align our resources around the highest value opportunities. So, when you look at the actions that we took, we think it's going to improve customer experience and efficiency, like I said. And then the action on the ABF side, where we reduced about 1% of total doors, we still have 8% more doors than we had in 2021. So we believe we're still positioned for growth as the market starts to inflect positively. So we really believe these actions are about just creating a simpler ArcBest, improving customer experience, increasing efficiency and really positioning the company to deliver long-term sustainable growth and long-term shareholder value creation and it really enhances what we outlined at our 2028 Investor Day target.

So then Matt, I'll turn it over to you.

Yes. So Ravi, looking on the truckload rate side, I would say your comment about double-digit increases. I'd say that's generally in line with our near-term expectations, low double-digit increases. Certainly, we're very pleased with the Asset-Light performance that we saw for the quarter with over $6 million of operating income, a $5 million year-over-year improvement. We are seeing some of those benefits from higher truckload rates, accruing to the benefit of expedite. Certainly, that tightening capacity is really helping demand for expedite services, the margins that we're seeing in that business. We are seeing those prices coming up in our truckload business and seeing some of the impacts there, particularly as it relates to our contractual business. And then just the continued growth in Managed Solutions has been a big help in that business as well.

Your next question comes from the line of Chris Wetherbee of Wells Fargo.

Maybe if you could touch on the pricing environment a little bit. I know, I guess, yields ex fuel are down a bit, but clearly, different freight profile, weight per shipment up significantly, and we're seeing some of the volume dynamics maybe come in a bit better than seasonality as you noted for the month of July. So can you talk about sort of pricing and how you think about the direction here? Are we seeing a degree of improvement? I know contractual rate increases is one measure to look at. So how do you think about broadly pricing?

Yes. Hey, Chris, this is Eddie. Yes, I mean, we're really happy with where we are from a pricing standpoint. If you think about where we were last year and how we really started to focus on improving our LTL margins, we started seeing that show up in the first quarter. And as we went into the second quarter, really excited to see that 5.8% annual negotiation increase number. We also implemented a general rate increase on June 22nd of 5.9%, and that's holding very well. You did point out that when you look at revenue per hundredweight, it shows slightly down, and that's really just a story of business mix and a heavier profile that's showing up in our system. Obviously, we do feel like we can continue the momentum that we have right now, and that's really our expectation as we go into the third quarter.

And your next question comes from the line of Jason Seidl of TD Cowen.

I want to go back to the spillover business from the truckload side. If we look back, how much in terms of tonnage growth do you think you lost over the last couple of years, just so we can sort of try to conceptualize what there is the gain going forward? And then the other question I have is related to sort of the historical MoLo business. What changes have you guys made sort of post the Scottish Montgomery decision? And how should we think about insurance costs going forward?

Hey, Jason, this is Seth. I'll take both of those questions. When we think about the truckload migration to LTL, we're seeing modest improvements there where that freight is coming over. It's hard to give you an exact gauge of what the total or historically what that's going to be. Generally, we look in the shipments that weigh heavier than 10,000 pounds, and that's where we're seeing some improvement in that space. But as truckload capacity continues to exit the market as carriers continue to be pressured by margins, the Montgomery case, elevated fuel prices, all the things that you just mentioned, we believe a lot of those certain heavier, more complex shipments that historically have moved in an LTL network will start to shift back, and we're seeing the early signs of that.

When you think about truckload multi-stops, that's just not in their wheelhouse, especially when freight rates improve. So I'm really pleased that we've continued to invest in our network, our fleet, our service capabilities throughout this entire cycle, which I think really positions us great for when the freight patterns start to normalize and those opportunities really do start to shift back to us. So while it's still early, we believe the combination of that tightening truckload capacity and just improving freight fundamentals overall is going to make it so it's going to shift that freight back over to us.

In terms of Montgomery and everything that's going on there, it's obviously an evolving situation. Really, to me, the Supreme Court decision provides just that additional clarity around the legal framework for broker carrier selection and claims and reinforces the importance of strong safety, freight compliance, carrier oversight practices across the industry. We think that's going to take some time to develop as insurance providers and shippers and carriers and brokers, everybody just evaluates the ruling and determines whether any changes to requirements, contracts, things like that are necessary. But safety and disciplined carrier selection has always been a part of ArcBest and how we operate.

We maintain really a structured risk-based approach to third-party carrier onboarding and qualifications. We have ongoing monitoring to make sure that everything is on the up and up. And we believe those are important capabilities when we partner with our customers in managing our risk and their risk. So, when you think about over time, it's really going to favor organizations that have well-established processes like ArcBest, have scale, have technology and dedicated risk management teams, which we have all of those things. So there's going to be continuing discussions around insurance costs and litigation trends, and I think we're still a little early there. But we've been doing it the right way for a long time with strict processes around carrier vetting. So at this time, we don't expect any change in our outlook and what we're doing. We're going to continue to monitor as the landscape evolves.

Your next question comes from the line of Jordan Alliger of Goldman Sachs.

I'm not sure if you discussed this fully. But on the restructuring plan, can you talk about the expected pacing of the realization timing? Is there a spread of that $40 million between Asset-Light and the less than truckload that you could talk about? And then is this augmentative to your longer-term targets from the Investor Day?

Hey, Jordan. It's Matt. So yes, I'll walk you through that at a high level. So in terms of the realization, we realized about $2 million of that cost savings in the second quarter. We expect to recognize about $6 million of that in the third quarter. And then we expect to be at that full run rate of $10 million a quarter or $40 million a year by the first quarter of 2027. And then just thinking about how that breaks down across the business of the $40 million, about 75% of that is associated with our asset-based business. Then on that remaining 25%, about 80% of that is associated with the Asset-Light business and then a small amount around $2 million is associated with our Vaux operation. And as you probably recall, those are expenses that we have historically removed from earnings on a non-GAAP basis. And so just thinking about non-GAAP impact, the non-GAAP impacts -- full impact is going to be around $38 million with the majority of that again concentrated in the Asset-Based business.

And then when you think about our long-term targets, I would say these actions that we're taking really just further our view on the achievability of those targets and they're really more in support of them than something that we're viewing as incremental to them.

Your next question comes from the line of Scott Group of Wolfe Research.

So, I wanted to get your perspective on the revenue trend, right? So April was up 11% and then plus 9%, plus 8%, July up plus 7%. So decelerating a little bit. Is the fuel dynamic at play? Maybe like can you talk to this like revenue per day trend ex fuel? I don't know, just any color or thoughts on the trend?

Hey, Jordan, hey, Scott, sorry about that. Yes, when I look at revenue per day, I really try to go back to my customer conversations that I've had and what we're hearing from them. And really, we're not hearing as much about tariff action or all that different stuff. It's really around oil and diesel prices, manufacturing, inflationary impacts housing construction continues to be weak. So, we're seeing customers who are increasing very strong revenue and then some that are declining. So it's kind of a mixed bag as we go out. Overall freight demand continues to be kind of muted, like we said, but we do have a very healthy pipeline, which makes me feel great. As that truckload capacity comes out of the market, we've had more and more customers come to us and talk about our supply chain solutions, which is why we saw incredible growth within our Managed Solutions segment. And that really feeds all of our service lines, whether it be asset-based, truckload, expedite, all those different areas. So there is no change in the dynamic philosophy and what we've gone to market. The percentages are about similar to what we saw in the first and second quarter. But as we've expanded that quote pool, we've ended up having better freight selection. As that quote pool gets bigger, we need the same amount of shipments that ultimately allows us to select the best shipment for the network that's not only the best shipment to fill empty miles, for example, but also the most profitable.

So that's where that mix and the heavier weight is coming from. But as we talk to our customers and as I see the pipeline results continues to strengthen, that's why I was really happy about the ArcBest View launch because that's going to improve the customer experience, digital engagements, all those different things. So really, the way I look at this is we've built the company for any environment. We've invested through the cycle. We continue to invest and that positions us to say yes when the market does inflect, but [ help there ].

Yes. And Scott, maybe I would just add, really not a significant change when you look at the year-over-year from June to July. We were up revenue per day around 7.9% in June, and we were there right at 7% in July. And there were -- there are some dynamics that are moving in different directions. Certainly, fuel is one where we saw that move lower a little bit, particularly earlier in the month, but we're pleased to see that weight per shipment has continued to strengthen. So we were at 8% year-over-year in June. Now we're at 11% year-over-year in July. And so it's nice to see that both on the core business and through the transactional business, some of those heavier weight shipments coming back in, which certainly has been helping our revenue per shipment metrics.

And your next question comes from the line of Bruce Chan of Stifel.

I just wanted to get at some of the mix impact questions from a different angle here. I don't know if you can just remind us of what the dynamic mix looks like versus the core LTL volume and whether there's any target that you want to manage to? And then I don't know if you can share it, but any differences maybe in the volume or pricing trends that you're seeing between those 2 kind of segments of the market?

Thanks, Bruce. This is Seth. Yes, when I look at our percent mix, we don't disclose the exact percentage of what we do dynamic or transactional and then versus core, but the vast majority of our business is core LTL business. And when we look at retention around those customers, it still remains very strong. They just continue to ship a little bit less because of the weaker demand environment. But as that -- as the demand environment starts to improve, we believe that's going to create some outsized operating leverage for us because we still have all those customers at great prices.

When you think about the transactional business, our dynamic business, all those different markets, it's really about helping maintain consistency in the network. We've spent a lot of time making sure that our service levels are at a great place, and we've executed on that in the second quarter. Our service is in an amazing place, and we hear feedback from our customers, our internal NPS continues to improve. So, it's really about maintaining that consistency in the network with Dynamic. But what's really important to understand, and we've said this before is, we optimize our mix on a daily basis, and it's based on profit maximization based on what the current market has given us and also available capacity there. So as we expand that quote pool, we can be more selective in real time, which in turn improves profitability like we've talked about. So you've seen the improvements that we've made over the long term, and these investments in our tools really give us greater flexibility, especially as the market turns. But we have some of the best visibility into our network that we've ever had in our history with all the tech investments we've made, and I expect further improvements as we continue to expand those capabilities.

Your next question comes from the line of Ken Hoexter of Bank of America.

So I understand you're closing some facilities, 10 LTL facilities as part of the restructuring. I get it's 1% doors. I think you said you're still up 8%. Maybe thoughts on where you think excess capacity is today? How should we see your ability to flex up into the up cycle, both across not just doors, but labor, physical doors and equipment? And then it seems that -- I'm going to ask 2 at the same time, but tons per day are outpacing seasonal norms into July. Maybe thoughts on why that shouldn't support an above seasonal asset-based margin. Is it simply fuel? Or is there anything else there?

Hey, Ken, this is Seth. I'll start with that -- the capacity questions that you had. And then if Matt Godfrey has anything to chime in, he can. But we've said in the past that we really bucket capacity into 3 different areas: people, equipment and facilities. So the people side, we feel like we're in a great spot there. We can add people as needed. We have the most attractive wage and benefit package in the entire industry. So we haven't seen really any recruiting challenges. On the equipment, we've invested over the long term throughout this cycle, have one of the youngest fleets on the road, and that allows us to flex the fleet up or down based off of the demand and what the customer demand is.

So on the real estate side, we worked on a long-term plan that we've discussed over the last 4 or 5 years, starting around 2020, 2021, and we've added over 800 doors to the network. We continuously optimize that network day in and day out. And we did a full review of the network and determined that these 10 facilities were not needed because we could service them at nearby facilities and not actually change the service that we're delivering to our customers. So we've still added about 8% doors in strategic markets where we see growth, service or efficiency opportunities. So I would estimate our capacity is around 15% to 20% excess capacity, and that allows us to flex up or down based off of what the demand is given to us.

So Matt, I don't know if you have anything to add there?

Thanks, Seth. And yes, as you said, there's 3 legs to capacity. We look at it from an equipment, door and a people perspective. We've invested in modeling around each of those areas. So we continue to leverage our total cost of ownership model, and we understand all of our needs from an equipment basis by equipment type and by location. And so we have great relationships with our OEM partners and feel really good about where our equipment is at, our ability to secure our equipment that we desire and keep that within our projected CapEx guidance.

In a similar way, we've invested in manpower planning models, enable us to forecast our labor needs at the system and location level. And Seth already talked about what we've done with real estate, but it's a continuous daily evaluation of our network. And really, when you roll all those things up, the reason we invest in those so heavily is that it enables us to service our customers with excellence, provide that premium experience, give us opportunities for profitable growth as we work towards achieving our long-term targets.

Ken, this is Matt Beasley. Maybe just to follow up on your question about the sequential OR in the Asset-Based business. So like we highlighted, we're expecting performance generally in line with what we've seen in history. You exclude the 2023 quarter where we had just a significant impact from the LTL competitor bankruptcy and you exclude the COVID impacted third quarter in 2020. So we're generally in line. There certainly are going to be some puts and takes there. As we looked at fuel, like I said, just kind of looking at the short-term energy outlook, looking at futures prices, look like that was going to step down a little bit. So we baked that into our guide. We also -- we're going to have some offsets expecting some continued strong performance on the productivity side as we move to the third quarter.

And then we did see the continued strength in weight per shipment in July. We see that moderating a little bit as we move through the balance of the quarter. But certainly, I would say, some potential for upside if for some reason, fuel came in above kind of where we've been seeing it over the last few days or we did see just continued strengthening in those weight per shipment trends.

And your next question comes from the line of Stephanie Moore of Jefferies.

I guess I did want to circle back to a prior question and commentary on the Asset-Light side of the business. I do think we kind of lumped both MoLo and Expedited together. But maybe as we think about what's just evolving over time in the brokerage industry and certainly from a liability standpoint that might be coming post the Scottish ruling, is there anything we should be thinking about as we think about maybe the different components within your Asset-Light business and especially as you kind of address beddings or what's being -- or what processes you already have in place. So I wanted to follow up there. And then I do have a follow-up to that.

Hey, Stephanie, this is Seth. I'll start on that. And then if anyone on the team has anything to add, they can chime in after I get done talking. But I'm really proud of the team for delivering $6.3 million in non-GAAP operating income in the second quarter, especially when you consider we only made $1.5 million in all of 2025. So that's a meaningful change, and it reflects a lot of that strategic action that we've been taking. So as you mentioned, we're really encouraged by the continued truckload capacity tightening. We did hear from a lot of our customers, enterprise shippers have been responding to us positively because we have great service within the truckload side. So, we continue to see a shift towards kind of shorter-term rate increases, mini bids, things like that. So that's been interesting. But a lot of customers are really trying to mitigate their spot exposure, while protecting that strong service that they're used to.

So demand has still been relatively stable. So that's been a good thing, but tender rejections continue to be up quite a bit. So we're encouraged by all those things, but we also saw strong shipment growth really led by managed like we talk about. And a lot of that really comes from all the disruption that we've experienced really over the last 5 years, but that business had another record quarter. And when managed ends up doing what they did, it improves productivity at Asset-Light. But I'd say that improvement in Asset-Light was across the board, whether it's our truckloads solution, our expedite solution managed, productivity was up 35% year-over-year, which is just such a meaningful change. So, I'm also really excited about a lot of the things we have coming up in the future around Asset-Light. The organizational changes that we already discussed is really going to simplify how we operate, improve productivity and improve our growth. We continue to improve productivity amongst our employees across each solution, but also making sure that we're looking at the profitability of our account base. So we've been really strategic about what we do there. And then the tech road map that we've been executing on, I feel like we're probably in the second or third inning of that. We've got a long way to go. And adding Mac to the team has been just a tremendous addition to us. He has a wealth of knowledge and experience, and I think he's going to continue to help us accelerate our results.

And your next question comes from the line of Ari Rosa of Citigroup.

This is Adrian dialing in for Ari. In your prepared remarks, you mentioned that you're not yet seeing a broad-based inflection in industrial demand. Can you just help unpack that a little bit? Are you seeing strength in certain regions relative to like weakness in others, maybe some end markets outperforming others? And when you look at the back half of the year, how do you see these dynamics playing out?

Adrian, this is Seth again. Yes, I mentioned some of those comments. When we look across our customers, health care manufacturing type customers, they operate on a multi bid, multiyear bid cycle. So we're currently working with them to work through that as truckload capacity tightens. When you look at apparel and consumer brands, for example, we're just not seeing too much demand there, but construction seems to be one of the positive areas and a lot of that probably relates to the AI build-out, not so much around housing.

So, when you look at recreational vehicles, we have some customers in that space, their demand remains healthy. So it's kind of a mixed bag when you go across the board. So -- but across all these customer conversations, a lot of the conversation has been around how do we navigate this volatility, how can we mitigate cost with the rapid rise in fuel? And what can you do to partner with us because we trust you with 103 years of experience to mitigate all those things. So tariffs really haven't been much of the conversation. But when I think about how all of that translates into 2026 and the remainder of the year, I continue to have confidence in our long-term outlook and those targets we outlined at Investor Day. We don't really operate on 1 month or 1 quarter. We're really focused on our long-term success, and you do that by partnering with customers, building that trust and delivering a premium service to them.

So -- but at the same time, we recognize there's a lot going on around supply side of the market, fuel volatility, inflation, all the different things. But at the end of the day, we are focused on things in our control. We're executing our strategy. We're simplifying the organization, accelerating decision-making, expanding our technology capabilities to improve productivity and strengthening our integrated approach, which we think is going to deliver long-term shareholder value as well as long-term customer value.

And your next question comes from the line of Jeff Kauffman of Citizens Bank.

I just want to go back to Jordan's question. On the Asset-Light, when you gave the original 2028 guidance of $40 million to $70 million in adjusted operating income, were these actions that you're taking now to consolidate the business, consolidate costs anticipated in that number? Is it incremental to the number? And just a follow-up, I guess, one of the other questions, an 8% change in average weight per shipment is pretty significant. What does that look like? Is that just pallets are getting heavier because of freight mix or because demand is increasing? Or are we moving a different kind of freight that just weighs more?

Yes, it's Matt. So thinking about our 2028 target, great to have you back covering stock. So when we think about 2028 targets, particularly around the Asset-Light business, so when we laid those targets out, we did anticipate that we were going to be working on efficiency, our cost structure. We knew we had progress to make there. So that was anticipated. Just kind of looking at the $40 million in savings, about $8 million of that is attributable to the Asset-Light business, $30 million is attributable to the Asset-Based business and then $2 million attributable to the Vaux business. And the $8 million there, that is what we would consider to be baked into the 2028 targets at this point and really feel good about the progress that we've been making in the Asset-Light business, just kind of thinking about where we are year-to-date there, we're up over $9 million for the year in operating income, again, kind of a similar quarter expected for the third quarter and with our outlook of $6 million to $8 million. And then if trends continue, we could see something similar to that in the fourth quarter as well, which certainly makes for a very nice year for the Asset-Light business and certainly just continued improvement and strengthening there.

Yes. I would add to that, too. When we look at each of the segments that we mentioned, whether it's truckload, managed, expedite, all of those areas are on track with what we anticipated in the 2028 targets. And then you had a question about weight per shipment and what's going on, right, with everything. And a lot of that, when we look at weight per shipment, it really is broken down into a few different categories. Our core business, which is the bulk of our LTL shipments, those customers continue to just ship a little bit less. Now we're seeing some good things there, some early signs, but it's still too early to say, hey, demand has flipped on us. But we are seeing some encouraging things. So the bulk of our business is just down because customers are shipping less. But like I said earlier, retention is in a good spot.

Now dynamic shipments, as we've expanded that quote pool, those shipments do look a little bit different because we have more optionality to optimize the network and maximize the profit that we can achieve. So those shipments do look a little bit different. And then something that's different versus history with our business versus others is our U-Pack business is just down because housing continues to be down. Those are generally smaller number of shipments, but heavier shipments. So that continues -- no real change sequentially there. But just when you're looking at historical figures, that is having an impact. So I'd say dynamic mix is changing slightly, but we believe it's a better outcome, but the core business continues to remain pretty consistent.

Okay. And there are no further questions at this time. I will now turn it back to Amy Mendenhall for closing remarks.

Thank you to everyone who joined us today. We certainly appreciate your interest in ArcBest. Hope everyone has a great day.

Ladies and gentlemen, that concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good morning, and thank you for standing by. Welcome to the ArcBest First Quarter 2026 Earnings Conference Call.

[Operator Instructions] As a reminder, this call is being recorded. I will now turn it over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Good morning. I'm here today with Seth Runser, our President and CEO; and Matt Beasley, our Chief Financial Officer. Other members of our executive leadership team will also be available during the Q&A session. Before we begin, please note that some of the comments we make today will include forward-looking statements. These statements are subject to risks and uncertainties, which are detailed in the forward-looking statements section of our earnings release and SEC filings. To provide meaningful comparisons, we will also discuss certain non-GAAP financial measures that are outlined and described in the tables of our earnings release. Reconciliations of GAAP to non-GAAP measures are provided in the additional Information section of the presentation slides. You can access the conference call slide deck on our website at arcb.com and our 8-K filed earlier this morning or follow along on the webcast. And now I will turn the call over to Seth.

Thank you, Amy, and good morning, everyone. The first quarter brought a challenging operating environment with severe winter weather, higher fuel prices and continued uncertainty. Even so, we remained focused on what we can control, executing our long-term strategy with discipline and advancing initiatives that support profitable growth, efficiency and innovation. I am incredibly proud of how the ArcBest team responded. In a dynamic environment, they stayed disciplined, remained close to our customers and continued delivering flexible, efficient and integrated solutions to meet evolving needs. Customer demand has remained steady, and we continue to see improvement in our pipeline. While the timing and pace of a broader recovery remains difficult to predict, conditions are becoming more constructive. Leading indicators of manufacturing activity have moved into expansion, which is supportive of future freight demand. At the same time, truckload markets are showing early signs of tightening as capacity continues to exit the industry, driven in part by regulatory enforcement and higher operating costs. In our customer conversations, there's an increasing emphasis on execution, reliability and visibility, and those priorities align closely with how ArcBest serves its customers. Against that backdrop, we will launch ArcBest View in May. This platform enables customers to quote, book and track shipments across our logistics solutions through a single intuitive interface. We developed ArcBest View in close partnership with customers, and early feedback has been very encouraging. Combined with our integrated solutions and continued progress in our digital capabilities, this platform enhances our ability to help customers respond quickly, manage complexity and build more resilient supply chains. Importantly, this launch reflects a broader set of capabilities we have been intentionally building over time. Our investments in the network, technology and operating tools have strengthened execution today, while expanding what we can deliver for customers going forward. We continue to advance the initiatives we outlined at Investor Day, and our team remains focused and aligned on achieving our long-term targets. Let me walk you through our progress for the quarter. In the Asset-Based segment, daily shipments increased 2% year-over-year to nearly 20,000 shipments per day. While severe winter weather affected volumes and service earlier in the quarter, service has since normalized and remains at a high level. The investments we've made in our network, equipment and labor planning tools position us to sustain strong, consistent service through the summer months and across the balance of the year. We also remain disciplined on pricing. Deferred price increases averaged 6% in the first quarter, our strongest result since the third quarter of 2022. That reflects our continued focus on revenue quality. In addition, the expansion of our dynamic quote pool has given us greater ability to make real-time pricing decisions, allowing us to be more selective and further optimize yield and profitability. Demand for our managed solutions offering continued to build during the quarter, resulting in another record performance and double-digit growth in daily shipments. This momentum reflects a stronger pipeline, deeper customer engagements and the value our team brings as they help customers manage increasingly complex supply chains. In Truckload, we remain focused on optimizing freight mix and maintaining pricing discipline. Revenue per shipment improved meaningfully both year-over-year and sequentially, driven by a tighter capacity market, higher fuel prices and improved yield quality. Across the business, we continue to make progress on efficiency and innovation initiatives. Continuous improvement training has now been implemented across approximately 75% of the network. Teams are focused on process discipline, safety and adoption of new tools, and that work is producing tangible results.

To date, these efforts have generated $32 million in annualized cost savings, with additional benefits expected as implementation continues through the remainder of the year. We are also making meaningful progress with our city route optimization project and remain on track to complete the latest phases of deployment. This AI-enabled initiative is reducing manual work, improving route planning and increasing asset utilization across the network. Phases 2 and 3 are expected to be fully operational in the coming months.

To date, the program has delivered $15 million in annualized savings while also improving network efficiency and service. The success we are seeing with city route optimization reflects a broader philosophy at ArcBest. We start with strong ideas, test them in the business, learn quickly, refine what works and then scale with discipline. That approach is shaping how we deploy AI and is guiding the next wave of initiatives across our technology road map. Our AI strategy is deliberate and closely aligned with our business priorities. We are deploying AI where it can create meaningful operational and financial impact, and we are embedding AI capabilities into core initiatives across the organization. Just as important, we are not forcing a single solution across a complex business. Instead, we are applying the right tools for the right needs. This approach allows us to move with speed and purpose while maintaining the governance required to ensure these solutions are secure, responsible and scalable. We believe AI delivers the most value when it strengthens our people and enables better decision-making. Our approach is practical and disciplined. We are investing in initiatives with clear return, partnering externally where it accelerates progress in combining advanced technology with the network, processes and expertise that already differentiate ArcBest. Most importantly, our customers remain at the center of this work. Digital tools are helping us serve them better, while the expertise, responsiveness and reliability they expect from ArcBest remain unchanged.

Across our technology road map, including AI-driven initiatives, we are aligning resources, simplifying processes and using data more effectively to help offset inflationary cost pressures, improve decision-making and lower our cost to serve. That work is driving meaningful productivity gains across the business. In Asset-light, for example, we continue to improve how we manage and optimize buy rates, particularly as market conditions shift. Initiatives such as offer collection, automated negotiation and capacity sourcing augmentation are enabling faster, more informed decisions. Taken together, our technology and AI initiatives are strengthening our business.

They are improving how we work, enhancing operational performance and helping our best execute effectively today while building for the long term. Looking ahead, we remain focused on removing barriers and simplifying how work gets done across the organization. That means enabling teams to collaborate more effectively, move faster and stay focused on what matters most to our customers. As we continue to align and streamline our operation, we are strengthening our execution today and building a more agile, scalable ArcBest for the future. With that, I'll turn the call over to Matt to walk through the financial results.

Thank you, Seth, and good morning, everyone. In the first quarter, disciplined execution, operational focus and cost control enabled us to navigate a challenging environment while continuing to position the business for long-term success. On a consolidated basis, first quarter revenue was $1 billion, up 3% year-over-year. Non-GAAP operating income was $13 million compared to $17 million in the prior year period, and adjusted earnings per share were $0.32 compared to $0.51 in the first quarter of 2025. At the segment level, Asset-Based operating income declined by $9 million year-over-year, while Asset-Light generated non-GAAP operating income of $3 million, an improvement of $4 million from last year. Turning to the Asset-Based segment. First quarter revenue was $655 million, up 2% on a per day basis. ABF's operating ratio was 97.3%, which was 140 basis points higher than last year and 110 basis points higher sequentially. Daily tonnage increased 7%, reflecting a 2% increase in shipments per day and a 5% increase in weight per shipment. Our large and growing digital quote pool continues to improve our visibility into demand and expand our options within the network. That has allowed us to target certain heavier shipments that fit well operationally and generate attractive incremental profit contributions. Revenue per shipment increased slightly, supported by the higher weight per shipment, but that was partially offset by a 4% decline in revenue per hundredweight, which primarily reflects the shift in freight profile toward heavier shipments. On the cost side, operating expenses increased for several reasons, including additional labor needed to support shipment growth, annual contract increases in union wage rates, higher fuel prices and increased depreciation expense associated with our equipment investments. Turning to trends so far in April, shipments per day are down 1% year-over-year, while weight per shipment is up 6%, resulting in daily tonnage growth of 5%. We are beginning to see modest improvement in truckload-rated shipments, which, along with other changes in freight profile is contributing to the higher weight per shipment. Revenue per shipment in April has increased 10% year-over-year, driven by the heavier freight profile and a 4% increase in revenue per hundredweight, largely reflecting higher fuel surcharge revenue.

Excluding fuel surcharge, revenue per hundredweight declined in the low single digits, primarily due to changes in freight profile. Sequentially, from March to April, weight per shipment is flat. Shipments per day are up 1% and tonnage per day is also up 1%. Revenue per shipment has improved by about 4% due to a 4% increase in revenue per hundredweight, largely reflecting higher fuel costs. Excluding fuel surcharge revenue, revenue per hundredweight was slightly positive on a sequential basis.

Fuel impacts became more pronounced in April than they were in the first quarter, which included only 1 month of elevated fuel prices. Higher fuel costs increased fuel surcharge revenue, but they also raised operating costs across the network. While our fuel surcharge mechanisms are designed to recover higher fuel costs over time, periods of rapid fuel price movement can create short-term timing differences between when revenue is recognized and when those costs are incurred.

Historically, ABF's non-GAAP operating ratio improved by approximately 350 basis points from the first quarter to the second quarter. Based on current trends, we expect second quarter performance to improve sequentially by approximately 400 to 500 basis points. This outlook reflects continued momentum in our commercial pipeline, disciplined execution on pricing initiatives and the impact of recent fuel price movements. Turning to the Asset-Light segment. First quarter revenue was $378 million, up 7% on a daily basis year-over-year. Shipments per day increased 10% and reached a new first quarter record as strong growth in Managed Solutions more than offset our strategic reduction of less profitable truckload volumes. Revenue per shipment declined 3% as higher rates associated with tightening capacity and increased fuel costs were more than offset by a greater mix of managed business, which typically involves smaller shipment sizes and lower revenue per shipment. We also made meaningful progress on the cost side.

Selling, general and administrative expense per shipment declined 15% to the lowest level on record, driven by productivity initiatives and a higher mix of managed business, which carries a lower cost to serve. Employee productivity also reached a record high with shipments per person per day increasing 26%. As a result, the Asset-Light segment delivered non-GAAP operating income of $3 million in the first quarter. Turning to April trends for Asset-Light. Daily revenue is up approximately 24% year-over-year, driven by 17% shipment growth, led by our managed business. Revenue per shipment has increased 7%, reflecting higher fuel costs and early signs of tightening capacity in the truckload market. Looking ahead, we expect second quarter non-GAAP operating income in Asset-Light to be in the range of approximately $1 million to $3 million. This outlook reflects continued yield discipline, active cost management and improved productivity performance, which together provide a solid foundation for long-term profitable growth. Turning to capital allocation. We continue to take a balanced long-term approach that supports growth while maintaining strong financial discipline.

Many of the network, technology and productivity investments needed to support future growth are already in place. As market conditions improve, we believe the business is well positioned to benefit from improving demand without a meaningful increase in capital requirements, which should support attractive returns on invested capital. Returning capital to shareholders remains an important priority.

In the first quarter of 2026, we returned more than $10 million through a combination of share repurchases and dividends. Looking ahead, we expect to remain opportunistic with repurchases based on share price while continuing to prioritize high-return organic investments and a disciplined approach to leverage. Our balance sheet remains a significant strength. We have ample liquidity and a net debt-to-EBITDA ratio that is well below the S&P 500 average. This financial position provides flexibility to navigate uncertainty, invest where we see attractive returns and respond quickly as opportunities emerge. As Seth said, we are staying focused on what we can control, executing our long-term strategy with discipline and advancing initiatives that support profitable growth, efficiency and innovation. As we look ahead, we remain confident in our strategic direction and in our ability to deliver the long-term targets we outlined at Investor Day. With that, operator, we are ready to open the call for questions.

[Operator Instructions]

The first question comes from the line of Ravi Shanker from Morgan Stanley.

You said at the top of the call that you're seeing conditions becoming more constructive. Can you help unpack that a little bit which end markets, maybe which parts of the country you're seeing that? And do you expect that to be fairly broad-based through the course of the year?

Robbie, it's Seth. Thanks for the question and good morning. We are seeing demand trends that have started to stabilize, though overall levels still remain below mid-cycle norms. Manufacturing/ housing continues to pressure our volumes like we've talked about in the past, and that's particularly around weight per shipment, which really remains below normalized levels for the network. Despite these headwinds, we were able to grow shipments by 2% in Asset-Based year-over-year, and our dynamic shipments are starting to trend heavier as well, and that reflects some improving freight selection that we've had in the network. April tonnage and shipments have also increased sequentially. They've tracked in line with normal seasonality, and that's an encouraging sign as we move through the rest of the year. And really where our focus is, is on pricing discipline, service consistency and cost control while really staying closely engaged with our customers during this volatile time with fuel prices and everything that's going on. Capacity fundamentals continue to move in a more constructive direction, and that really provides the earliest sign of a more balanced market ahead. You've heard about the ongoing truckload carrier exits, just tighter regulatory environment, aging industry fleets, which makes me happy that we've invested in our fleet throughout this cycle. So the timing of the demand inflection still remains uncertain, but the supply rationalization is progressing, which is good. You've seen manufacturing PMI move into expansion territory these past 3 months, and that's just an important directional indicator of where freight demand is going. Housing/ automotive still is constrained, but they could improve as rate cuts and things like that happen, hopefully later in this year. So -- but as conditions normalize, our available network capacity, strong customer relationships and our pipeline position as well to capture incremental demand efficiently and productively. I've spent a lot of time with customers over these last 3 months. And really, what's clear to me is they're gravitating towards partners. They trust organizations that can bring consistency, insight and stability during times like this because it just continued to be a rapid change. And we really view markets like this as an opportunity, and we've made purposeful investments throughout this cycle to ensure we're positioned ahead of the next inflection. So in short, we're investing, listening and executing, delivering value for our customers and shareholders regardless of the broader environment.

Your next question comes from the line of Chris Wetherbee from Wells Fargo.

I guess I wanted to pick up a little bit on some of the comments you made about TL-rated freight and maybe think about the broader truckload market and what it might mean in terms of volume shift back over. It seems like maybe on the margin, you're seeing that. You noted regulatory improvement was kind of moving in your favor there. So I guess as you think about the rest of the year beyond what you've seen so far in April, I guess, what does that opportunity look like? What would you expect to see it in terms of a tailwind from a volume standpoint?

Chris, Seth here again. We'll -- I'll talk through the truckload side and then Eddie can make some comments on just some of that truckload-rated business moving into asset base. But on the truckload side, most enterprise shippers are responding positively and granting increases where needed because they're seeing what's going on with capacity. We've seen a shift in the shorter-term rate increases as well as mini-bids to mitigate our spot exposure while maintaining the service that our customers expect. And like I said in my previous comment, demand is more stable, but those supply constraints continue due to increased costs, the regulatory pressure, all those things that are going on. So spot rates are currently exceeding contract by 15% to 20%. Normalized for fuel, we've seen contract increases in the low to mid-single digits in the first quarter year-over-year. And we expect as we move through second and third quarter, it's probably going to be in the low to mid-double-digit range. This is from the truckload side. So moving forward, we're going to continue to optimize our truckload volumes to bring on profitable new business and shed some business that we can't profitably execute on. But I've been really impressed by the team. If you look at our asset lights in the first quarter, we delivered $3 million in profitability. And all of last year, we only delivered $1.5 million through all of 2025. So really proud of the team and the execution there. And I'll turn it over to Eddie to talk about some of the truckload-rated shipments moving into the Asset-Based network.

Yes, Chris, this is Eddie. Just kind of mentioned this earlier, but we have seen a tighter truckload capacity market that's producing higher spot rates. And then you combine that with higher fuel prices, and we're starting to see some early signs of business push into our integrated logistics solutions and LTL. Really the first signs in our transactional markets, we're up to over 250,000 quotes a day. So we're -- we have an opportunity to get early signs of potential spillover back from truckload to LTL. It's really just given us a great opportunity to find the highest quality revenue that's in those opportunities and then deploy whether it's dynamic pricing or one of our volume quote facilities to kind of capture that business where it makes sense in our network. So I would say it's a robust spillover, but there are some early signs of some of that coming back to the LTL and our integrated logistics offerings.

Your next question comes from the line of Jason Seidl from TD Cowen.

I wanted to talk a little bit about your comment that we're sort of not yet near the mid-cycle. You're clearly getting much better pricing right now, which is pretty impressive. As we move towards the sort of mid-cycle demand stage, where do you see pricing going, all other things being equal in the truckload space?

Yes. Jason, this is Seth again. Good morning, Core LTL pricing continues to improve, and that's really supported by the rational market, the disciplined actions that we've continued to take even despite the softer environment. We expect that discipline to hold as market conditions evolve. You saw in our notes that deferred contract renewals increased 6% in the quarter. That's our strongest result since the third quarter of 2022. And that really reinforces the confidence and durability of those core customer relationships that we had. The customers are still with us, just shipping less as we've talked about throughout the cycle. So as volumes recover and capacity tightens, we expect that pricing discipline to persist and ultimately translate into further rate improvement. And also as volume improves, we expect more core business from our current customers because what I mentioned was the retention stats earlier. Now what Eddie touched on a little bit ago was our strategy for the dynamic quoted freight, it's unchanged, but its effectiveness improves as that quote pool expands like we talked about at our Investor Day. So a larger quote pool gives us more selection within the targeted freight universe, and that allows us to choose what freight fits best in our network to deliver high-quality pricing and profitability. And those shipments have trended a little bit heavier as that quote pool has expanded over the past 6 months, I'd say. As that optionality increases, we get that better pricing. But also as we look at our core pipeline, it continues to be a lot stronger. So as we get new business wins, we get flexibility to optimize mix and maximize incremental profit contribution. So -- we've had a long history of pricing discipline. We evaluate books of business based on how each account performs in the network, not a single pricing metric. And we remain focused on profitable growth, ensuring that we're properly paid for the value that we deliver. And we continue to make targeted investments in service, efficiency, enhancing the customer value proposition while improving our cost structure. And ArcBest View rolling out in May is just another example of that. The feedback has been great from our customers thus far. So we're going to continue to focus on serving our customers efficiently and make sure that we're pricing disciplined as we move through the cycle.

Your next question comes from the line of Scott Group from Wolfe Research.

So with the OR guide for Q2 outperforming seasonality, any way to put some additional color there on what's driving that? How much of that's sort of the flow-through of fuel versus maybe tonnage getting better? Just any thoughts there? And then just one more follow-up on fuel. If I look back at prior periods where we've seen such big increases in diesel costs, we've typically seen a bigger spike in Rev per Shipment trends, Rev per hundredweight trends. Is there anything different about sort of how we should think about fuel for you right now than maybe what we've thought about in the past?

Yes, Scott, it's Matt. So just thinking about some of the sequential trends as we think about first quarter moving to second quarter, really, it's across the board where we're seeing outperformance versus what we would expect. And so that's -- if you look at revenue per day, shipments per day, daily tonnage, weight per shipment, revenue per hundred weight, all of those, as we look to the current projection for the second quarter are outperforming where we see the 10-year history. And so certainly, fuel was a factor in the first quarter, some of the fuel volatility. We still would have been within our guidance range for the quarter even without the fuel changes. The fuel changes are not the primary driver of the outperformance in the second quarter. They are a driver of the performance that we're projecting, but really, it's strength across the business, both on the commercial side and on the yield side that are driving the sequential OR performance. Again, if we look at the 10-year history, we see around 350 basis points of improvement when we move from the first quarter to the second quarter. But when you take into account the strength that we're seeing, again, like I said, across the board across revenue shipments, tonnage, weight per shipment, revenue per hundredweight pricing, take all that together, and that puts us in that 400 to 500 basis points of improvement that we're projecting for the quarter.

Your next question comes from the line of Jordan Alliger from Goldman Sachs.

I just wanted to come back to sort of the weight per shipment. I know you guys have mentioned your change in freight profile and mix is a big part of it. Of course, historically, weight per shipment has often been correlated to improvement in the economy. So I'm just wondering, is some part of this weight per shipment strength that you're seeing even as we go into April related in your mind to the economy? Or is it truly just the mix shift?

Jordan, it's Seth here, and good morning, Our weight per shipment on our core business is still being impacted by just the softer manufacturing economy that can cause shippers just to reduce the shipment size like we've discussed in the past. But as I mentioned, our retention is in a great place. So we're starting to see our core business start to produce more. I mentioned dynamic shipments have been trending heavier. So that's going to impact weight per shipment. And that really is the direct result as we've expanded that quote pool, it's allowed us to be more selective in real time optimizing our yield, our network and our profile and profitability. So that increased visibility and optionality of that larger quote pool really allows us to accept certain heavier shipments that fit well within our network. In April, year-over-year weight per shipment, it's up about 6%, and that's impacted by the heavier dynamic shipments as well as a little bit of those truckload-rated shipments that Eddie mentioned earlier as well. So we're beginning to see modest improvements, but I would say it's still pretty early there. As a reminder, we're impacted a little bit more than others on weight per shipment because of the U-Pack service that we offer. With housing market where it is and interest rates, it's resulted in fewer household good moves, which are generally smaller amount of shipments, but just heavier in nature. And normally, from first to second quarter, we see our U-Pack business start to improve, but it's still below historical norms. So we got a lot of operating leverage there. So we believe that more of this truckload freight is going to move back into the LTL space as capacity normalizes in the truckload space that we've mentioned already as well. And also our pipeline within our managed business continues to grow. And as managed grows, that feeds our other service lines, and we get to select the best freight for the network. And really, we've been through a lot of cycles in our history and -- there's still a lot of uncertainty out there. But what I've been proud of the team is they focused on execution, staying close to our customers and being disciplined with price because we are built for any environment, whether it's up, down anyway, what customers appreciate in these conversations is they're able to partner with us and say, "Hey, my fuel is going up'; or 'This is going on'; or 'I can't find capacity.'; We partner with our customers because we want to say yes. That's really what our strategy is. So we have one of the best teams in the industry, and I'm confident in our ability to execute in the short term and the long term regardless of the environment that's going on.

Your next question comes from the line of Bruce Chan from Stifel.

Just a question here on the Asset-Light business. I know you've been pretty focused on productivity there. It seems like a good chunk of that is coming from the mix of managed business. Assuming that we're kicking off the cycle here, how are you thinking about shipment growth and maybe the need for additional headcount in truck brokerage? And sorry if I missed this in the opening remarks, but maybe you can remind us of what the spot contract mix looks like there, too.

Bruce, Seth again. I'll start out and then if Mac has anything to add, he'll chime in as well. But I'm really proud of the team for delivering $3 million in non-GAAP op income for the first quarter. Like I said earlier, we made $1.5 million in all of 2025. So we started out the year strong there. And we're encouraged by the continued truckload capacity exits that we've seen. We did see strong shipment growth led by Managed who had another record quarter, and that speaks to the investments that we've made throughout this cycle to position managed as a truly integrated logistics company. Operating expenses were lower, and we ended the quarter with record high productivity within asset-light and also record low SG&A cost per shipment, which all contributed to that improved productivity. This is due to the investments that we've made throughout this cycle in technology and trying to grow without having to add the headcount and also what we've done to develop our employees to make sure that they're ready for the next cycle. So shipments and revenue are strengthening in April. So we mentioned our op income range there of $1 million to $3 million in our 8-K, but we continue to take actions to adjust our cost to better align resources to match business levels. But what I'm really excited about is Mac has 3 months under his belt. He's been a huge addition to our team. We continue to work to improve the profitability of our account base. We're focused on improving productivity with technology deployments, and we're in the early stages of a lot of that. So I'll turn it over to Mac to see if he has anything to add.

And Bruce, it's Matt. Maybe just one more thing I'll add. So if you look at the spot versus contract mix that we had over the last year, it's pretty evenly split, roughly 50-50, and that's the level that we saw as we move through the first quarter as well.

Your next question comes from the line of Tom Wadewitz from UBS Financial.

So I wanted to circle back a bit. I know you had some questions on pricing environment in LTL. If we look at it and say, in fuel in 2Q, right, you've got revenue per shipment sounds like it's up pretty nicely in April, but it also sounds like a lot of that is fuel. So when do you think -- like what's the lag we should consider with the stronger the 6% contract renewals and also weight per shipment, if you think of it and say, ex-fuel revenue per shipment, right? Because it sounds like that was maybe kind of flattish if you look at April versus March. So just, I guess, more perspective on when do we see that improvement in pricing drivers flow through to revenue per shipment ex fuel what's the time lag on that?

Yes. Thanks, Tom. This is Seth, and then I'll start and then turn it over to Eddie. So I just wanted to hit on fuel a little bit because fuel surcharge is really just one component of pricing, generally protects us with our fuel surcharge mechanism as fuel price increase and then as it decreased, it protects or helps customers positively. So -- but fuel surcharge, it covers more than just fuel costs, and that's what I wanted to jump in because it's propane forklifts. -- it's rail, it's purchase transportation. It's all those other costs that I wanted to mention. So it's not just on the revenue and the freight we move, we also have additional costs there. So -- and I'll turn it over to Eddie to talk about your other question.

Yes. So I really think about from a yield perspective, this was something we really focused -- started focus on in the second half of last year. So with a really strong result in the first quarter of this year, over 6% with our increases, we're building to, I think, a better overall mix of business in our core LTL. And obviously, with the fuel prices going up, it doesn't just come with higher revenue. There's higher costs and the timing of the fuel surcharge and those costs sometimes makes it a little harder to see the benefit that would come from that situation. But overall, we feel really good about the mix of business we have. The yield discipline is strong. We're committed to continuing to improve on our prices with LTL. And what gives us confidence in that is we've had a strong growth in 2025 that's continuing in 2026. Our sales pipeline is robust and continues to be strong, especially with our managed solutions. [ We've mentioned ] several times now, but expanding flow pool is going to allow us to really further adjust our business mix to get us the most profitable business for our systems and our network. So we feel really good about where we are from a yield perspective. And even with fuel potentially changing up or down, our yield fundamentals are going to continue to stay strong.

Okay. And then if I...

Your next question comes from the line of Brian Ossenbeck from JPMorgan.

A question just on the -- maybe Matt can chime in too, just on the -- all the headlines we've seen in terms of truckload brokerage with the risks of Chameleon carriers with bigger focus coming up with the Montgomery case, of course, and how that safety risk might be extended or liability risk might be extended to truckload brokers. Just want to see if there's anything you're doing with your carrier base based on some of the recent headlines and what's coming down the pipe from potentially regulatory and even from the Supreme Court. And then if that were to go through and the court finds that the liability should be extended to the brokers, what do you think that does for the industry in general? So I know there's a lot of moving parts out there, but clearly, it looks like it's going to be something we talk about for a while. So I'd love to get your thoughts on that.

Yes, Brian, thanks. This is Seth here. So I'll answer your first question just about everything that's been in the news there. Safety has really always been fundamentally how ArcBest operates. And while the recent media attention is really focused on specific situations, we really remain focused on disciplined execution and consistent operating practices that align with the applicable laws and regulations. So we use a structured compliance-based process to select and monitor third-party carriers with ongoing visibility into authority, insurance, safety status and carriers that don't meet those requirements are not eligible to move freight for us. So the FMCSA provides this national regulatory framework for carrier safety. We operate within that, obviously, but we also invest in systems and processes that support a disciplined risk management and operational consistency. So -- at this time, we don't expect these developments to change our outlook or our approach to safety and compliance because it's already embedded in our operation and reflected in how we run the business. So our customers expect us to operate safely and responsibly, and we continue to engage in open and constructive dialogue with our customers to support their long-term growth goals. So as far as truckload capacity and what's going on with all that, when you look at the continued supply chain [ exhibits ] of the truckload factors, that's due to bankruptcies, these regulatory things that you mentioned. There's also a lot of things going on with the Lila's Law, non-domiciled CDLs. There's just a lot going on overall. So really, at the end of the day, what we do is focus on things we can control, partner with customers to navigate this uncertainty, and we believe we're positioned with our service being in a great place to lead with the great opportunities and have great conversations with our customers. So I hope that answers your question, Brian.

Your next question comes from the line of Stephanie Moore from Jefferies.

I wanted to maybe talk about your 2028 targets. Obviously, when you originally gave those targets, the macro or the underlying freight environment was in a different position than it seems to be today. So maybe just talk a bit about progress towards those targets with a bit of a firmer macro or what appears to be a freight environment. Maybe talk a little bit as you think about those targets.

Stephanie, we have confidence in our long-term view and the targets we outlined at Investor Day. We didn't expect a significant freight recovery in 2026 in those targets. So we're [indiscernible] before we anticipated, but we still need to see more consistent demand. We're encouraged by the truckload exits that we mentioned earlier and 3 positive months of PMI reading. Obviously, the war in Iran and corresponding increases in fuel could impact inflation, interest rates. But we are seeing the effects of the supply side and we look -- as we're looking for demand to continue to inflect. Really, when I think about our business across both Asset-Based and Asset-Light, our focus is building a scalable, disciplined operation that can fully capitalize not only on our initiatives, but also the operating leverage that we have within the business. So -- over the past several years, we've invested a lot in our network and technology productivity, remain very disciplined on pricing, as Eddie mentioned earlier. And as the market improves, we expect those investments to translate into greater network density, better utilization of excess capacity, more freight per stop, and that's going to allow incremental volume to flow through resources that are already in place. So at Investor Day, we outlined the earnings potential as the market inflects in our Asset-Based business, we modeled about 100 basis points of non-GAAP operating ratio improvement versus 2024 with an upside of up to 280 basis points if industrial production returns to trend and housing normalizes and truckload spot rates improve. In Asset-Light, we modeled a $10 million improvement in expedite and a $75 of net revenue per shipment per year with upside potential of up to $30 million as expedite manufacturing recovers and truckload rates normalize. And then truckload brokers, we've talked about for every $10 of margin per shipment expansion, it equates to $3.5 million of incremental profit to the bottom line. So as volumes inflect, we expect this incremental margin to improve, and we feel good that we're on pace to achieve our long-term goals that we outlined at Investor Day.

Your next question comes from the line of Ari Rosa from Citigroup.

So the connection wasn't great there, so I may have missed a little bit of that. But Seth, you've now been in the CEO seat for a few months. Obviously, the business isn't new to you, but I'd love to hear your reflections after a few months in that seat and how you're thinking about potentially things differently from how Judy was running the business. Obviously, you have the long-term targets, and we understand there's quite a lot that implies to where we currently stand. But just kind of broaden that out and talk about how you're thinking about managing the business and what your objectives are that might differ from your predecessor?

Perfect. Thanks, Ari.Good morning, Well, I want to start with that I believe in the strategy of our company and also our ability to achieve those long-term targets that we outlined at Investor Day in September. I always go back to the customer and in my customer conversations, our solutions resonate with them. We really differentiate ourselves in the marketplace as a logistics partner with assets -- and that's really different from a lot of what our competition does. And by finding ways to say yes to our customers, we feel that's going to position us well for greater revenue, profit and account retention. So really, what I've been focused on is optimizing our sales resources, putting people in the best position to succeed, win and grow business as well as grow these long-term relationships that we've had. We continue to optimize our cost structure. We've also worked to improve customer experience. And that's why I think when ArcBest View launches in May, it's really going to be differentiated in the marketplace and allow us to give out -- give our customers the information that they're searching for in a self-serve manner. So in my first 3 months in the role, I really believe accelerating our strategy will drive sustained value creation for customers and shareholders. In the environment, it's just been unpredictable really throughout the last 5 or 6 years, but -- but I can tell you why I'm confident in the future. Our strategy is sound. We've navigated this market downturn very well. We're ready for any changes that lie ahead. We have a tremendous amount of operating leverage in the business when the market does turn. This team focuses on things in their control, and we view these times as opportunities. We positioned ourselves for growth with all the investments we've made over the last 5 years as well as margin expansion with the investments in the asset-based network, technology. I just feel like we have so much opportunity in front of us, and we're seeing it through strong pipeline numbers, new business, continued acceleration of our cross-selling efforts. Our tech-enabled initiatives continue to progress at a much faster clip. I've been really proud of the tech team and what they've been able to deliver for our business and our customers. And we continue to win external awards, which to me really validate the strategy and tells me about the value we're bringing to the market is differentiated, and that's going to allow us to win in the short term and long term. So my goal is really to accelerate that progress we've already made. But I can tell you, none of this would be possible without our amazing people. So our people are the heart of our success. I spent a lot of time with our employees. I really couldn't be more prouder of the work they do for our customers day in and day out. So we feel we're positioned to deliver on our long-term targets, deliver value for our customers, which will ultimately translate to shareholder value creation.

Your final question comes from the line of Ken Hoexter from Bank of America.

So just want to talk about the stickiness of the dynamic freight a bit. Maybe in the past, you got caught with too much and you wanted -- as you wanted to switch to capacity, your own freight. Did I hear you have a newer process that enables maybe more fluidity. Maybe you could talk about the thoughts on your excess capacity now. And then I guess, to Stephanie, you mentioned that maybe things were picking up a bit faster. So I just want to understand thoughts on the time frame from the rising ISM to get that shipment growth. And given the competitive environment, I don't know if others are being more competitive and that's the impact on shipments near term. So just maybe a couple of things rolled up in there, but any thoughts?

Yes. Perfect. Thanks, Ken. I appreciate that question. I'll respond and then if any one of my team has any comments, they can chime in as well. But I'll start with Dynamic first. Our business this primarily core. So that's really where we spend a lot of our time is core published business that Eddie mentioned earlier. So the dynamic mix is what's changed a little bit, and that's really because of just the growth in the quote pool. Our actual shipment count that we're targeting is relatively consistent. It's just the mix has changed because we have a bigger quote pool and we can optimize our network. So what's important to understand, and I know I've mentioned this before, is we optimize our mix on a daily basis, and it's based on profit maximization based on current market prices and available capacity. So as capacity starts to go down, we expect our optionality to improve. And the more that we expand that quote pool, the more selective in real time we can be. And that's what I think is really important. So -- we mentioned at Investor Day, but since the inception of Dynamic, that quote pool has grown, our revenue per shipment has improved over 50% as that quote pool has expanded. And I've said this in the past as well, but our peers use 3PLs to make those adjustments, but we are the 3PL. And that's what's important to understand is being a 3PL of assets improves optionality for our customers. So as far as excess capacity and our ability to scale, we really break that into 3 buckets: people, equipment and real estate. On the people side, we've invested a lot in labor planning tools, and we feel like we're positioned to have a strong service summer as well as the remainder of the year. So we feel great about that. Equipment, we have one of the newest fleets on the road because we've been disciplined with our investments through this cycle. And then real estate, we've added over 800 doors to the network with continued enhancements ongoing. So we feel like we're positioned very well. And all these optimization efforts that we talk about as we improve productivity when business volumes do inflect, we're just going to need to recruit less people, which is good because it allows us to say yes to our customers.

That concludes the question-and-answer session. I would now like to turn the call over to Amy Mendenhall for closing remarks.

Just wanted to thank everyone for joining us today. We certainly appreciate your interest in ArcBest, and hope everyone has a great day.

That concludes today's meeting. You may now disconnect.

Good morning, and thank you for standing by. Welcome to the ArcBest Fourth Quarter 2025 Earnings Conference Call.

[Operator Instructions]

As a reminder, this call is being recorded. I will now turn it over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Good morning. I'm here today with Seth Runser, our President and CEO; and Matt Beasley, our Chief Financial Officer. Other members of our executive leadership team will also be available during the Q&A session. Before we begin, please note that some of the comments we make today will be forward-looking statements. These statements are subject to risks and uncertainties, which are detailed in the forward-looking statements section of our earnings release and SEC filings.

To provide meaningful comparisons, we will also discuss certain non-GAAP financial measures that are outlined and described in the tables of our earnings release. Reconciliations of GAAP to non-GAAP measures are provided in the additional Information section of the presentation slides. You can access the conference call slide deck on our website at arcb.com, in our 8-K filed earlier this morning or follow along on the webcast. And now I will turn the call over to Seth.

Thank you, Amy, and good morning, everyone. ArcBest delivered solid fourth quarter and full year results and I want to begin by recognizing the outstanding execution of our entire team. Over the past year, we navigated a prolonged freight recession and ongoing market volatility. Through it all, our people stayed focused and committed to our long-term strategy built around our 3 pillars: growth, efficiency and innovation. Throughout the year, we leaned into our strengths, made disciplined decisions and continued investing in initiatives that set ArcBest apart.

As a result, we delivered premium service to our customers, grew daily LTL shipment volumes, restored asset-light profitability achieved record revenue and shipments in our managed solution and advanced strategic priorities through technology and optimization projects. These accomplishments demonstrate the resilience and dedication of our team and we're confident that the strong foundation we've built positions us for continued success. We are also advancing the initiatives we outlined at our Investor Day in September which are designed to help us achieve our long-term targets and deliver greater value to shareholders. As always, our customer-first mindset remains core to our strategy. We will continue listening to our customers' evolving needs in delivering flexible, efficient and fully integrated solutions that keep them coming back to ArcBest.

With our unique focus on innovation and operational excellence, ArcBest remains a trusted partner, ready to help customers navigate whatever comes next. We're excited to officially welcome Mac Pinkerton as Chief Operating Officer of our asset-light business. Mac brings deep industry expertise and proven leadership. He will help us build on our momentum drive value for our customers and shareholders and further strengthen our competitive position in this important part of our business. And as part of our ongoing assessment of board size and composition and the skills and capabilities needed for effective oversight, we're also pleased to welcome Anne Bordelon and Bobby George as independent directors. They bring financial expertise and proven leadership in digital transformation that will further strengthen our Board. We also want to thank Kathy McElligott and Fredrik Eliasson for their many years of dedicated service. Their guidance and contributions have been invaluable to ArcBest.

Now let's review our results for the quarter. In the fourth quarter, asset-based LTL shipments increased 2% year-over-year averaging about 20,000 shipments per day, while seasonal softness and an unusually weak October across the industry impacted volumes. This year-over-year improvement demonstrates the effectiveness of our refined go-to-market strategy and our intentional focus on expanding our core LTL business. By sharpening our approach we're capturing new opportunities while continuing to deliver strong service and greater value to customers, maintaining solid yield performance remains central to our approach. In the fourth quarter, deferred price increases averaged 5%, up from 4.5 in the third quarter. This improvement reflects the strength of our disciplined pricing approach. We take a rigorous data-driven look at every accountant lane, making adjustments to ensure we're fairly compensated for the service and value we deliver. This discipline supports our long-term financial health and mutually beneficial customer relationships.

Shifting to managed solutions. Demand remains high and we delivered double-digit growth in shipments per day again this quarter. This sustained momentum highlights the value our managed offering brings to our customers, navigating today's complex logistics landscape. Truckload performance was another bright spot. Throughout the quarter, we demonstrated strong pricing discipline. Revenue per ship and increased 11% year-over-year, and gross margins on a per shipment basis improved by 17% over the same period. In addition, we grew our business from SMB customers, which diversifies our portfolio and positions ArcBest for additional growth and profitability. Throughout 2025, we made meaningful progress on efficiency and innovation, 2 pillars of our long-term strategy. Our continuous improvement training program has now been successfully implemented across approximately 60% of the network. Our dedicated team trains employees on process and safety best practices, deploys new technologies and ensures adoption of new tools. These efforts have delivered $24 million in annual cost savings.

In addition, we are actively rolling out Phases 2 and 3 of city route optimization which uses AI to reduce manual tasks, improve route planning and maximize asset utilization. Phase 2 and 3 delivered $2 million in savings last year bringing the total savings from the project of $15 million in 2025. These initiatives reflect our commitment to building a more efficient, innovative ArcBest and help offset cost inflation. 2025 was also a pivotal year for accelerating AI across our organization and advancing on our technology road map. Here are just a few highlights. In truckload, AI-powered process improvements are helping us make better decisions when covering freight and improving buy rates, delivering $2.5 million in operating income benefit last year.

Our truckload carrier portal adoption has reached 32% and more than half of our truckload shipments are digitally augmented. Over 30 AI agents now support document processing, automated protein and shipment booking across multiple channels. AVA, our AI-powered virtual agent is transforming customer service by routing inquiries, resolving common issues instantly and freeing our people to focus on more complex value-added support. Our quote augmentation projects streamlines load building and automated 120,000 e-mail quotes in 2025 and enabling faster and more efficient customer responses. Automated phone options for carriers have cut abandonment rates in half and boosted productivity. Last year, more than 23,000 carriers use our AI phone agent to cover over 7,000 shipments. Through targeted training, 15% to 20% of our office employees now consistently use AI tools in their daily work. And through AI-driven automations, we've eliminated millions of unnecessary e-mails giving teams more time to focus on what matters most.

These efficiency and innovation efforts are delivering tangible results, elevating performance across the organization and helping us counter inflationary pressures. Prioritizing these projects will allow us to grow when the market turns without adding the same level of incremental costs. And while technology is unlocking new levels of productivity, it's our talented people who make these advancements real. Their expertise, creativity and commitment continue to drive our success. As I step into the CEO role, my priorities are clear: sharpen our customer focus raise the bar on operational excellence, leverage technology to amplify productivity and maintain cost discipline that drives profitable growth. I'm excited about the opportunities ahead and honored to lead our team as we continue creating lasting value for our customers, our shareholders and our employees.

Before closing, I want to acknowledge the recent severe winter weather that affected much of the country. These conditions disrupted transportation networks across the industry and created challenging circumstances for many of our teams. I'm extremely proud of our people. They acted quickly and continue to work tirelessly to restore full network operations. Safety is our highest priority and the team has responded. Their dedication ensured we continue serving customers with the reliability they expect from ArcBest even in difficult conditions. I want to extend my sincere thanks to every team member involved in that effort. I'll now turn it over to Matt to walk through the financial results for the quarter.

Thank you, Seth, and good morning, everyone. Despite continued softness across the freight market, ArcBest delivered solid fourth quarter financial results. Our disciplined approach, operational excellence and strong execution helped us navigate a challenging environment while continuing to create long-term value for our shareholders. Let's take a closer look at our fourth quarter performance. Consolidated revenue was $973 million, down 3% year-over-year.

Non-GAAP operating income from continuing operations was $14 million compared to $41 million last year. In our Asset-Based segment, non-GAAP operating income decreased $28 million, while asset light achieved breakeven non-GAAP operating results, an improvement of $6 million over last year. Adjusted our non-GAAP earnings per share were $0.36, down from $1.33 in the fourth quarter of 2024. Turning to our asset-based segment. Fourth quarter revenue was $649 million, which was flat on a per day basis. ABF's operating ratio was 96.2%, a year-over-year increase of 420 basis points. Sequentially, the non-GAAP operating ratio increased 370 basis points due in part to 3 fewer revenue days. Daily shipments increased by 2% year-over-year and weight per shipment increased slightly, resulting in nearly a 3% increase in tons per day. This growth was driven in part by onboarding new core LTL business through the commercial efforts Seth mentioned earlier.

Revenue per hundredweight declined approximately 3% year-over-year, both including and excluding fuel surcharges. This decline was primarily driven by reduced shipment activity in the manufacturing vertical, which continues to experience softness. On the expense side, additional labor to support shipment growth, annual increases in contracted union labor rates and higher equipment depreciation and contributed to increased operating costs. In January, daily shipments increased 3% year-over-year, weight per shipment increased 5% and daily tonnage increased 8%. Both the current year and prior year periods were affected by winter weather. January 2025 saw lower weight per shipment due in part to reduced mix of truckload-rated shipments. This mix shift contributed to the year-over-year increase in tonnage and the associated decline in revenue per hundredweight. Sequentially, from December to January, weight per shipment remained consistent, while shipments per day declined 3% tonnage per day decreased 4%, largely due to winter weather impacts.

Historically, ABF's non-GAAP operating ratio increases by about 260 basis points from the fourth quarter to the first quarter, we currently expect our first quarter operating ratio to increase by approximately 100 to 200 basis points sequentially, an improvement relative to typical seasonality due in part to a softer-than-normal fourth quarter though still reflective of the current industry environment. Now turning to the Asset-Light segment. Fourth quarter revenue was $354 million, a daily decrease of 5% year-over-year. Shipments per day were up slightly as growth in Managed Solutions offset a strategic reduction in less profitable truckload volumes. Revenue per shipment decreased 6%, reflecting both the soft freight market and the higher mix of managed business, which typically has smaller shipment sizes and lower revenue per shipment. On the cost side, SG&A cost per shipment decreased 15%, driven by productivity initiatives and the higher mix of managed business which carries a lower cost to serve. Employee productivity also improved significantly with shipments per person per day, up 19%, and non-GAAP operating results were breakeven for the quarter.

For the full year, asset-light delivered over $1 million in non-GAAP operating profit, achieved record high employee productivity and reached a historic low in SG&A cost per shipment marking a strong turnaround from 2024s $17 million loss. In January, asset-light daily revenue increased 6% year-over-year. Shipment growth of 13% was led by our managed business. However, its smaller average shipment size resulted in a lower overall revenue per shipment. For the first quarter, we expect an operating loss of up to $1 million, reflecting typical seasonality in current market conditions. Despite these near-term pressures, we remain committed to maintaining yield discipline, managing costs, and positioning the segment for sustainable long-term profitability. Looking ahead, we remain confident in our strategic direction and in our ability to deliver on the long-term 2028 targets we shared at Investor Day.

When we set those targets, we did not anticipate a significant freight market recovery in 2026. Our focus remains on what we can control, driving productivity, maintaining cost discipline and positioning ArcBest for sustainable success regardless of external market conditions. Turning to capital allocation. We continue to take a balanced, long-term approach that supports both growth and operational efficiency. From 2022 through 2025, ArcBest made targeted real estate investments as part of our network facility road map, strengthening the foundation for profitable growth. These investments improve productivity enhance service quality and expanding our capacity to meet evolving customer needs. We closed 2025 with $198 million in net capital expenditures, which included $25 million in property sales.

Looking ahead, we expect capital expenditures to be below 5% of revenue, with 2026 net CapEx anticipated in the range of $150 million to $170 million. This reduced spend level reflects fewer real estate purchases and remodels following several years of targeted investments and optimization projects that have made our network more efficient. We also anticipate lower spending on revenue equipment in 2026. Our equipment purchases continue to be guided by a robust total cost of ownership model that evaluates equipment pricing and life cycle economics to determine optimal replacement cycles. With equipment costs trending higher, our analysis points to adjusting the timing of certain replacements as the most cost-effective use of capital while still ensuring reliability.

Importantly, our younger fleet and proactive maintenance program supports performance over an extended horizon even as we optimize investment level. Returning capital to shareholders remains an important priority. In 2025, we returned more than $86 million through share repurchases and dividends. We'll remain opportunistic with repurchases based on share price while continuing to prioritize high-return organic investments and maintaining prudent leverage. ArcBest balance sheet remains strong with approximately $400 million in available liquidity and a net debt-to-EBITDA ratio well below the S&P 500 average. This financial strength allows us to navigate uncertainty and capitalize on opportunities as they arrive. As our industry continues to evolve, ArcBest is well positioned to lead. Our disciplined execution, strong financial foundation and focus on innovation give us confidence in our ability to achieve the long-term targets we set.

And our people are at the heart of our success. Their expertise, resilience and dedication to our customers consistently set ArcBest apart. With that, operator, we're ready to open the call for questions.

[Operator Instructions]

Our first question comes from Ken Hoexter from Bank of America.

Matt, maybe just to follow up on some of the outlook that you set there or maybe even the January guide or targets you said this morning, tonnage up 8%, revenue under down 8%. Maybe talk about what's going on in the mix change there. You mentioned some of the truckload shipments are disappearing, but yet weight was staying the same. That was a little surprised. So maybe just thoughts on how that's adjusting and the impact to first quarter OR that you said?

Ken, this is Seth. So obviously, this past week was impacted by the strong winter storms throughout the country, and when you think sequentially from December to January, we normally see a step down sequentially. But on a year-over-year basis, we are trending slightly ahead of the historical seasonality. So last year, we had a lower mix of the truckload shipments, which really contributed to the year-over-year increase in tonnage and then the associated changes in revenue per hundredweight.

Last January, we had kind of rough weather as well, if you remember, but it was more spaced out throughout the month versus one big storm like we just experienced earlier this week. So our dynamic shipments have been trending a little bit heavier which has contributed to that stronger tonnage level. We're not targeting any more dynamic than we did in the fourth quarter, but it just continued to trend heavier with that mix there. So that kind of aligns with what we talked about at Investor Day is as that pool grows, we expected the mix to change. So our OR normally increases about 260 basis points sequentially from 4Q to 1Q. We're expecting in that 100 to 200 range that we outlined in our prepared comments. That's better than history, but also reflective of just the weakness that we see in the macro.

So we continue to look at our costs and take action to adjust where we can. We want to improve efficiency without inhibiting growth when the market does turn. That's something we've done throughout our entire history. We've invested in labor planning tools that allows us to be very agile and we're focused on the longer term and believe in the strategy and initiatives we outlined at Investor Day. Our pipeline has continued to strengthen. We got to make sure that the business we bring on is profitable. So we're working through those opportunities where we provide the value at the right price.

And really, when I think about our company, we're built for any environment because we stay close to our customers, and that's the way we've built this company is to be responsive and say, yes, regardless of the market conditions. So our customers continue to come with us -- come to us with challenges, and we're really focused on what's in our control. And we have good momentum with our initiatives pipeline and we're ensuring we're positioned for growth now and in the future.

Our next question comes from Jason Seidl from TD Cowen.

Appreciate the time. Talk a little bit about the mix that you guys always seem to have going on. When can we expect that to sort of normalize? So it's more of an apples-to-apples comparison? Or is this the new norm for you guys where you move around more the typical LTL carrier in terms of your mix?

Yes. Jason, this is Eddie. Mix has really been something and you pointed it out, has been something that's been driving our business for several quarters. Really has started when you think about the freight recession we're in our fourth year of that recession. And our business is predominantly manufacturing, industrial production tied to the housing markets. And those 3 verticals have really been impacted. So what we're seeing from an opportunity set is that business does have some softness to it. And that trade out of that business for new business is really what's driving our mix.

We have a very disciplined pricing approach when it comes to really any opportunity, we look at each account one at a time, make the best decision we can for each account . We try to manage the mix to the best we can to produce the most profit for our company, but some of it is really just back to the macro and what we're experiencing in that macro environment. So it's hard to predict when that will stabilize. But we're very committed to get the most out of every opportunity and every piece of business that we have to produce the profit that we want that supports our long-term targets.

Yes, Jason, I would add to that, that our retention has been in a great place, but our customers are just simply producing less because of Eddie mentioned there. So we feel great about our retention staff, but we don't want to lose any customers. So we invested in an onboarding team and a retention team who's focused on keeping these customers on board because the longer-term relationships we have with customers generally the better pricing we achieved with those customers.

And also, the housing market continues to be challenged with our U-Pack business and that impacts weight per shipment no changes there on a year-over-year basis, but just something we're going to continue to watch is how in improves.

Our next question comes from Ravi Shanker from Morgan Stanley.

Maybe just a clarification to kind of when you talk about the Jan trends, are you saying that they are relatively idiosyncratic to you guys just given your comps? Or do you think they're fairly industry-wide? And also maybe kind of broadly for the industry, have you noticed any change in the competitive dynamic, especially with kind of speculation that Amazon is going to potentially open up as a third-party LTL carrier later this year?

Ravi, it's Matt. So on the January dynamic, what I would say, certainly we're feeling the weather impacts that the rest of the industry is feeling, maybe something that's maybe a little bit more specific to us is just that comp for January 2025, where, as Seth mentioned, we had a little bit less of a mix of truckload-rated business in that month. Those tend to be heavier shipments that carry a lower revenue per hundred rate, but obviously a higher revenue per shipment.

And that was really just specific to some dynamics that we're in play in January of 2025 and we're at a more normalized level. In January 2026, don't really expect any changes on a go-forward basis, but it does influence the year-over-year comp. And then Seth, Randy, I don't know if you want to comment?

Yes. On the competitor side of things, we're keeping an eye on what's going on. But really, we focus on what's in our control. And what we continue to hear from customers is they're still facing that general uncertainty around the impacts of tariffs and interest rates and just everything that's going on. So the sentiment out there kind of remains cautious. But what we focus on is what we can control, as I said. And that's our go-to-market approach as an integrated logistics company aligns well with what customers are talking to us about now. And that's why we've seen that double-digit growth in managed solutions.

So we have a lot of opportunities because of the markets we operate in. We have a great potential to expand with our current loyal customer base. So we're paying attention to what's going on in the market. but we have a lot of opportunity within our control that we're focused on.

Our next question comes from Reed [indiscernible] from Stephens.

I know Mac has only been in there for about 25 days at this point, but I'm sure they've been a busy 25 days. I wasn't sure if you shared any -- I wasn't sure if you shared any insights on maybe some priorities for him coming into asset-light, given this is a big part of your guidance that you gave at the Investor Day. So just any insights early insights he has there.

Yes. Mac officially started a few weeks ago, as you mentioned, and he's hit the ground running and he's actually in the room with us today. So I'll let him turn it over to him and give his thoughts on his first few weeks here at the company.

Thanks, Seth, and thanks for the question, Reed. Only a few weeks here in here. And I would tell you right now, I'm more excited today than I was 3 weeks ago. I've had the great pleasure to work for a couple of companies. It's been around over 100 years. And I think we all know how special that is. And what it takes is a company grounded in a fantastic culture, focused on our customers, our employees, founded in innovation and creativity. And that's something that has been absolutely reaffirmed over the last few weeks. The urgency that this team has relative to improving our TSR is possible.

So excited to be a part of that. We've got competitive services and a really strong team I think we all believe the market's going to improve. Regardless of that, we got to continue to perform and grow our business. I'm more confident after the 3 weeks I've been here will meet our Investor Day targets, and I'm looking forward to making the asset-light business more meaningful in these discussions.

Next question comes from Jordan Alliger from Goldman Sachs.

So I understand that things are still soft in the manufacturing economy. But as you think ahead for this year, do you see any signposts, whether it be from customers or your own internal thoughts that perhaps we could be at least on a stable and maybe a footing from an inventory standpoint, et cetera, that could lead to a little bit of freight movement on an industry level, not an idiosyncratic ArcBest issue, what you're doing, but just a broader improved health in the demand environment as we move through the year.

Thanks, Jordan. This is Seth. I'll get a start and let Eddie chime in with any additional thoughts. But I've met with a lot of customers on the back half of last year and then also I'll be meeting with quite a bit next week as well. So in the conversations I've had, our customers still are focused on cost reduction, operational efficiency, process improvement and many customers are taking proactive steps to manage the uncertainty, including inventory repositioning supplier renegotiations, moving their supply chain around.

So some of the bright spots that we've seen in the LTL space, there's been some discretionary retail sectors, food and beverage recreational equipment. We've seen some bright spots there in truckload. We've seen that SMB growth that we talked about, and we continue to see some promise there. Expedite, life science continues to be strong for us and a growth opportunity and then when you think about just information technology and everything that's going on around data centers, that's been another part of strength. So we haven't heard much from a demand standpoint.

In Matt's prepared remarks, he mentioned how our 2026 Investor Day targets didn't expect a great macro standpoint, but that's why we're -- we go to market the way we do is an integrated logistics company. And so we can say yes to our customers, and that's what's allowed our pipeline to be in a great spot. That allows us to be selective about the freight we bring into the network. Our core business is growing. Managed Solutions is up double digits and really the opportunities are right in front of us to somewhat Max said in his previous comments, customers trust us. They look to us to navigate these uncertainties and that's why we've continued to see that growth that we've talked about. Eddie, I don't know if you have anything to add?

No. Seth, you covered this really well. I would probably just emphasize that I don't know if it's really an industrial signpost that's out there, but our success with managed solutions just gives us a lot of confidence that we're going to be able to continue to navigate through whatever the market ends up being this year. We're having great conversations. Our opportunity set is robust and we're being successful, helping our customers meet the demands of their supply chains.

Our next question comes from Chris Wetherbee from Wells Fargo.

Maybe a 2-part question here. So I guess first, maybe broader comments on the competitive pricing environment and how you guys are seeing things shaping out here as we're moving into early 2026. Obviously, industry volumes have been under pressure for a period of time? And then maybe specifically to kind of what you guys are doing from a strategy perspective around mix and volume growth. So 8% increase on the -- in January in terms of volume. I think the guide for the OR in LTL is probably about 200 basis points or so worse on a year-over-year basis.

So I guess -- is there a level of volume at this mix that starts to become more accretive from a margin perspective? I guess, how do you think about kind of refilling up the network after a couple of years of volume declines to get to the point where we're actually seeing positive incremental margins on that business?

Chris, this is Seth. I'll start on the pricing comment and then have Eddie chime in on the volume side of things. But when I look at our deferred contract renewals in the fourth quarter being up 5%, when you think about the third quarter, we were at 4.5% in the second quarter, we were -- we've continued to strengthen our yield metrics. So as we continue to see success in growing core business from those new customers that we talked about all last year, we see how it reacts operationally in our network, and then we make adjustments.

So our strengthening has -- our pricing has continued to strengthen as we've made those adjustments, and that's why you've seen the deferred numbers continue to improve throughout the quarter, and we expect that to continue throughout this year. So we remain disciplined and focused on profitable growth and making sure that we're getting paid for the value that we deliver to our customers. So we're going to continue to stay focused on disciplined pricing. That's what we're seeing in the market right now as well as discipline among our competitors. But I want to point you back to the longer-term goals, and that is that we want to achieve our revenue per shipment growth outpacing cost per shipment growth by 80 basis points per year, and that's what we're striving to do.

So we're making strategic investments to improve the value that we deliver to customers to be able to command those increases. And I'm really excited about ArcBest View launching in the middle of the year because I think that's going to be industry-leading in terms of visibility and ways to navigate your supply chain from that new customer platform. So we're very focused on it and make sure that we want to continue to get that value that we provide. And then Eddie, on the growth side.

Yes. Really on the mix, again, we actively manage our business mix and profile to achieve the best results. We haven't really changed our strategy on the amount of larger LTL shipments or transactional shipments. In fact, it's been very consistent from fourth quarter into the start of January. We did have the issue -- are really the lower volume shipments in January 2025.

I think that's really what you're seeing when you do a comparison to this January and why that really jumps out. But no strategy change. And really, it's our jobs and yield to get the most out of whatever profile business mix that we have, and we're seeing improvements in that as we go early this year and into 2026.

Our next question comes from Bruce Chan from Stifel.

A lot of conversations here about mix and especially the core business versus the dynamic now. Maybe just wondering if you can give us a sense for the mix or what the balance looks like between those 2 products in the network right now? And then maybe just a bit more generally, I don't think we've ever seen the transactional pricing tool as the dynamic pricing tool at work in an up cycle -- just thinking through that scenario, maybe in a hotter market, is there an opportunity to see a pricing tailwind for that business or even prioritize it over for?

Bruce, this is Seth. So our business is primarily core. We don't disclose the specific mix between transactional and core. It fluctuates from time to time. But as Eddie said, there's no strategy change especially when we look at our sequential numbers there. So transactional business really helps us maintain consistency in the network and allows us to be positioned when the market turns.

So our core business continues to increase. We feel great about our pipeline, and we have multiple wins throughout the business. So we're going to continue to focus on that profitable growth and mix management. But what Eddie said, we optimize our mix on a daily basis, and it's based on profit maximization based on the market prices and what available capacity is. So since launching Dynamic, our price per shipment has increased by 50%. We outlined that at Investor Day. So as that pool grows and you need the same amount of shipments in your network, generally, what happens is the price improves.

Now to your point, we have not had dynamic pricing in a good market environment. But what we expect is our core business that we have good retention on, the price will continue to improve on that business as customers just ship more, and then we're able to have the dynamic actually because the market is better, improve the pricing on that side as well. So a majority of our shipments are published. The dynamic mix has been consistent and we think as the market improves, both sides are going to benefit us.

Yes. The only thing I would add, this is Eddie. In an up cycle, we do believe that our core business we would see growth in it, and that growth could come a little choppy at times. It can be big in certain markets, especially driven by certain customers who are experiencing an up cycle faster or harder than others. But the great thing about dynamic is that's going to allow us to really fill in our network where we need, smooth out that choppiness and allow it to really optimize our profit even more. So we would love to have an up cycle with the amount of dynamic quotes that we have today, it would really lead to a more profitable situation for us.

Our next question comes from Brian Ossenbeck from JPMorgan.

Just wanted to see, I guess, Seth how the operations are right now after the big store, I guess, maybe another one coming. But how has the recoverability been just operationally? And do you feel like there's some volume that's lost is not coming back? Or have you seen that start to come through after the disruptions? And then just maybe as well, just to comment for the full year and maybe the next couple of years, when you think about the footprint you have now, obviously, the CapEx is coming down. It seem like that's more or less equipment. But want to see how you're feeling about the door count, the positions you have in different markets and how that might change for this year?

Yes. Thanks, Brian. I'll start with the weather question, then I'll turn it over to Matt to talk about door count and where we're at from a real estate standpoint. But we always have weather every year or natural disasters and our focus is on our people and making sure that they're safe. We communicate with our customers. We work through any potential disruption that we have. We did see more weather events in December than historically and that challenge productivity a little bit, but we navigated those events well and service our customers with excellence.

So the first 3 weeks of January, we were trending actually much better than last year because of the weather events last year. But the storm we saw this week was a very large one. In terms of service center impact, we think it's going to be one of our worst Januaries in terms of service center closures and the FMCSA actually issued a 40-state waiver that waive dollars of service regulations, which speaks to just the size of the storm. So we dynamically adjust our network to optimize freight movement as part of just regular operations and we lean into those abilities during this time of disruption.

We talked a lot about the tools we've invested in. And the past 2 winters, we've been able to use those tools to navigate it better than any point in our history. So the investments we've made in recent years and expanding capacity in the network, optimizing our equipment and our fleet that allows us to navigate these storms much more better. So we continue to communicate with customers to make sure that they know where we stand in terms of restoring full network operations. The OR impact it's baked into our guidance that we provided the cost from that. We still have some potential costs as we're still kind of early stages on the cleanup.

But we get winter weather every year. It's in our historical numbers, and we feel like we can outperform it with the tools we've invested in. I'll turn it over to Matt to talk about the real estate investments and where we sit from a capacity standpoint.

Thanks, Seth. And just before I talk about on the real estate side, I want to echo Seth's comments from earlier and really thank our people for their dedication and efforts during these significant times of disruption. As Seth said, we really prioritize safety and our teams have done a tremendous job over the last week, keeping our people safe communicating with our customers and working to restore normal operations so we can deliver a premium and efficient service for our customers.

So as we've talked about over the last year, we've added nearly 800 doors to our real estate network. And we feel really good about where we're at from a capacity standpoint. I'm excited that we have a couple of projects that are wrapping up here as we move throughout the first quarter. specifically in Denver that will add significant capacity in that market for growth and provide us a better operational standpoint to operate with efficiency in that market. So we've been able to be very strategic over the last few years with our investments, and those have been a mix organic builds and new builds in our network and also taking advantage of real estate opportunities in the market.

And so just to kind of come back to that, we feel really good about the capacity. We feel really good about what that's done to provide opportunities for growth with our customers, allow us to be more efficient. And we'll continue to evaluate opportunities as they arise and be strategic with the investments that we make so that we can put ourselves in position for further growth.

Our next question comes from Stephanie Moore from Jefferies.

Maybe touching a little bit on the AI initiatives and other productivity investments that you've made over the last several years. I just wanted to think about it on both an asset-based and asset-light side. If you how you're thinking about leveraging those investments in a recovery? And are you approaching an up cycle differently based on those actions?

Thanks, Stephanie. This is Seth here. I want to start with mentioning how we have a very talented internal tech team who spend dedicated time research and innovations, testing them to see what's going to have the biggest impact on our business. And customers need us to run our business efficiently, and we see AI as an option to make that happen. So we see tremendous potential around automating processes with human-assisted interactions.

And although technology is important, and we're going to talk about it quite a bit, we've always been a tech-forward company. people are who make it happen. So having our people at the center of everything is really important to me. I mentioned a lot of examples in my prepared remarks of projects that we're working on and potential benefits. We're early stage in a lot of that. I view 2025 more as a foundational year for us as a from an AI perspective, and we're going to continue to evaluate where AI makes the most sense as well as any technology. Ultimately, first, you have to understand the processes. And then if the processes are right, you use AI to improve them. And you also have to make sure your data is in a good spot.

So we invested in our data team back in 2018 and having good data as a strategic advantage for us, and that's why we outlined what we did on our technology road map at Investor Day. So -- and all of our AI initiatives aren't managed separately, they're part of every single initiative that we have. So when you think about everything that we've done for asset-light asset base from an AI perspective, I think that's only going to accelerate. Ultimately, what that does is it allows us to scale without adding the incremental cost when the market does come back. So I feel like we continue to make progress there, but we're still early stages on a lot of this. Many of the examples I gave in my prepared remarks, we're in the pilot stage, and we're looking forward to a full rollout as we move into 2026.

Next question comes from Tom Wadewitz from UBS.

So I guess I'll maybe just give you 2 questions. So one would just be on pricing dynamic in the market. I think you talked about that pricing that you're realizing it's gotten a little bit better in the last couple of quarters, which is great. But do you think competitive environment in LTL is pretty stable, maybe similar to where it was a year ago? Or you think it's getting a little bit tougher as you're later into a downturn?

And then maybe just if it's okay, I'll maybe ask another one of Mac, just whether he has any kind of high-level thoughts on kind of how asset-light competes, how you fit in the market, what might be good leverage for growth?

Tom, this is Eddie. Yes, I mean, from a comparison standpoint, I wouldn't characterize really what we're seeing right now, really any different over the last year. mean pricing discipline remains rational within the market. We actually have seen a little less bid activity from customers which actually to me is a good sign. I think last year, that was pretty robust. And every time a customer went to bid, it did kind of create an open market, which allowed new carriers to come in to go after some business, which usually they're more aggressive than incumbents who are looking to improve price to cover cost increases.

But recent bid data tells us that it's actually slowing down. So that's an encouraging part to me. Obviously, what we're what we try to do from our perspective is really be disciplined with all of our decisions. We evaluate every opportunity on its own merits, and we're looking to get the right price for the value that we're offering to our customers. So from a market standpoint, feel like the market still rational and nothing's really changed there. And I'll let Mac talk about the asset light side.

What I would say just from the outside looking in a 3-week perspective of being here is that, one of the things I recognize is that when you think about our asset-light business, specifically our managed solutions is on a growth trend that's far outpacing the marketplace. And I think this team has done a really nice job over the last number of years to build a strong foundation in this space. So when I think about our managed solutions that is really a fully integrated approach to third-party services in the marketplace. We're outpacing a lot of our competitors. I feel really good about that.

From a services perspective, when I think about LTL brokerage, truckload brokerage, our intermodal business, our Global Forwarding business, we're at different points of journey within each one of those services. Each one of them approaches the market a little bit differently. So it's hard for me to say we're going to have a singular approach to that. But I feel really good about how we're positioned in the market. Over the last year, this team has invested fairly significantly within the SMB space. And year-to-date, we're exceeding our expectations from a per person perspective, from a productivity standpoint and certainly across the team. So when I think about our managed business outpacing in that mid-market area and then the investment of SMB and how that's pacing to achieve breakeven in 2025 gives us a really strong foundation to build upon as we move forward.

Our next question comes from Ari Rosa from Citigroup.

So I'm curious about the longer-term outlook. In the slide deck, you mentioned reaffirming the 2028 financial targets, specifically the EPS of $12 to $15. You mentioned also that 2026 doesn't really anticipate much improvement in the market. So I'm just hoping, obviously, as we look to the back end of 2026, we're going to be closer to 2028, right, only 2 years out. Help us understand like where that inflection comes and where that real acceleration in EPS growth kind of hits and how you see that playing out? What is it that drives that inflection? How much of that is dependent on the macro, how much of it can be achieved kind of through self-help initiatives? And kind of what's the time line for us to start to see that flow through to EPS?

Yes. Thanks, Ari. This is Seth. We have confidence in our long-term view and the targets we outlined in Investor Day. As we mentioned in 2026, we don't see a lot of improvement from a macro standpoint but we didn't expect that in our targets that we set out. So lower interest rates could potentially help us clarity over tariffs, the tax bill, there's a lot of different things going on from the demand standpoint. But also on the supply side, we could see some changes there as well. So we saw sequential increases in PT during the fourth quarter. You've seen all the stories about enforcement actions around ELP and also just what's going on with nondomicile drivers.

But I would say, despite the environment, we're going to continue to focus on what we can control. And the initiatives we outlined in Investor Day around our 3 strategic pillars of growth, efficiency, innovation, we expect to continue to accelerate on those initiatives as we move through. In the Investor Day, we outlined some potential upside if the macro does improve and Matt can chime in on those next after me. But we see a lot of areas of opportunity ahead of us. growth. We continue to see our pipeline improve. We think that's going to translate. Mac just mentioned the double-digit increase in managed. If you remember what we talked about, managed feeds our other service lines as well.

So as managed grows, we grow LTL. We grow our truckload offering, we grow expedite and then as we improve the value we deliver to our customers, that generally allows us to improve price, which speaks to that revenue per shipment outpacing cost per shipment by 80 basis points. then the productivity initiatives that we've mentioned throughout this call and in our prepared remarks, we continue to see benefits asset-light at an all-time high in productivity and a low in SG&A cost per shipment. So we expect to continue to make advancements on our strategy, and we believe in the long term and whether we're going to ultimately end up to achieve these targets.

Yes. Ari, this is Matt. I think Seth covered it well. As we laid out at Investor Day, a lot of our targets were built on things that were in our control, cost, productivity yields. Certainly, you see the results in 2025 on all of those fronts, like we talked about when we were contemplating our 2028 targets, we weren't really looking at a significant macro improvement in 2026 as we were building those models, and we continue to feel good about how we're positioned for 2028. Certainly, a lot of momentum across the business.

I'm excited about how we're leveraging technology, exciting about continuing to accelerate on the asset-light side, certainly very pleased with the result that we saw in the year-over-year improvement in the asset-light business in 2025. A lot of projects ongoing around the asset-based business that are continuing to show great results. And so again, really feel good about executing on everything that's within our control, which was the biggest driver of 2028, and we do expect some macro improvement as we exit 2026 and move forward towards 2028.

Our last question comes from Cole Cousins from Wolfe Research.

Just to hit on 1Q guidance, given the comp dynamic through the quarter, what are the embedded tonnage and yield assumptions in the 100 to 200 basis points of OR deterioration and maybe just remind us what your typical OR seasonality is into 2Q and given the storm dynamic, is it fair to think that we might be able to outperform that this year?

Cole, it's Matt. So as we look at the first quarter and just where we see the projection going, certainly, like we talked about, there are some dynamics that have been in place in January. And so overall, we would expect the tonnage. The tonnage was up 8% in January. I think you're going to see that moderate as we look at the full quarter, still up and still up relative to history. But something lower than the 8%, probably more like the 4% to 5% range.

Overall, we expect to continue to see shipment per day growth on a year-over-year basis as we continue to move through the quarter. Again, just some of the costs back to the fourth quarter are helpful as we're thinking about being able to achieve the 100, 200 basis points guide of OR increase versus the historical around 250, 260 basis points. As we look forward from the first quarter to the second quarter, we feel good about how we're positioned in all of the yield and productivity initiatives continuing to come to bear across the business, but probably too early to be specific about what we're expecting at this point in time.

We have no further questions. I would like to turn the call back over to Amy Mendenhall for closing remarks.

Thanks to everyone for joining us today. We certainly appreciate your interest in ArcBest. Hope everyone has a great day. Thanks.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, and thank you for standing by. Welcome to the ArcBest Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this call is being recorded.

I will now turn it over to Ms. Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Good morning. I'm pleased to be here today with Judy McReynolds, our Chairman and CEO; Seth Runser, our CEO-elect and President; and Matt Beasley, our Chief Financial Officer. Other members of our executive leadership team will also be available during the Q&A session.

Before we begin, please note that some of the comments we make today will be forward-looking statements. These statements are subject to risks and uncertainties, which are detailed in the forward-looking statements section of our earnings release and SEC filings. To provide meaningful comparisons, we'll also discuss certain non-GAAP financial measures that are outlined and described in the tables of our earnings release. Reconciliations of GAAP to non-GAAP measures are provided in the additional information section of the presentation slides.

You can access the conference call slide deck on our website at arcb.com in our 8-K filed earlier this morning or follow along on the webcast.

And now I'll turn the call over to Judy.

Thank you, Amy, and good morning, everyone. ArcBest is well positioned to navigate any environment guided by a long-term strategy built on 3 pillars: growth, efficiency and innovation. At the heart of our approach is a deep understanding of our customers. Delivering for them drives our success and enables us to achieve our financial objectives.

Years ago, we recognized that supply chains were becoming more complex, and we took proactive steps to prepare ArcBest for that future. Today, we deliver flexible, efficient and fully integrated solutions designed to meet our customers' evolving needs. By listening closely and solving real-world challenges, our teams position ArcBest as a trusted strategic partner, helping customers succeed not just today, but for the long term.

In late September, we hosted our Investor Day in New York City, and we appreciate everyone who joined us, both in-person and virtually. During the event, we shared ArcBest's strategic vision, showcased key initiatives and introduced long-term financial targets that underscore our disciplined growth-focused approach.

As we execute on our strategy, we are supported by a strong and experienced Board of Directors whose expertise spans transportation and logistics, finance and capital markets and digital transformation. In that spirit, we are pleased to welcome Chris Sultemeier to the ArcBest Board. Chris brings more than 30 years of leadership in logistics, transportation and supply chain operations. His deep industry knowledge will be a tremendous asset as we advance our long-term goals.

I also want to take a moment to recognize Dr. Craig Philip, who will retire from the Board in January after many years of dedicated service. Craig's insights and guidance have been instrumental to ArcBest's success, and we are deeply grateful for his significant contributions.

Today's call is especially meaningful for me because it is my final earnings call as CEO. It has been an incredible honor to lead this organization. Over the last 15 years, I've had the privilege of working alongside some of the most talented and dedicated professionals in the industry. Together, we've embraced change, driven innovation and built a company that is truly unique and differentiated.

I am deeply proud of what we've accomplished and equally excited about what lies ahead. Seth Runser's transition to CEO has been carefully planned, and the Board and I have complete confidence in Seth's ability to lead ArcBest into its next chapter. I've worked closely with Seth for many years. He knows ArcBest inside and out, has a clear strategic vision and demonstrates a genuine commitment to our people and customers. I know he will lead ArcBest with integrity, purpose and passion.

I will always cherish my time as CEO, and I have no doubt that the best is yet to come. ArcBest is built to deliver, and I look forward to watching this company continue to grow and thrive, both as Chairman of the Board and as a committed long-term shareholder.

With that, I'll turn the call over to ArcBest's CEO-elect and President, Seth Runser.

Thank you, Judy, and good morning, everyone. Before we dive into the details of our third quarter performance, I want to take a moment to focus on the bigger picture.

At ArcBest, our strategy is built around creating meaningful value for our customers. Every day we help them navigate complexity, overcome disruption and achieve stronger supply chain outcomes. That's what sets ArcBest apart.

Looking ahead, this commitment will continue to guide us, helping us to anticipate challenges, seize opportunities and lead the industry with innovative, customer-driven solutions. By delivering for our customers, we position ourselves to achieve profitable growth, generate strong free cash flow and create long-term sustainable value for our shareholders. Now let's review the progress we've made on our profitable growth initiatives.

In the third quarter, we averaged 21,000 Asset-Based LTL shipments per day, a 4% increase year-over-year. This growth and market share gain reflect the strength of our refined go-to-market strategy and our intentional focus on expanding our core LTL business.

As we onboarded new business, we faced some service challenges that caused us to fall short of our expectations, higher-than-expected volumes in certain markets, greater intra-month volume changes, conservative hiring earlier in the year due to macro uncertainty, and peak summer vacation season all contributed.

In some locations, increased reliance on Cartage also impacted cost and service. These factors affected on-time pickups and deliveries, which was reflected in our latest Mastio survey results. However, we acted quickly.

Hiring efforts have advanced in key markets, Cartage usage has significantly declined, and service levels have returned to normal. Customer feedback is already reflecting these service improvements. As we grow, we remain committed to delivering the premium service our customers expect.

Pricing discipline remains a cornerstone of our profitable growth strategy. In our Asset-Based business, we continuously evaluate account and lane level performance to ensure we're appropriately compensated for the value we deliver. Our decisions are informed by shipment profile data, lane pairings, shipment density and pickup and delivery requirements.

When freight moves through our network, we monitor performance closely. And if margins don't meet expectations, we partner with customers to identify solutions that balance service quality with sustainable returns. This is an ongoing process, and we are pleased to have achieved a 4.5% average increase on deferred contract pricing renewals during the third quarter.

Turning to Managed Solutions. Shipments per day grew by double digits year-over-year in the third quarter, setting another quarterly record for both revenue and volumes. This performance underscores our ability to help customers adapt to a dynamic freight environment and find cost efficiencies in their supply chains. Even amid the ongoing freight recession, growth in Managed helped us achieve an all-time high for asset-light shipments per day.

Truckload also showed meaningful progress without relying on macro tailwinds. Our pricing discipline during bid season drove a nearly 9% increase in revenue per shipment with corresponding improvements in gross margins.

We're advancing on our strategic initiative to optimize the truckload business mix, focusing on higher-margin SMB customers. We've reorganized sales teams, streamlined processes and leveraged technology to enhance efficiency. As a result, employee productivity in truckload is at its highest level ever.

We've also made meaningful progress on efficiency and innovation, key pillars of our long-term strategy. Our continuous improvement team continues to conduct service center visits, coach employees on process and safety compliance, deploy new technologies and ensure confident adoption of new tools. These efforts have delivered $20 million in year-to-date savings.

Our strategy and optimization team led by Christopher Adkins is focused on delivering measurable value by combining targeted process improvements with advanced technology. These efforts ensure that AI is applied in ways that enhance productivity, streamline operations and reduce cost to serve across the enterprise.

One example is our truckload carrier portal, which includes lane matching and auto offer negotiation. This tool frees up bandwidth for our teams, improves margin and helps reduce fraud. Adoption has grown to 28% and 52% of truckload shipments are now digitally augmented.

These initiatives are improving productivity and helping us mitigate inflationary cost pressures. Looking ahead, we remain focused on disciplined execution and continuing ArcBest's legacy of innovation and service.

We are confident that our approach will drive growth and profitability despite near-term headwinds. As many of you know, we set ambitious but achievable targets for 2028 at our Investor Day. These include improving the non-GAAP operating ratio in our Asset-Based business to 87% to 90%, delivering asset-light non-GAAP operating income of $40 million to $70 million, generating total operating cash flow of $400 million to $500 million and achieving non-GAAP EPS in the range of $12 to $15. We remain well positioned to deliver on these targets.

Before I turn the call over to Matt, I want to thank Judy for her vision, her leadership and the way she has transformed ArcBest. She is an incredible leader, and I am so grateful for her trust and support. I'm glad she's staying on as Chairman and look forward to what the future holds. On behalf of the entire team at ArcBest, we wish Judy and her husband Lance the best in this next chapter.

With that, I'll turn it over to Matt to walk through the financials.

Thank you, Seth, and good morning, everyone. Despite continued softness in the freight environment, ArcBest delivered solid third quarter results that reflect disciplined execution and a continued focus on creating long-term value for our shareholders.

Taking a closer look at our third quarter performance. Consolidated revenue was $1 billion, down slightly year-over-year. Non-GAAP operating income from continuing operations came in at $50 million compared to $55 million last year.

Our Asset-Based segment saw a $10 million decrease in non-GAAP operating income, while the Asset-Light segment delivered $1.6 million of non-GAAP operating income, an improvement of nearly $6 million over last year. Adjusted earnings per share were $1.46, down from $1.64 in the third quarter of 2024.

Turning to our Asset-Based business. Third quarter revenue was $726 million, representing a 2% increase on a per day basis. ABS non-GAAP operating ratio was 92.5%, an increase of 150 basis points over the third quarter of 2024 and an improvement of 30 basis points sequentially.

In the third quarter, daily shipments grew by 4%, while weight per shipment decreased by 2%, resulting in a 2% increase in tons per day compared to last year. This growth was driven in part by onboarding new core LTL business through the commercial initiatives Seth mentioned. However, softness in industrial production and housing continues to pressure weight per shipment, reducing revenue per shipment without corresponding cost decreases.

To support shipment growth, we added labor conservatively and supplemented network capacity with purchase transportation and local Cartage during peak vacation season. Annual increases in contracted union labor rates, combined with higher purchase transportation spending and equipment depreciation drove operating expenses higher.

Despite these headwinds, cost per shipment improved by 1% year-over-year, reflecting ongoing productivity gains. Additionally, Cartage and purchase transportation costs returned to normal levels in September after elevated activity in July and August.

We remain disciplined in our pricing strategy, securing deferred increases averaging 4.5%, a strong outcome in a market where many shippers are focused on cost savings. This underscores the strength of our customer relationships and the differentiated value we provide.

Revenue per hundredweight declined 1% year-over-year, both including and excluding fuel surcharges, impacted in part by fewer shipments in the manufacturing vertical. Looking at October trends, daily shipments grew 1% year-over-year, while weight per shipment decreased 2% and daily tonnage levels declined 1%.

For the fourth quarter, we expect our operating ratio to increase by approximately 400 basis points sequentially, reflecting the softness in the broader freight market that we're seeing across the industry.

Moving on to the Asset-Light segment. Third quarter revenue was $356 million, a daily decrease of 8% year-over-year. Shipments per day reached a record high, up 2.5% from the prior year, driven by double-digit growth in our Managed Solution. Revenue per shipment decreased nearly 11%, reflecting the soft freight market and growth in our Managed business, which has smaller shipment sizes and lower revenue per shipment levels.

SG&A cost per shipment decreased over 13%, reaching the best level in Asset-Light history, driven by productivity initiatives and a higher mix of Managed business with a lower cost to serve. Shipments per person per day also hit an all-time high.

Non-GAAP operating income of $1.6 million was a significant improvement compared to last year's non-GAAP operating loss of $4 million, driven by volume growth, margin improvement and cost reductions. In October, Asset-Light daily revenue was down 9% year-over-year, primarily due to lower revenue per shipment from the soft freight market. Managed continued to show strength, though its smaller shipment sizes contributed to lower revenue per shipment.

Shipment growth, which was strong through the third quarter, has moderated as we entered the fourth quarter. This slowdown is typical for this time of year as the second and third quarters generally represent peak shipping periods for our customers. For the fourth quarter, we anticipate an operating loss in the range of $1 million to $3 million, reflecting seasonality and current market dynamics. We remain focused on managing costs and positioning the segment for long-term profitability.

We continue to take a balanced long-term approach to capital allocation. For 2025, we've updated our net capital expenditure guidance to approximately $200 million, a decrease from the previous range of $225 million to $275 million. This reduction reflects $25 million in net proceeds from real estate sales completed in the third quarter, which generated a pretax gain of approximately $16 million. These properties were replaced by new locations gained through the Yellow auction sites that strengthen our network and enhance our operational footprint.

In the first 9 months of 2025, we returned over $66 million to shareholders through share repurchases and dividends. In September, our Board increased the company's share repurchase authorization to $125 million, a clear sign of confidence in our strategy and long-term outlook. We'll remain opportunistic with repurchases based on share price while prioritizing high-return organic investments and maintaining prudent leverage. Our balance sheet remains strong with approximately $400 million in available liquidity and a net debt-to-EBITDA ratio well below the S&P 500 average.

While external conditions remain dynamic, ArcBest is well positioned for the future. We're focused on what we can control, operating with discipline and making smart strategic decisions that strengthen our business and create long-term value. Before I turn the call back to Judy, I want to recognize her leadership.

Judy has played a pivotal role in shaping ArcBest into the company it is today, and her vision and commitment has set a strong foundation for our future. On behalf of the entire team, thank you, Judy. It's been an honor to work alongside you. Looking ahead, I'm excited to partner with Seth as we build on that foundation and continue driving our strategy forward.

Judy, thank you again. I'll now turn the call back to you.

Thank you, Matt. Before we move to Q&A, I want to leave you with this. ArcBest's greatest strength has always been its ability to adapt and lead through change. That resilience transformed us from a small local freight hauler into the global logistics company we are today, and it will continue to drive our success for years to come.

As I step away from my role as CEO, I do so with complete confidence in our team and in the strategic path we've set. This company is in great hands, and I look forward to watching its next chapter unfold.

To our analysts and shareholders, thank you for your trust and partnership. To our employees, thank you for your dedication and resilience. And to our customers, thank you for choosing ArcBest. It has truly been an honor to serve as CEO.

With that, let's open the call for your questions.

[Operator Instructions] Your first question comes from the line of Jason Seidl with TD Cowen.

Judy, I just wanted to say congratulations just on a great career at ArcBest and I wanted to tell you what a pleasure it was working with you and wish you all the best going forward.

I want to jump a little bit, guys, to sort of the guide in 4Q and then maybe what that means to rolling into '26, because it's obviously a lot weaker than I think I would have expected. Is there anything going on seasonally that you think would be sort of abnormal? Like are you more impacted by the government shutdown than maybe one would think? Or is this something where normal seasonality starts you out a little bit on the year-over-year decline side into '26?

Jason, this is Seth. Thanks for the question. So we did see some softness in October, and that's similar to what our peers have been reporting. We always see that step down sequentially from third quarter to fourth quarter, but it's been below our normal expectations as we move through the month.

So normally, we step down about 3% on shipments. We're seeing closer to about a 5% reduction. And then when you think about the way the calendar falls in November with only 18 business days and the holidays, that just creates some challenges from a top line perspective.

So the weakness in October we really attribute it to multiple factors. You saw PMI was released on Monday, and that continued to be below 50. We heard the stories about inventory pull ahead in July, and that might be a factor. The continued weakness in the market just impacting weight per shipment, which we've been discussing throughout this freight recession. And then there are secondary impacts of the government shutdown.

The only area where we really do a good amount of government business is on the Asset-Light on the expedite side with Panther. So we're seeing that impact on Asset-Light results and the guide we gave there. But we can't point directly to Asset-Based impact, but the government is the largest employer in the United States. So I'd imagine there's some secondary impacts there.

So we're taking action to reduce our costs and align resources with the level of revenue that's given, and we expect that to continue throughout the fourth quarter. That's something we've done through our entire history as we've navigated these cycles.

In Cartage and PT, what we did in September to reduce that cost is a great example. So we're focused on pulling all those levers, but we're also focused on the long term and believe in our strategy and initiatives that we outlined at the beginning of the -- at our Investor Day last month.

We see on the growth side, our core business continues to grow. The pipeline continues to be very strong. We've done a lot on the efficiency front. We're taking more cost actions as we move through the fourth quarter. Really proud of the Asset-Light team improving productivity, 33%. We saw improvements in Asset-Based as well. And we have a robust roadmap of future projects that we're working on, which we think is going to provide some efficiency gains in the future.

So the way we built this company is to say yes to our customers, and we think we're built for any environment. So, whether it's a little bit weaker or busier, we want to say yes to customers, and that's the way we're built. So we've been doing this a long time, over 100 years. And we've navigated this cycle very well, and we'll continue to make adjustments as we move through the rest of the year and as we move into 2026.

Your next question comes from the line of Brady [ Ste ] with Stephens, Inc.

Congrats to Judy on the great career, and we're sad to see you go. Kind of following up on Jason's question. Previously, you have talked about 350 basis points to 400 basis points being the normal 4Q to 1Q OR move. That would imply if you add the 400 basis points to -- from 3Q to 4Q, basically, that would imply you have an unprofitable to breakeven LTL.

If you can talk about how you expect that to progress? And then I guess also just talking on the pricing weakness here in October. I know I'm sure some of that is mix related and some of it is a declining weight per shipment. But if you can just talk about some of the dynamics in there as well.

Yeah, Brady, it's Matt. So you're right. We have talked about the 350 to 400. If you were to look at just a straight 10-year history, it's more like 250 basis points, but there were some strong 4Q to 1Q moves during COVID. And so over the last few years, as we've given the history, we've excluded those.

I think to Seth's point, we certainly are taking a look at costs at a very detailed level in addition to just all of the ongoing efficiency and productivity projects that we've had and have been working on. Certainly, we're pleased with the results that we've seen, as we talked about with the record levels of productivity on the Asset-Light side and just continued improvement on the Asset-Based side as well. And so, we're continuing to make progress, and we're continuing to identify costs and to pull those out.

And so, I think it's a little bit too early to say just given some of the softness that we've seen over the last few weeks. I wouldn't say that we're necessarily expecting that to persist into the first quarter. We're hopeful as we get some resolution on the government shutdown. And as we move into the new year and we see the impact of the recent interest rate moves, we'll get some improvement on the macro.

But I would say we're focused on controlling everything that's within our control on the cost side and again, expect continued progress there and more to come on what the sequential guide will look like as we move from the fourth quarter into the first quarter.

On your question on yield, Eddie, I don't know if there's anything that you might want to add from a pricing standpoint in terms of what we're seeing?

Yes. I mean I actually think it's improving from where we were earlier in the year. There is a lot of noise with our price metrics with account mix changes, profile changes. But we were able to post a 4.5% renewal increase, which was an improvement from second quarter. And really, that increase by month actually improved throughout the quarter. So we're very optimistic we're going to continue that momentum into the fourth quarter and into 2026. So I feel better about where yield is standing right now.

Your next question comes from the line of Jordan Alliger with Goldman Sachs.

Judy, it's been great interacting with you all these years and best of luck going forward. I really appreciate all your time.

Thank you.

So I guess maybe a big picture question then. Obviously, it's still pretty tough out there in the freight world, as denoted by the volumes from you and your peers in October. But pricing seems to be resilient. So I guess my question is, can you perhaps share some thoughts on the capacity setup when we do get to the volume inflection from an industry perspective overall, taking into account the Yellow bankruptcy. Like what are you seeing in terms of terminals sort of going into the next cycle and how it stacks up? And when we do inflect, could the situation lead to what sort of price recovery, if you will?

Jordan, this is Seth. When we think about just excess capacity, there's obviously a lot of that right now in the LTL space and then truckload, obviously, with the way the market has been.

From an LTL perspective, I think is where your question was coming from. Long term, we just have less capacity than we had 5 and even 10 years ago. When you look at how the Yellow auction kind of played out, there's a good chunk of those facilities that left the industry. So we've been strategic with where we've invested, where we see growth, service or efficiency opportunities, and it hasn't added a lot of cost to our actual base.

We've seen the productivity improvements as we've opened new facilities or expanded current facilities. So, we've talked over the long term, we have a long-term network plan, and we've expanded by about 800 doors. And most of that work is done and past us.

So I think when the market actually inflects and we see things start to get busier, that's going to be positive for pricing because there's just less capacity out there. So what I love about our company is we invest throughout cycles. So whether it's a down cycle or up cycle, we're making strategic investments to position ourselves to say yes to customers, whether it's a bad market or a good market, which I already mentioned.

So, I feel like we've been really strategic that we'll be able to take advantage when the market gets better. And the relationships that we have with our customers, 80% of our revenue comes from customers over 10 years. That allows us to improve our price as we deliver on the value that our customers see.

Yes. And Jordan, this is Matt Godfrey. I would just add to build on what Seth said. We've been very strategic throughout our real estate journey with the capacity that we've added over the last few years. The Yellow opportunity through their bankruptcy gave us the opportunity to speed up some of the targets that we had. But we take a continuous evaluation approach to our network. And so, we'll continue that process into the future, but we feel very good about where our capacity is when the market turns and the ability to say yes to our customer base.

Your next question comes from the line of Ravi Shanker with Morgan Stanley.

And Judy, I will also echo congratulations on your retirement here and you'll be missed.

Seth, maybe if we get a sense of the volume decline that you've seen in the last couple of years. And obviously, you pointed out to the ISM being weak, et cetera. But do you guys have a sense of how much of the volume decline may potentially be cyclical versus structural in terms of LTL shift or maybe some of the private guys ramping up and gaining share? And how much of it is structural versus cyclical?

And maybe on that same note, in your opening remarks, you kind of spoke about some of the factors that may have hurt you in Mastio this year. Do you feel like that also is more of a cyclical or a transitory drop and you guys will rebound next year?

Thanks, Ravi. So when I think about what I've done throughout this year, I spend a lot of time with customers and customers are facing just general uncertainty around tariffs and what happens with interest rates and demand and everything that's going on out there. So we've tried to partner with customers if they need to increase inventory or shift where they're sourcing from, and that aligns well with our integrated approach.

So this is more cyclical from our standpoint because our retention stats are really in a good spot. We haven't lost customers. They're simply just shipping less, and that's what we've been talking about for the past few years.

But when we think about the opportunity that we have, we operate in markets with $400 billion worth of opportunity. So that's just a tremendous way to expand with our loyal customer base that we already have. So with the change in strategy and market approach from a sales perspective, we continue to see our core LTL business grow, managed at all-time highs, and we continue to make progress on our SMB strategy within truckload. So I believe that it's more cyclically related than just the demand softness throughout and I believe strongly in what we're doing to execute to see profitable growth into the future.

And then your other question about Mastio, we anticipated that might happen. That's why we disclosed that in our 8-K in August about service challenges. We were really successful with onboarding new business, and we were conservative in our hiring targets earlier in the year. So we just didn't have the staff in place to service that business the way we expect it to.

So I'm really proud of the way the team reacted quickly, solve those service challenges. And when we look at our internal metrics, we've improved substantially since the summer peak vacation. So -- and we expect that to continue because we think the better you service customers, the stronger your pricing power and retention is going to be, and that's the type of company we are delivering a premium service for our customers.

Your next question comes from the line of Ken Hoexter with Bank of America.

Judy, again, congrats on your upcoming retirement.

So, this is the worst OR, I guess, in the fourth quarter forecast here since the first quarter of '20 COVID lows and then going back to the -- if it's the fourth quarter, it's worse since going back to, I guess, to 2017. Matt, you mentioned you continue to make progress, but I'm confused in where the progress is, right?

So you're starting off soft on the volumes, noted a corresponding decreasing or inability to decrease the costs. So what moves are you making to then align those costs? Is it the PT that's staying out of whack? Is it something with the extra hiring you've done? Just maybe trying to contrast if you know that the costs are out of whack, what moves can you take to realign that to get the cost back down?

Yes, Ken. So we have a number of different initiatives that have been ongoing across the Asset-Based organization, including our continuous improvement initiatives and teams have been going out across the footprint. Starting with our largest facilities, we continue to see a lot of runway with that. And certainly, we're continuing to advance our technology initiatives in a number of different ways, including around labor planning, line haul, our city route optimization project, which we talked about the benefits that we're seeing there. And you can see that in the numbers.

I mean we have normal, typical inflation in the business. Certainly, we have seen on the depreciation front as we've replaced our fleet using our total cost of ownership model, just the increased cost that we're seeing on the equipment side has shown up in our depreciation. We know that we've just got normal increases on the ABS side under our union contract.

And again, in the third quarter, we also used a little bit more Cartage and purchase transportation than normal just as we saw that volume surge. But then if you look on a cost per shipment basis, we were down 1% year-over-year on cost per shipment. So not only being able to mitigate the effects of inflation on a year-over-year basis, but also being able to decrease the cost on a per shipment basis.

So I would say, in general, we're focused on what we can control, and we expect to make continued progress on that. As we move through 2026, we certainly are seeing the same macroenvironment that everybody in our industry is seeing. As talked about on their calls, we're seeing show up in industry surveys. And so certainly, that is affecting the guide that we're seeing for the fourth quarter. But we still -- we're seeing the impacts of our commercial initiatives in our results. I mean, you still saw volume growth in October. We're still expecting to see overall volume growth on a shipment per day basis for the fourth quarter.

We're taking a lot of action on the yield side that I would say has not yet fully accrued to results, but we're going to expect to see the results of as we move into the first quarter of next year. So again, certainly, like we talked about, a little bit softer macro backdrop than we were expecting or maybe had seen historically with some of the factors that Seth talked about, including what are likely some secondary impacts from the government shutdown, maybe some pull ahead and just continued weakness in the manufacturing economy. But we still feel good about the targets that we gave at Investor Day, and we're continuing to make progress on those, and we expect that we'll continue to see results.

Your next question comes from the line of Bruce Chan with Stifel.

Judy, certainly been a pleasure working with you over the years, and we're going to miss you, but I wish you all the best here.

There's a glancing reference to the supply dynamics and truckload earlier in the call, so maybe I'll take that one. I know that we've talked about overflow truckload freight in your model in the past. Maybe you can just remind us of what percentage of your business overlaps with that market? And then maybe more broadly, what are your views on that returning? And are you seeing any signs, even if early or having any conversations about that coming back?

Bruce, this is Matt. So you're right. I mean we talked about this a little bit at Investor Day just in terms of the potential that we see for -- back to some of the discussion about cyclicality as we think about where we've been in manufacturing housing and truckload rates. If we see those returning to more normal historical levels, that's where we could see the upside of up to 280 basis points from macro improvement as we move from 2024 through 2028.

As we think about the truckload overlap into our LTL business, we have seen correlation between the higher length of haul, so think about maybe 1,000-plus miles and heavier shipments, so maybe 5,000-plus pounds. And it's not a significant piece of our overall Asset-Based LTL book of business. It's probably low-single digits. But still, we have seen some of those volumes move away.

Of course, those are very strong when you think about how those price out on a revenue per shipment basis, which is why there is some movement back. There has been some movement to the truckload market, just where those truckload prices are. And so I would say as we think about where truckload pricing will be going here over the next year or 2 as we think about capacity dynamics, and then just an improving macro, we would expect for those shipments to make their way back into the LTL network.

Your next question comes from the line of Tom Wadewitz with UBS.

This is Mike Triano on for Tom. And Judy, team UBS here, wishes you all the best in retirement.

So at Investor Day, you mentioned an assumption in the long-term target of revenue per shipment outpacing cost per shipment by 80 basis points a year on average. As we look into '26, do you think you need help from the macro to drive better freight mix and revenue per shipment? Or is there enough that you can do from a cost perspective and just stabilizing the mix that can help you achieve a positive spread in that revenue minus cost per shipment metric?

Mike, this is Seth. So when I think about 2026, obviously, no one has a crystal ball about what's going to happen right now. There's been a lot of changes in these last few years, but we do have confidence in our longer-term view and the targets that we outlined at Investor Day. So when you think about from a demand standpoint, we don't see a lot improving on the demand side right now, but lower interest rates could spur increased homebuilding, manufacturing, auto, all those different things. We saw the tax bill get passed that could drive renewed freight demand, clarity over tariffs and the government shutdown as those issues get resolved, we think that could be a positive impact for us.

So the supply side is something we're looking at, but we haven't seen the impacts from the ELP mandate or the non-CDL enforcement yet, but we're hearing anecdotal stories that could be positive. So if you just look at the cost to operate a truck and where the truckload market pricing is right now, we could continue to see exits on that regard.

But what I will say is despite all the environment and macro noise, like Matt mentioned earlier, we're focused on things in our control, and that's being customer-led, and we're going to focus on managing our costs in the short term as well as being positioned for the long term. And we're taking those actions now, and Cartage and PT is a great example of that. But we have other areas of opportunity that we're looking at.

We continue to invest in service improvements across the board. I look forward to launching ArcBest View next year and having a better service for our customers. And we have a robust pipeline that I already mentioned before.

So we feel confident that we can achieve that revenue per shipment outpacing cost per shipment by the 80 basis points as we move through next year and throughout our entire target window through 2028. So although, we continue to navigate just the challenging macroenvironment, I'm very confident in our team's ability to generate shareholder value over the long term.

Your next question comes from the line of Brian Ossenbeck with JPMorgan.

Judy, congrats again on your upcoming retirement.

Just 2 follow-ups here. First one, just on the September to October trend. It looks like weight per shipment is stabilizing, but pricing per hundredweights not actually increasing. So I'm just trying to understand if you can clarify that a little bit in terms of the comments, I think, Matt made about maybe being able to catch up for some of the costs you incurred ramping up this new volume with price or maybe it's on different shipments. So a little bit more color there would be helpful.

And then also, if you can give us a little more clarity in terms of the productivity per shipment or per person per day rather in Asset-Light setting a new record. Is that driven by some of the mix shift? Or how should we think about how you guys are reaching that?

Brian, this is Eddie. In terms of like the price change from September to October, we do still see a lot of volatility when it comes to our account mix. The macroeconomic environment is still pretty -- is a pretty big headwind for us. So we're not getting a lot of help there on weight per shipment.

And so, we did see some business come into our network that had a different profile, and it's typically been operationally efficient for us, which helps. But it does put some pressure on our -- your typical revenue per hundredweight yield metrics.

But we are very encouraged with the progress we're making with our renewal increases, I mentioned that earlier on the call. But that's momentum going in from the second quarter to third quarter, and we're seeing really good signs going into the fourth quarter as well with those renewal increases. So lot of noise in those typical yield metrics, but I do feel like we're making progress. And Matt mentioned some yield initiatives that we've been taking, and that's having an impact on some of our account mix as well. So progress and there's more to do, and I think you're going to see that in fourth quarter and into 2026.

Yes, Brian, I'll take the Asset-Light productivity question. So we have a lot of initiatives that we're working on at Asset-Light. You saw that 33% productivity improvement that we mentioned. But I still feel like we have a lot of runway to go that will help our people to focus on our customers versus doing manual tasks.

So we also measure service from an internal standpoint. On the Asset-Light side, and we continue to see best-in-class results. on the service side. But what gives me a lot of confidence in the future is some of the projects that we've been working on with Christopher's team and the truckload team and managed around inbound call automation.

We're automating scheduling and booking loads, and that allows the team to focus on more complex work. We started to implement Truckload quote augmentation, which uses AI to load, build, quote and e-mail responses to customers much quicker than a human can do and focus on those more challenging things.

The shipper initiatives on the carrier side, we're doing a lot with third-party load board integrations, routing guide automation, automated offer approvals and then the carrier portal, which I mentioned in my opening comments. We continue to have features like lane matching, auto offer negotiations, which really helps reduce that fraud side of things in the market.

So we're going to continue to invest in this area. Managed saw another record quarter from a growth productivity standpoint. We see a lot of runway there with a $1 billion pipeline, like we mentioned at Investor Day. So I think all of this work ultimately comes down to allow us to position ourselves for growth without having to add the cost when the market does inflect because of these productivity gains.

Yes, Brian, it's Matt. I'll just maybe add on one more comment. So like Seth said, we're very proud of where we've come on the productivity side in the Asset-Light business and the 33% improvement that we saw on a year-over-year basis and where we see that going. And certainly -- so that has been a key driver of the performance. And it's been across our solutions. So truckload on its own reached its highest level of productivity when we look at shipments per employee per day in the third quarter.

And then there are some other impacts just because in our managed solution, we do have higher productivity levels just on a shipment per employee per day basis. And as we continue to grow managed, we do see some impacts as well from there. But a lot of it is -- all of the initiatives that Seth has talked about that we've been working on and we're going to continue to focus on.

Your next question comes from the line of Stephanie Moore with Jefferies.

I wanted to ask maybe a higher-level question. I know that you have pretty good insight into the housing market with your U-Pack business. So I wanted to hear if you had any insight from what your customers are saying as it relates to this overall housing demand and the expectation this could turn the corner in 2026?

Stephanie, yes, we're seeing the continued weakness on the housing front like it's been reported publicly. We hope with interest rate reductions that we're seeing with the Fed right now take action that that's going to spur some demand. We do think there's pent-up demand in the housing market. It's just been too expensive from an affordability standpoint. So I think as those interest rates lower, that's really going to help improve our U-Pack profit, obviously.

When we look at U-Pack in general, we are at a very low point because of just the housing market where it's been over the last 3 or 4 years. So that really does drag on the weight per shipment metrics and some of those profitability metrics. So we think when the market flips, it's going to have kind of an outsized impact for us when the housing market flips.

And also housing drives so much of truckload capacity, which then spills into LTL, obviously. So we think when the housing market strengthens, that's going to be impactful to us. But we don't see it in the near term. We think as the Fed continues to take actions, hopefully, into 2026, we see that demand continue to improve.

Your next question comes from the line of Ari Rosa with Citigroup.

Judy, let me echo others in congratulating you on your retirement. Definitely a nice career, and it's always been a pleasure working with you.

You mentioned in your opening comments market share gains in the LTL space. I'm just curious what you think is driving those market share gains. Given -- I guess it's hard to reconcile with some of the commentary around some of the service challenges. So -- but then also, right, you've talked about pricing discipline and other things. So like what is the process of gaining market share gains? Is that kind of maybe taking on some mix that's less attractive? And if you could just kind of talk about that strategy and how you think about those things? Because again, I'm trying to reconcile it with some of the margin pressure that you're talking about here, given it seems like volumes are actually looking okay relative to others.

Yes, Ari, this is Eddie. Yes, I mean, we've been very proud of our commercial team and what they've been able to achieve this year. We had consolidated our customer-facing groups and our business acquisition teams together under this commercial team. And that alignment has really led to a lot of great results when it comes to getting in front of our customers more, developing opportunities.

And then one of the best things about ArcBest is we're differentiated in the marketplace. We offer a suite of solutions that are different than most of our competitors. We're an integrated logistics company with assets, and that has resonated throughout the year with our customers, and our sellers are taking advantage of that.

From a standpoint of the type of business that's coming in, it's been good for us. It's been profitable. The profile of that business has been different than what our existing business was or is. But that's just because we've acquired that business at still a premium to the market price. If you look at our peers in that space, they have a lower revenue per hundredweight than what our average is.

We are the market leader when it comes to revenue per hundredweight and yield. And so I think it's not bad business for us. But it is different, and it has led to some efficiency gains in our network from an asset base standpoint. But there's always an opportunity to utilize this growth to improve our mix, improve our yield in our company. And that's really what we've been focused on the second half of the year.

Your final question comes from the line of Chris Wetherbee with Wells Fargo.

It's Rob on for Chris. And Judy, we'd like to echo our best wishes as you move on to the next chapter.

With regard to pricing, we saw a slight acceleration in the contract renewals in 3Q and a bigger tailwind from fuel, but revenue per bill declined sequentially in the quarter. Can you talk about the biggest drivers of the underperformance versus your contract renewals? And when you expect revenue per bill to better approximate renewals or GRIs as we're looking out?

Yes. Rob, this is Eddie again. Yes, I mean, the biggest driver of that revenue per shipment is the drop in weight per shipment. And that's been a headwind for us all year. A lot of the new core business, LTL core business we brought on has been heavier weight, but that softness in the manufacturing sector, industrial production and housing has been a pretty -- put some pressure on our weight per shipment metrics and ultimately, our revenue per shipment standpoint.

So that's pretty much the story on that. Again, that profile has been operationally efficient for us. So it's led to some efficiency gains there that's been good for us. And we're just going to constantly look at our book of business. We make good -- we have a strong history of pricing discipline that allows us to really manage this business well. We make account-by-account decisions. And if we run across any business that we don't think is good for us or not contributing, we're taking immediate action on it to improve it.

Your final question comes from Scott Group with Wolfe Research.

Best of luck to you, Judy.

Thanks.

So a couple of things. Maybe can you just talk about the tonnage assumption that you've got within the -- for the OR guide for Q4? Do you assume it gets any sort of better or worse? And then just on the LTL pricing environment, if I look back at the last couple of quarters when the yields have been down a little bit, you've disclosed, hey, we've got growth in lower cost but lower-yielding shipments, and you sort of took that text out and now it's just, hey, yields are flat. Is this -- I know the pricing renewals are getting better, but is this -- like taking that language out, is this indicating that it is, like, tougher pricing environment, and it's not about mix and it's more just sort of underlying price?

Yes. So Scott, this is Matt. I'll talk a little bit just on the sequential view that we have as we move from the third quarter to the fourth quarter and kind of what we're seeing for tonnage overall. I would say as we're moving forward, we expect to see just a slight increase both on a year-over-year basis and a slight increase, maybe low-single digits on a year-over-year basis as we look at the fourth quarter overall from a volume perspective. And so certainly moderating versus what year-over-year volume that we were seeing in the second and third quarter, just as we've seen a little bit softer macroenvironment.

And so I think as we think about big picture on tonnage, we would expect tonnage to moderate as well. Not expecting any significant changes in weight per shipment, but certainly, the overall macro softness could continue to impact weight per shipment as we move through the fourth quarter.

On the pricing side, we continue to feel good about all of the actions that we're taking there. You're right. We have seen early in the year, just some of the new business that we took on was operationally more efficient, and we're still continuing to see that dynamic.

If you look at just the profile of that business, how over dimensioned that business is versus our overall book of business. It just does not, as over dimensioned, doesn't have as many operational requirements, does generally have a lower cost to serve. And so I wouldn't say that there's anything in general that has changed in that overall dynamic.

Yes. The only thing I would add is, I really do believe that the pricing discipline is still right. I think the market is rational when it comes to pricing. I mean we have seen probably in the last couple of quarters just a higher frequency of customer bids, which does kind of create an opportunity for a competitive environment, especially for any carriers who don't have that business.

But in those situations that -- where we've been an incumbent, we just lean into our value and our relationship, and that's typically allowed us to get a fair increase while retaining the business. Or worst case, we've used it as an opportunity to price out of some unprofitable business to achieve better yield results.

So I don't think it's gotten anything worse in terms of the market. And I do feel like a lot of -- there is a lot of noise with our yield metrics just because of account mix and this macroeconomic impact on existing customers that they're just shipping less. And that existing customer base has historically been priced really well for us. And so, there are some headwinds there when that business is down.

That is all the questions we have. I would like to turn it back over to Amy Mendenhall for closing remarks.

Thank you to everyone for joining us today. We certainly appreciate your interest in ArcBest. This concludes today's conference. You may disconnect.

[Presentation]

ArcBest began in 1923 as a local Arkansas freight hauler. Fast forward, and today, we've transformed into an integrated logistics company with global reach and solutions for nearly every supply chain need. We provide end-to-end logistics solutions powered by our own assets and an expansive capacity network.

With the perfect blend of technology, expertise and transportation options, we connect shippers to the solutions they need. We can shift modes, optimize routes and adapt quickly when the market changes. And as our customers grow, we grow with them, always finding smarter ways to move goods, improve efficiency and drive results.

Innovation is core to our strategy. And it starts with listening. We are committed to continuous improvement, building tools and solutions to meet our customers' needs, help our employees do their jobs more efficiently and ensure we're always ready for what's next.

Our tech stack includes solutions for shippers and carriers and offers end-to-end visibility, intuitive freight management, the highest security standards and groundbreaking innovation. And it's designed to help supply chains run better.

Our people are at the heart of it all. Across our 250 locations, 14,000 employees bring grit, creativity and a values-driven mindset to every interaction. They go the extra mile to help earn and keep our customers' trust.

For over 100 years, we've helped businesses move forward. Today, we're building better supply chain, delivering results and creating long-term value. ArcBest is built to deliver.

Good afternoon, everyone, and welcome to ArcBest's 2025 Investor Day. It is great to see all of you. This is our first Investor Day in a decade, and we're excited to have the opportunity to share our story, our strategy and our vision for the future. ArcBest has undergone a remarkable transformation. And today, you'll see how we're positioned to lead in a rapidly evolving logistics landscape.

Before we begin, a quick reminder, today's presentation includes forward-looking statements that reflect our current expectations about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You'll find a detailed discussion of these risks in our SEC filings available on our Investor Relations page at arcb.com.

We'll also reference certain non-GAAP financial measures. Reconciliations for these measures are included in the appendix of today's presentation, which is available on our website. For your convenience, there's a card in front of you with a QR code linking you directly to this presentation.

Today, you'll hear from our Chairman and CEO, Judy McReynolds; our CEO-Elect and President, Seth Runser; and our CFO, Matt Beasley. They'll walk you through our strategy our focus on execution and how we're creating long-term value. Following the presentation, we'll have a Q&A session. And for those joining on the webcast, you could submit your questions online. After Q&A, we invite you to stay for refreshments and conversations with our team, including our Americas Road Team captains who are with us today.

You can also experience our technology firsthand, including a live demonstration of Vaux Smart Autonomy with the forklift in Arkansas operated remotely from right here in New York.

Over the last decade, Judy and the management team have led a bold strategic transformation, building a full-service integrated logistics company that is built to deliver for our customers, our people and our shareholders. Built to Deliver represents our commitment to delivering value through innovation, through service and through execution. Today, you'll hear who we are, why we are built to deliver and how this mantra is driving results. We hope you'll leave with an understanding of ArcBest's strong history and why our future is even brighter.

Now please join me in welcoming our Chairman and CEO, Judy McReynolds.

Good afternoon. Thank you all for joining us. We're excited to have you here and host you so that we can share how ArcBest is uniquely positioned in today's dynamic logistics environment. And you'll hear from Seth, who will walk you through our strategic initiatives and how we're executing against our long-term goals. And then Matt will provide a deeper view into our financial performance and outlook.

But first, I want to highlight what truly sets us apart and why we're built for long-term success. ArcBest is a leading integrated logistics company, operating in a nearly $400 billion addressable market. For more than a century, we've developed trusted relationships and delivered results for our investors, our customers, our employees and our communities. With a technology-enabled and integrated approach and solutions spanning both Asset-Based and Asset-Light capabilities, ArcBest is built to deliver.

We serve as a strategic partner and a trusted adviser to more than 30,000 customers, from iconic global brands to thousands of small and midsized businesses. Our top 10 customers represent just 13% of revenue, giving us a broad, balanced customer base that supports growth across economic cycles and positions us to deliver long-term value to our shareholders.

We'll Find A Way is more than a tagline. It's how our customers describe us and it's a promise we live by. Our mission and vision are beacons that guide us. In both, you'll see a desire to make a positive impact. ArcBest helps keep the global supply chain moving, and we strive to do that in a way that positively impacts the world.

We continuously evaluate our strategy to ensure that it aligns with market needs, and our customers validate it through their feedback and actions. Demand for our services is strong, with 25% growth in active accounts since 2019, and our Net Promoter Scores remain consistently positive.

Our core values: creativity, integrity, collaboration, growth, excellence and wellness are embedded in everything we do. They guide how we hire, train, lead and serve. With 14,000 employees unified by our mission and strategy, every team member plays a clear and purposeful role in driving our business forward.

Our best strength begins with our people, and I'm proud to introduce our experienced and engaged executive team, a group of leaders who bring extensive industry knowledge, strategic vision and a relentless commitment to innovation and customer success. Seth Runser and Matt Godfrey bring operational excellence in a customer-first mindset with over 3 decades of combined ArcBest experience. Matt Beasley is driving disciplined financial strategy and capital allocation.

Christopher Adkins and Dennis Anderson are shaping our future through forward-thinking strategy and cutting-edge innovation. Erin Gattis ensures our people and culture remain a competitive advantage. Michael Johns has provided trusted legal counsel for many years. As he prepares to retire at the end of this year, we're excited to welcome Brent Hagy, currently our VP of Legal, into the role of Chief Legal Officer.

Eddie Sorg leads with a deep understanding of our industry, customers and pricing. And we're excited to welcome Mac Pinkerton in January as Chief Operating Officer of Asset-Light. Mac brings nearly 30 years of experience from C.H. Robinson, most recently as President of North American Surface Transportation.

Our leadership team is supported by a strong, seasoned Board of Directors whose broad and strategic experience spans transportation and logistics, finance and capital markets and digital transformation. We're also proud to welcome Thom Albrecht, whose nearly 40 years of industry experience bring valuable operational insight and investor-focused mindset. The Board remains deeply committed to governance best practices, transparency and responsiveness to shareholder feedback.

Together, our leadership team and our Board of Directors bring a powerful blend of strategic vision and operational expertise, and I'm confident in their ability to guide us into our next chapter.

ArcBest is more than a logistics operator. We're a customer-led innovator. This mindset is our North Star, driving sustainable growth and profitability. Our diverse and flexible capacity solutions set us apart. With robust North American LTL platform, over 40,000 assets and a strong carrier partner network, we're equipped to meet a wide range of supply chain needs.

Innovation is embedded in who we are. We empower our teams to challenge the status quo and align innovation directly with business outcomes. Our people and values-driven culture are a tremendous asset. In a rapidly evolving logistics landscape, they enable us to respond with agility and build lasting customer relationships. And we have a proven track record even in challenging environments. And that reinforces our confidence in the road ahead.

At ArcBest, every decision, from the people we hire to the solutions we offer, is made with the customer in mind. As supply chains grow more complex, customers need integrated multimodal solutions that provide flexibility and efficiency. ArcBest meets these needs as a trusted partner.

One customer recently shared ArcBest is the most holistic solution to supply chain and logistics. No other organization or combination of businesses will result in the same broad productivity. That's the kind of impact we strive for, and it's the reason our customers keep coming back.

Our integrated model allows us to say yes to customers, offering tailored seamless solutions that connect customers and capacity rather than forcing a fit. With ArcBest, customers can build supply chains that are flexible, efficient, resilient and reliable without the complexity of managing multiple providers.

By partnering with ArcBest, a well-known provider of upscale and modern home furnishings was able to enhance their operations. Through our integrated transportation network, tech-enabled tools and capabilities, our skilled team that supports their business, they're realizing efficiencies by shortening transit times, reducing transportation costs and accelerating fulfillment speed. This showcases the transformative impact of ArcBest integrated solutions.

Let's talk about Managed, a pivotal part of our customer partnerships. We launched this offering in 2017 in direct response to a customer request, and quickly saw a growing need for strategic end-to-end logistics support. It was a natural evolution into becoming a true partner in supply chain transformation. This solution exemplifies how we go beyond moving freight to becoming an extension of our customers' teams, delivering insights, efficiencies and measurable cost savings.

What sets us apart is our ability to tailor solutions using the right combination of people, data and technology, [ plus a ] seamless access to assured capacity through our owned assets and a vast carrier partner network. This is also where our LTL brokerage capability shines, leveraging deep market intelligence and strong carrier relationships to complement our Asset-Based network, giving customers flexibility and reliability.

Recently, we helped a leading lighting manufacturer modernize their shipping operations. By automating key processes like shipment consolidation and routing, we drove meaningful value by saving them 5% and improving their supply chain. It's a win-win and a perfect example of how ArcBest is built to deliver.

Modern supply chains are dynamic and complex. Our ability to solve these challenges comes from the breadth and the integration of our solutions. On average, customers rely on 4 distinct logistics services to keep operations running. We anticipated this shift in 2012 and responded with strategic acquisitions and organic investments. And then we integrated these services to create a seamless experience, a key differentiator versus single-mode providers. We bring together managed solutions, less-than-truckload, truckload, expedite and other services to deliver tailored end-to-end logistics solutions.

These services aren't siloed. They're strategically integrated to create revenue and cost synergies that benefit both our customers and our business. Whether optimizing routing, consolidating shipments or responding to urgent needs, our integrated model meets customers where they are and scales as they grow. And that breadth of capability translates directly into stronger, longer-lasting relationships.

And those relationships deliver results. Customers who use multiple ArcBest solutions stay with us longer and generate significantly more value. Retention is 5% higher and revenue and profits are tripled.

We're not only cross-selling. We're building integrated partnerships. In fact, 70% of our Asset-Light customers also use our Asset-Based services. amplifying the impact of our sales efforts. And behind the scenes, we drive synergies across sales, technology, finance and HR, creating scalable growth that benefits both customers and our business.

As I mentioned, shippers typically rely on 4 distinct logistics solutions to keep operations running. Here is a powerful example of how our integrated approach allows us to grow with our customers. In 2014, we began serving a leading global auto manufacturer with a single expedite solution. By 2017, they added LTL. By 2018, they added truckload. By 2023, we became a managed solution partner, reengineering their supply chain and improving visibility. And in 2024, they began a Vaux Smart Autonomy pilot. This journey more than doubled revenue, from $17 million to $47 million. It's a testament to the power of trust, innovation and long-term partnership.

Trust isn't given. It's earned, and at ArcBest, it's foundational. We hear it from our customers, our team and our stakeholders. A premium experience drives retention, revenue and profitability. When we reduce friction for customers, we improve our own efficiency. It's a true win-win.

In a complex cyclical industry, we don't compete on price. We differentiate on service. And it shows. Over 80% of our revenue comes from customers who've been with us for more than a decade.

Capacity is critical in logistics, and ArcBest offers a diverse and flexible suite of capacity solutions. Unlike traditional 3PLs that rely solely on third-party providers or carriers limited by their own assets, ArcBest combines both. Through ABF, we operate 240 service centers and 40,000 pieces of owned equipment. Through MoLo, we built a top 15 truckload brokerage with access to over 70,000 carriers. Our managed and LTL brokerage solutions tap into over 95% of U.S. LTL capacity. And expedite adds 600 owner-operators delivering premium services for mission-critical freight.

This scale and diversity means we are built to solve complex challenges, which helps our customers grow and creates value for our shareholders. ArcBest isn't just moving freight; we're moving businesses forward.

Our dedication to service excellence is consistently recognized by customers and the industry. We're proud to be the only carrier to earn 10 or more American Trucking Associations' Excellence awards for security and cargo claims. This reflects our unwavering commitment to delivering freight on time and damage-free. This level of performance is more than operational pride. It enables us to align pricing with the value we deliver, which deepens customer relationships, leading to repeat business and sustainable revenue growth. And for 19 years, Mastio rated us Exceeding Industry Standards. This isn't luck. It's the result of disciplined execution, a customer-first mindset and continuous investment in tools that make doing business with us easier.

One of the ways we have transformed ArcBest is through our focus on innovation. Innovation is in our DNA. And today, it's a strategic engine powering efficiency, growth and transformation. Our innovation team is tightly aligned with the business goals and actively engaged with the start-up ecosystem, giving us early access to emerging technologies.

But innovation isn't limited to one team. It's embedded across ArcBest supported by trained innovation ambassadors who help us surface and scale ideas. We actively manage our innovation portfolio to prioritize initiatives that deliver the greatest shareholder return, whether through revenue growth or operational efficiency.

ArcBest has a long history of using technology to empower people and transform logistics. From adopting IBM Systems in the 1960s, to launching the industry's first transactional website in the 1990s, we consistently led the way. Our iterative approach moving from idea to pilot to scale delivers real results. Optimization initiatives of, in 2021, we've, through those optimization initiatives, we've realized over $45 million in cost savings. In 2023, we introduced the Vaux technology suite, named 1 of Time's Best Inventions of 2023. And in 2024, we launched an AI-powered optimization road map that's already driving results.

Today, Asset-Based productivity is at its highest since 2021, and Asset-Light productivity is at an all-time high. And we expect even more improvements ahead.

At ArcBest innovation starts with listening. We actively engage with our customers, employees and partners whose feedback fuels continuous improvement and drives commercial success across our business. Many of our most impactful offerings came directly from listening. Managed Solutions grew from customers asking for help with broader supply chain challenges. Retail Plus was cocreated with customers to avoid costly fines for missing delivery windows. Dynamic pricing was built in response to shifting quoting behavior, unlocking a new channel for profitable growth. And ArcBest View, that Seth will introduce later, delivers real-time visibility and multi-mode quoting in 1 intuitive platform.

A perfect example of our innovation capabilities is Vaux, a groundbreaking solution that began as an employee idea and has grown into transformative freight movement technology. Vaux began as a solution to improve trailer loading and unloading, but it quickly revealed broader potential. Today we're in discussions and pilots with some of the world's most recognizable brands about how Vaux can help reduce bottlenecks, improve safety and give companies greater control over their operations.

Our customers face growing pressure to improve efficiency while navigating labor shortages and aging workforce and safety concerns. Our opportunity for the material handling market is estimated at $50 billion and is expected to grow. Vaux positions ArcBest to lead in this high-growth market because it solves real problems and delivers real value.

Our first product, the Vaux Freight Movement System, can unload a trailer in under 5 minutes. That's a 90% improvement over traditional methods. Customers then asked for safer, more consistent material handling. So we developed Vaux Smart Autonomy, featuring teleoperated forklifts with human-in-the-loop capabilities. It's the fastest, most flexible way to introduce autonomy into existing operations without costly redesigns. Operators can now work remotely from anywhere in the world and manage multiple forklifts simultaneously.

Most recently, we launched Vaux Vision, which transforms a standard forklift into a mobile dimensioner. With recent NMFC changes, demand is rising and the data Vaux Vision captures is unlocking even more value.

Technology drives change, but people make it happen. And our people are at the heart of our success. We hire for skill and values alignment, and our customers feel that difference. Our turnover is approximately 30% lower than other large companies. So we spend less time recruiting and more time developing our people. And that shows. We're proud to be recognized by Forbes and U.S. News for our culture.

But we don't stop at recognition. We invest deeply in our people, from our driver development program with 40 schools and 1,000 CDL driver graduates, to our Leadership Academy now in its 10th year. We're building a resilient, adaptable workforce ready to lead through change.

Leaders like Seth Runser and Matt Godfrey are great examples, both started in our management development program, and their journeys prepared them to move confidently into new leadership roles and deliver impact from day 1.

When I stepped into the CEO role in 2010, we were emerging from the Great Recession. Over the past 15 years, we've built a stronger, more resilient business, and the results speak for themselves. Since 2019, revenue was up 49%, operating income was up 81% and earnings per share has more than doubled. We've built a track record of delivering profitable growth even amid industry volatility, and we're just getting started.

Our 3 strategic pillars: growth, efficiency and innovation are deeply interconnected. Innovation is the foundation that enables both profitable growth and operational efficiency. At ABF, we've improved our operating ratio by 330 basis points over the past 5 years. Normalized for union pension impacts, we're operating in the mid-80s. This reflects disciplined execution, a relentless focus on making employees' jobs easier and achieving our financial goals.

Long-term success requires a long-term mindset. And that's why we strategically invest through all phases of the business cycle. In 1997, we launched U-Pack, a flexible lever for profitable growth. In 2012, we launched strategic development programs for talent and began our transformation into an integrated logistics company with the acquisition of Panther.

In 2019, we began piloting the Vaux mobile platform, opening the door to a $50 billion market. We've been forward-thinking with AI, establishing our data analytics infrastructure in 2019, well before the current AI wave. And in 2021, we acquired MoLo to scale our truckload capabilities and launched our innovation portfolio, driving service and efficiency improvements. We've also invested in our facilities, expanding capacity and improving network performance. This disciplined approach builds resilience and maintains momentum and positions us for growth regardless of market conditions.

ArcBest has a proven track record of creating value. We delivered a total shareholder return of almost 140% over the past 5 years, outperforming the S&P 500 by over 20%. We've made tremendous progress and we're confident in the path ahead, but we know there's more to do.

So as I prepare for my retirement as CEO, I've reflected on what we've built together, I'm proud of the foundation we've laid, grounded in innovation, discipline and a deep commitment to our people, customers and investors. I'm confident in ArcBest's future under Seth's leadership. He brings deep business insight, a passion for our purpose and a clear vision for what's next, ensuring our continued focus on delivering long-term shareholder value.

And with that, it's my privilege to welcome our CEO-Elect and President, Seth Runser, to share more about the work underway and how we're building on this momentum.

Well, good afternoon, everyone. First, I want to thank Judy for her incredible leadership and her vision. Her stewardship has really built the foundation of the company we have today, and we're grateful for everything you've done for our company, Judy.

So I began my career with ArcBest about 18 years ago. And in that time, I've moved across the country, serving in various roles, from frontline operations to service center management, Regional Vice President of Operations. I ran our linehaul team, eventually moving into the ABF Freight President role in 2021, before taking this role. So my leadership has been defined by a drive to continually improve and profitably grow our business, active listening and a bias for swift action to drive results through efficiency and innovation.

When I became President ArcBest, I went on a listening tour around our company, and what I heard from our employees and our customers only strengthened my belief in ArcBest strategy. We have built our company to deliver for our customers, our employees and our shareholders.

My journey here has also reconfigured my convictions around our 3 strategic pillars: growth, innovation and efficiency. Through purposeful execution, we're strengthening our position in the industry and delivering the right solutions at the right time to meet evolving customer needs. Our integrated approach enables us to navigate disruptions, drive better supply chain outcomes and maximize value for our shareholders.

Looking ahead, our priorities are clear. Number one, accelerate profitable growth by strengthening our premium service offering. Number two, increase efficiency to enhance operational excellence and optimize performance. And number three, drive innovation to deliver solutions that keeps us and our customers ahead in an evolving world. These priorities guide how we operate, helping us anticipate challenges, seize opportunities and create opportunities and meaningful impact across the supply chain.

Now let's take a closer look at the steps we're taking to accelerate profitable growth. We've refined our go-to-market approach to align solutions with evolving customer needs. We're maintaining yield discipline, prioritizing profitable growth by delivering premium service. We're expanding our quote pool to increase digital engagement and drive revenue growth. And we're enhancing customer service and visibility tools to provide transparency and support for optimized supply chains.

We are focused on working smart and moving fast. Earlier this year, we made a strategic change, aligning marketing, yield, sales and customer service under one leader. This integration allows us to better connect the customer experience with pricing intelligence and our go-to-market strategy.

Eddie Sorg, our Chief Commercial Officer, is leading this transformation. Eddie brings almost 30 years of experience at ArcBest, including significant yield expertise. His deep understanding of cost and profit drivers, combined with this customer-first mindset, makes him uniquely qualified to lead this effort. His team is focused on accelerating managed opportunities, growing our core LTL business, optimizing the mix of our truckload business and enhancing the growth of our Expedite solution.

And his insights and leadership are shaping the next chapter of ArcBest growth. Our Managed Transportation Solution is a true success story. Since its launch in 2017, daily shipments have grown at an impressive 44% annual rate, and we've retained over 90% of our customers, a clear sign of the value we're delivering. Even during the freight recession, daily shipments grew more than 60% and, importantly, Managed remained profitable throughout the entire downturn.

That resilience underscores its strategic importance in our portfolio. Today, our Managed pipeline has surpassed $1 billion and will continue to expand, fueled by our growth initiatives. As Managed grows, so do our other services as we leverage LTL, Truckload and Expedite along with our carrier network to deliver seamless, efficient solutions that create value for customers and investors.

We are laser-focused on expanding our core LTL business, and capacity is key. Back in 2021 when I served as ABF Freight President, we began building for growth, investing in our network, equipment and pricing strategies. And these investments are paying off. In 2024, we launched a targeted sales campaign that's already adding about 2,000 new core LTL shipments per day, and that number continues to climb.

To accelerate this momentum, Eddie has a clear vision for commercial excellence. We've also met with sales and operation leaders nationwide to identify and remove barriers, streamlining contract administration, enhancing EDI connections, and investing in onboarding and retention teams. These changes are adding shipments and strengthening our long-term customer relationships.

Trust is earned through consistent execution, especially on the hard things. We reliably set appointments, handle over dimensional freight with care and deliver solutions that others avoid. These capabilities demonstrate our commitment to doing the difficult things well.

As trust builds, volume and pricing improve. In year 1, new customers see volume growth and pricing gains. And by year 2, tonnage with new accounts grows nearly 70%, signaling strong loyalty and an increased share of wallet. And pricing follows suit with low double-digit increases, reflecting the trust that we've earned. This progression underscores the long-term value our relationships and our ability to price for performance. As Judy mentioned earlier, 80% of our revenue comes from customers who have been with us over a decade, a testament to the trust and value we've built over time.

We're executing a strategic initiative to expand and optimize our Truckload business, driving higher margin growth and refining our customer mix. Enterprise customers are important, helping us maintain a strong carrier network and competitive buy rates. Many enterprise customers also leverage multiple ArcBest solutions. But our key focus is accelerating growth in the SMB market, which typically delivers 60% higher profit per load. To capture this opportunity, we've reorganized our truckload sales team, removing friction, streamlining processes and improving efficiency. These changes are producing meaningful results. When we acquired MoLo in 2021, 80% of our truckload revenue came from enterprise customers. Currently, the mix is 60% enterprise and 40% SMB. But our long-term goal is 60% SMB and 40% enterprise, positioning ArcBest for sustained profitable growth.

Truckload represents our largest market opportunity for share expansion, and we're excited to welcome Mac as Chief Operating Officer of Asset-Light. Mac's leadership will accelerate our momentum and strengthen our market position.

Expedite is also a critical component of our integrated logistics solution. Customers need speed and flexibility and reliability, and ArcBest is uniquely positioned to deliver with our Expedite solution. that provides time-sensitive and high priority services. We're already a top 5 expedite provider in the U.S., and we're building on that strength. Our opportunity pipeline revenue has grown by 10% since the first quarter of 2025, and we're investing in technology and capacity to capture even more of that demand.

We're getting ready to launch a proprietary TMS system designed to boost productivity and enhance customer experience. And our track record says it all: a 98% on-time success rate measured within 15 minutes of promised pickup and delivery. Expedite also plays a strategic role in our network, complementing Managed, LTL and Truckload. Net margins have expanded 140 basis points year-over-year and customer retention is up 11% since 2023. We are committed to accelerating the growth of this high-margin, high-value service.

Tech-enabled pricing has always been a core strength at ArcBest. 40 years ago, we developed a costing model well ahead of the industry. This model has been a long-time differentiator, enabling intelligent pricing decisions, making and driving value. We continually build on this foundation. Our Cost Calculator, which was developed in the '90s, it uses AI and predictive models and is still a key enabler of our industry-leading pricing. In 2017, ArcBest began implementing density-based pricing model nearly a decade before the most recent NMFC changes.

In addition, our fully integrated logistics approach gives us unmatched market intelligence and real-time pricing metrics. A more recent innovation, Dynamic Pricing, offers multiple benefits. Customers increasingly want to engage digitally. And through our proprietary technology and real-time decision engine, we provide intelligent quotes that optimize network capacity and profitability.

This disciplined technology-driven approach to pricing is a key differentiator. It supports our long-term financial goals and reinforces our commitment to delivering shareholder value. We've made the investments and they continue to pay off.

Our centralized pricing strategy drives profitable growth by enabling smarter, faster and more consistent decisions. Pricing discipline isn't just about setting rates. It's about delivering profitability. We've successfully implemented strategic price increases, coupled with operational efficiencies to stay ahead of rising costs while expanding margins.

At the heart of this strategy is our approach to pricing, which balances 3 critical factors. Number one, what does it cost to handle this business? Our model provides a detailed, data-driven view of cost drivers, ensuring profitability on an account-by-account basis.

Number two, what alternatives are available in the market? This keeps us competitive and well positioned.

Number three, what unique value do we bring to this customer supply chain. And this is where our integrated solutions and service set us apart from the competition. This process provides a full picture of each opportunity, drives intelligent decision-making, and it's a cornerstone of our success.

This disciplined approach has resulted in ArcBest having the strongest LTL pricing metrics among competitors, with revenue per 100 weight 1.6x higher and revenue per shipment 1.5x higher. This is a testament to the trust that our customers have in our ability to deliver for them.

At ArcBest, innovation and pricing strategy has long been a differentiator, and our internally developed dynamic pricing model is a prime example. The vast majority of our daily shipments come from core LTL customers, relationships that are foundational to our business. But as we all know, demand can fluctuate from day to day.

To better manage this variability, we developed our Dynamic Pricing model. This technology was designed to enhance utilization of our internal capacity on a daily basis. It allows us to place the right shipment in the right location at the right times, optimizing yield and ensuring sustainable revenue performance.

To give you a closer look at how this works in practice and the value it's creating for ArcBest and our customers, let's take a look at this short video.

[Presentation]

ArcBest is making pricing smarter and transforming how freight moves through our network with our dynamic pricing model. The LTL industry has been talking about moving to smarter pricing for many years. ArcBest is leading the industry in delivering on that vision.

While most of our shipments come from core LTL customers, some shippers prefer to quote their freight daily, seeking real-time pricing that meets immediate needs. ArcBest is meeting that demand with our dynamic pricing option that gives qualified shippers immediate access to our LTL capacity.

Gone are the days where shippers need to request LTL prices and negotiate for days, weeks or months to get to an agreed pricing structure.

Dynamic Pricing is a strategic engine. Behind every quote is a powerful AI-enabled system that considers market pricing, labor planning, capacity and costing, all fueled by a growing pool of daily quote activity. It's uniquely designed to adjust daily, ensuring our rates reflect the most current network and market conditions. As the quote pool expands, our pricing intelligence sharpens, enabling smarter decisions and driving incremental profits.

The result: optimized capacity utilization across our network and stronger, more consistent financial performance. Shippers request quotes for available capacity in real time. And our technology seamlessly matches their needs with our internal network, generating prices that reflect the current capacity and market conditions.

As demand fluctuates, the technology dynamically adjust pricing to align with available capacity, giving us the flexibility to capture incremental profit while maintaining disciplined pricing. By adjusting pricing based on real-time capacity, we optimize equipment and facility use, ensure labor consistency and maintain operational stability.

Since launching in 2020, Dynamic Pricing has scaled rapidly. Volume has grown unfold to nearly 250,000 quotes per day, and revenue shipment is up nearly 50% for this business.

A larger quote pool means better freight selection, higher yield and stronger financial performance. ArcBest View will make quoting even easier, and deeper integration with 3PLs and TMS platforms will expand our reach and drive more opportunities.

By leveraging technology, enhancing customer engagement and aligning with market trends, ArcBest is driving innovation in pricing and building a more agile, intelligent freight ecosystem.

As the freight industry becomes increasingly digital, you can see why our Dynamic Pricing model is a key competitive advantage. By combining the ease of use for customers with strong service, we've created a win-win. Customers get the flexibility they want and we deliver stronger results for our shareholders.

At ArcBest, exceptional service means more than moving freight. It's about creating seamless, trustworthy experiences. Our Voice of the Customer program combined with insights from Mastio help us understand what matters most to customers, which you can see on the left-hand side of the slide. This table illustrates 5 key initiatives we've launched to address these customer priorities.

The first is a renewed focus on quality training. For over 40 years, our quality process has driven continuous improvement. Last year we doubled down, training nearly 8,000 employees in 2024 and 2025 to deliver top-tier service.

The second focus is on digital connectivity, including investing in technology for seamless interactions, real-time visibility and proactive communication.

The third is an investment in key account management, which includes strengthening customer relationships and providing dedicated support to our largest and most profitable customers.

The fourth is a focus on continuous improvement, which includes deploying operational experts across the ABF network to reinforce best practices and implement new technology to support a premium customer experience.

And the fifth is standing up an onboarding and retention teams, supporting customers at every stage to reduce churn and build loyalty.

These initiatives underscore ArcBest's commitment to service excellence, driving retention, lowering cost to serve and creating real value.

Expectations continue to evolve, and we are meeting them head on with our digital tools that enhance service and visibility. At ArcBest, we believe technology should make doing business easier, faster and more intuitive. That philosophy drives our digital and AI strategies. We've deployed AVA, our AI-powered virtual assistant, which is transforming customer service. AVA intelligently routes inquiries, resolves common issues instantly and frees up our agents to focus on more value-added support. This improves response times and elevates the overall customer experience. Additionally, ETA accuracy has improved by over 20%, helping our customers plan more effectively.

And through EDI and API integrations and platforms like arcb.com, we're providing differentiated shipment visibility and proactive communication. These tools enable and empower customers with real-time insights and reduce the need for assisted service.

Use of our digital tools continues to grow and the impact is meaningful. Digitally engaged customers need significantly less customer support, which has contributed to a 20% reduction in customer interactions over the past year.

And now we're taking the next step. I'm excited to introduce ArcBest View, our new customer service platform currently in beta and launching publicly in early 2026. ArcBest View is more than a digital upgrade. It's a unified experience that brings quoting, booking and visibility across all of our logistics solutions into one seamless interface.

Within the ArcBest View platform, customers will have access to Viewpoint, our new visibility tool where they can manage shipments across modes in a single intuitive dashboard. Whether you're quoting an LTL shipment, booking a truckload or tracking a final-mile delivery, customers can do it all in one place, with fewer clicks and greater confidence. We're proud of what we've built and even more excited about what's ahead.

As you've just seen, our profitable growth strategy is comprehensive and intentional. Through a refined go-to-market approach, we have aligned our growth engine teams and are focused on accelerating managed opportunities, growing core LTL business, optimizing our truckload mix and enhancing Expedite growth. We are maintaining yield discipline through tech-enabled pricing strategies and expanding our quote pool opportunities through our Dynamic Pricing tool. And we are enhancing customer service with tools like ArcBest View. These efforts are already driving measurable results, and I'm confident they will drive value in the years to come.

We've outlined the strategic actions driving profitable growth, now let's focus on how we're boosting efficiency across the ArcBest enterprise. From optimizing network capacity and fleet operations, to expanding our continuous improvement teams, we're building this strong, efficient foundation for sustainable growth.

Our strategic investments in network infrastructure are essential to both our growth and high-quality service our customers expect. Since 2021, we've added roughly 800 net doors across our Asset-Based LTL network. These expansions are targeted, data informed and aligned with long-term customer demand.

Expanding square footage is not our only focus. By modernizing facilities and optimizing dock operations, we've reduced bottlenecks, improved throughput and enabling faster, more reliable service. This is how we scale with purpose.

As a recent example, the expansion of our Chicago distribution center increased transfer capacity by 24% in a critical hub, demonstrating our commitment to investing ahead of demand while maintaining capital discipline.

Our facility network is a strategic asset. We operate approximately 240 service centers across the country, each one thoughtfully placed as part of a well-planned real estate and network engineering strategy. Our network allows us to reach U.S. businesses within 1 hour 80% of the time, ensuring we're located where customers need us most.

Optimizing our network also drives efficiency in one of our most cost-intensive areas, linehaul, which represents about 40% of incremental expenses for ABF. Through facility expansion, smarter labor planning and improved productivity, we achieved record levels of trailer capacity utilization, a key measure of linehaul efficiency. Even small gains here creates significant value. Every 1% improvement in utilization equates to roughly $9 million in annualized cost savings. Since 2021, we've reduced total miles by $8 million while improving equipment utilization and service quality. We're also refining our appointment scheduling, enhancing labor planning tools and piloting new technology to optimize daily dispatch operations, improving both service and efficiency.

As we build a smarter, more efficient network, optimizing our fleet is a critical part of that vision. We invest around $160 million per year into equipment, one of our largest capital investments, guided by a data-driven total cost of ownership model. This approach ensures we maintain optimal replacement cycles, and we're proud to have one of the youngest and most efficient fleets in the network. A younger fleet means lower maintenance cost, better fuel efficiency and fewer service disruptions.

We prioritize safety and take our responsibility in sharing the road seriously. Having a newer fleet enables the latest safety technologies like advanced braking systems, collision mitigation and lane departure alerts. We're also piloting smart speed limiters and onboard cameras to further enhance safety and compliance.

ArcBest is committed to sustainability, and fleet optimization helps us reduce our carbon footprint. We've been an EPA Smart Wave Partner since 2006, and this year we were named an Inbound Logistics Green Supply Chain Partner for the 14th time. We continue to explore emerging technology to help reduce emissions and we're actively testing electric vehicles to understand where they could work best in our network. We're building a fleet that's safer, smarter and more sustainable, which will deliver value for our employees, customers and shareholders well into the future.

Our culture of continuous improvement enhances customer service and revenue while also delivering productivity gains, expanding transfer capacity, improving performance management and elevating service levels across the board. Our continuous improvement team coaches employees on process, safety compliance and deploys new technology, ensuring confident adoption of new tools.

In 2024, we completed this training at 5 of our largest facilities, generating $12 million in annualized savings. With a strong runway ahead, we're scaling this initiative in 2025 and beyond, reinforcing the operational excellence that sets ArcBest apart. This is how we empower our people to lead change and build a stronger, more agile organization for the future.

At ArcBest, innovation is not a buzzword. It's a disciplined, high-return investment that fuels profitable growth and sharpens our competitive edge. We're advancing on 2 key fronts: our innovation portfolio and our technology road map. These aren't isolated projects. They're part of a broader approach to innovation, one that's grounded in data, aligned with our strategy and focused on delivering long-term value for our customers, employees and shareholders.

The innovation happening at ArcBest is exciting. It's a powerful engine for driving efficiency, cost savings and service enhancements across the organization. To date, we've launched over 70 optimization projects. Of those, 45% are fully implemented and delivering results, while another 25% are in the pilot phase.

Each project begins with an idea, often sparked by a challenge in the field, a data insight or a customer opportunity. We test and refine, then scale the most impactful projects across our network.

Our strategy team plays a pivotal role in this process. They analyze performance data, study operational trends, leverage learnings from past successes to prioritize high-impact projects. Their work helps streamline processes, enhance customer experience and boost productivity. This approach reflects our commitment to using technology and disciplined processes to solve real-world problems.

Our optimization efforts are already driving measurable results. For example, our city route optimization tool, which uses AI to reduce manual tasks, improve route planning and maximize asset utilization. Phase one alone is contributing over $13 million in realized annual savings, and we're now advancing to the next 2 phases. Phase two uses daily demand predictions to streamline pickup routes, improving responsiveness and service efficiency. And Phase three introduces dynamic routing, automated, customized routes generated in near real time with flexibility for human adjustments based on local expertise. We're rolling out these phases strategically, starting with our most impactful locations first.

Let me give you a real-world example. At our Baltimore service center, this software cut a manager's planning time from 4 hours to just 45 minutes. Now in my history, I used to be the service center manager in Baltimore back in 2014, so I know how challenging the inbound operation can be there. I remember what it was like, and it would take me 4 to 6 hours to plan the city operation because I wasn't from the area, I wasn't familiar with the city. I was stuck behind a computer screen making adjustments when I really needed to be out on the dock coaching, training our employees.

When I saw this software and action during the pilot, I immediately thought back to that time when I was in that seat. It would have been a game changer, not just for me but for our customers, our people and our overall service and efficiency. This is a real-world example of how we solve real operational problems with our technology investment and how it has an impact on our overall results.

These results are only the beginning. Our approach to optimization backed by disciplined execution is unlocking meaningful value today and laying the groundwork for even greater efficiency and service gains tomorrow.

As we continue the conversation around innovation, let's look at how our technology road map is transforming the way we serve customers and operate our business. Customers increasingly want to engage digitally, and our initiatives combine the strength of human relationships with the power of technology. The result is a more efficient, responsive and scalable operation that lowers our cost to serve while improving the customer experience.

Here are a few key projects. Our carrier portal project has features like lane matching and auto offer negotiation to free up bandwidth for our teams. It improves margin and reduces fraud. We've already seen a 24% adoption rate, and 46% of our truckload shipments are now digitally fulfilled.

Our quote augmentation project uses AI to assist with load building to automate quote and e-mail replies, speeding up response times and improving accuracy. Our appointment scheduling project optimizes routes and specialized equipment by generating accurate pickup and delivery schedules, enhancing both efficiency and customer experience. Our inbound call project is piloting automation for routine calls, allowing teams to focus on complex, value-added interaction. We're also advancing our pricing and capacity sourcing projects to improve decision-making and agility in a dynamic market.

We've already realized $1 million in savings this year from these initiatives, with significant upside as usage grows. This is how ArcBest turns technology into performance, building a smarter, more connected company, ready to scale and adapt in a rapidly evolving landscape.

As you've seen today, ArcBest is executing with purpose, investing with discipline and innovating with speed. We've built a foundation that is strong, scalable and ready for what's next.

For me, this is personal. After 18 years at ArcBest, I've witnessed firsthand the incredible impact strong performance has, not just on our company, our customers and our shareholders, but on our people and their families. When we succeed, we create opportunities that reach far beyond our walls.

I couldn't be more excited about where we're headed. We are ready to accelerate. We are built to deliver. And together with the best team in the industry, we will continue creating lasting value for our customers, our shareholders and our employees for years to come.

Now we'll take a 15-minute break. When we return, Matt Beasley will show you how these initiatives translate into financial performance and long-term value creation, and walk you through our financial targets and the path ahead. Thank you very much.

[Break]

Well, good afternoon again. It's great to see so many familiar faces and some new ones as well.

You've just heard Judy and Seth talk about how ArcBest is built to deliver: with the right strategy, the right initiatives and the right team. And now I want to take that story and connect it with the numbers. And more importantly, what those numbers mean for creating sustainable long-term value for our shareholders.

Over the past 5 years, we've been navigating one of the most dynamic periods in freight history and delivered results that really speak for themselves. Let me share a few highlights.

First, we improved ABF's operating ratio by more than 300 basis points, thanks to strong service, disciplined pricing and operational excellence. Second, we more than doubled our non-GAAP EPS, significantly increasing the earnings power of the business. We also delivered an average 15% return on capital employed, showing how effectively we turn investments into returns. And we generated about $300 million annually in operating cash flow, which allowed us to return nearly $400 million to shareholders through share repurchases and dividends.

That's even more significant when you consider that we did it in a market where softness in manufacturing, housing and truckload rates created real headwinds. But we stayed focused and delivered. This track record gives us a strong foundation and real confidence in where we're headed next.

Looking ahead, our results will be driven by the 3 strategic pillars that Judy and Seth just covered. First, accelerating profitable growth. That means growing revenue in smart, disciplined ways while maintaining healthy margins. Second, increasing efficiency. We're focused on raising the bar on operational excellence across every part of our business. And third, driving innovation. We're using technology and creative ideas to stay ahead of the curve and deliver more value to our shareholders. Combine those pillars with our disciplined approach to capital allocation, and we believe we're in a strong position to deliver superior returns and build lasting shareholder value.

So let's dive into what that means for our financial targets and what you can expect from us in the years ahead. We have a clear, actionable plan to significantly improve the profitability of our Asset-Based business. Our target is to improve ABF's operating ratio from 91% in 2024 to between 87% and 90% by 2028. So why does that matter? Because every single percent of OR improvement at ABF means more than 10% increase in asset-based operating income when you compare it to 2024 levels.

We plan to get there by increasing revenue per shipment by more than 80% more than cost per shipment increases annually through 2028. At the same time, we expect shipments to grow steadily in the low single digits. So we'll have a healthy balance of margin expansion and volume growth, both coming from disciplined execution of the initiatives that Judy and Seth just covered.

This includes sharpening our go-to-market approach, to capture growth where it matters most; expanding our core LTL business and building on momentum in Managed Solutions, which also drives freight to ABF. On pricing, we'll stay disciplined and leverage our deep expertise. We're also expanding our dynamic quote pool to bring in the right freight to maximize network profitability. On the cost side, our investments in facilities, equipment, technology and training, along with process improvements will help offset inflation.

As these initiatives gain traction and the market improves, operating leverage will amplify results. That means meaningful operating income and EPS growth for our shareholders.

Now let's shift to our Asset-Light segment, where we see real opportunity to drive meaningful operating income growth. Our goal is to deliver non-GAAP operating income of between $40 million and $70 million by 2028. So let me walk you through how we plan to get there.

First, let's talk about Managed Solutions. As Seth mentioned, demand here is strong. We've seen double-digit growth in shipments and revenues. In the last quarter, in the second quarter, shipments hit an all-time high. Customers want partners who can help build supply chains that are both efficient and resilient, and that's exactly what Managed delivers. Last year, Managed contributed about $13 million in operating income. And with a healthy pipeline and strong momentum, we expect that to grow to about $25 million at the midpoint of our range.

Next, Expedite. This solution is all about premium service and exceptional on-time performance. Historically, Expedite has been a strong performer, averaging about $17 million a year over the last decade and even peaking near $40 million of operating contribution -- operating income contribution in 2021. Now recently, the softer manufacturing environment and lower truckload rates have pressured results. But as those markets recover, we expect results to improve.

At the midpoint, we're assuming about $15 million of operating income contribution, which is slightly below the 10-year average and we believe well within reach as the market rebounds. So just those 2 solutions alone get us to the lower end of our $40 million to $70 million target range.

So now let's talk about truckload. When we acquired MoLo, its strong enterprise customer base helped us deliver record segment operating income in 2022. Since then, like for the rest of the industry, compressed brokerage margins and pressure on contract business have created headwinds. But the actions that Seth outlined, expanding our SMB customer base, improving productivity and leveraging technology are working. In fact, Asset-Light posted its first profitable quarter in 2 years in the second quarter.

Brokerage continues to capture more of the total freight market and we expect demand for truckload brokerage to keep growing as customers seek brokers who can seamlessly connect them to capacity. So with disciplined execution, a recovery market and a leadership team strengthened by Mac Pinkerton and the technology and process improvements we've implemented, we believe that Asset-Light is positioned for sustainable, profitable growth.

So let's take a quick step back. Our strategy is clear, but we've navigated one of the longest and deepest freight recessions in recent memory. It's been a tough environment for everyone in the space. But despite those headwinds, ArcBest has continued to deliver solid results. The recent interest rate cut and the likelihood of more to come give us reason to be optimistic. Why? Because lower rates typically spark manufacturing and housing activity. And when those sectors pick up, freight demand usually follows, especially for ArcBest.

The midpoint of our target assumes only a partial recovery. But if the environment improves and we keep executing with discipline, we see real upside beyond the midpoint.

So let's talk about what a more meaningful recovery could mean for both of our business segments. Starting with our Asset-Based segment.

Manufacturing is one of the biggest drivers of freight demand in the U.S., and it's been in contraction for most of the last 3 years. Now to put that in perspective, nearly half of our Asset-Based revenue comes from manufacturing and wholesalers. If industrial production simply returns to historical trends, that alone could improve our operating ratio by about 140 basis points.

And then housing softness has impacted U-Pack and other housing-related shipments. A return to normal housing activity could add about 100 basis points. And if truckload pricing improves, which affects heavier, longer-haul LTL shipments, that could be another 40 basis points. And so if all 3 return to normal, that's up to 280 basis points of improvement over 2024 levels, and compared to the 100 basis points that we've assumed at the midpoint of our target.

On the Asset-Light side, a recovery in manufacturing and truckload rates could result in about $30 million of operating income in Expedite. That's double the $15 million that we're assuming at the midpoint of our target range. For truckload, every $10 improvement in margin per shipment adds about $3.5 million in operating income. So even small changes can have a big impact.

So to sum it all up, our targets only assume a partial recovery. If things bounce back faster and we keep doing what we do best, we see real potential to outperform these targets.

With our projected business performance, we expect to generate between $400 million and $500 million in operating cash flow in 2028. That kind of cash generation gives us the ability to keep investing in the business and continue returning capital to our shareholders. We'll keep putting capital to work where it delivers the strongest returns. That means focusing on high-return opportunities, things like real estate, equipment and innovation-driven projects that fuel growth, improve efficiency and position ArcBest for long-term success.

We'll also remain disciplined as we evaluate strategic M&A. And through it all, we'll maintain a strong balance sheet because that gives us the flexibility to deliver in any market environment.

So let's talk about our outlook for capital expenditures. If you look at this slide, you'll see that from 2022 through 2025, we've been in a period of elevated investment. During this time, we executed on our network facility road map, making strategic investments in real estate to build a strong foundation for profitable growth. These investments were intentional, designed to boost productivity, improve service quality and make sure we have the capacity to meet our customers' evolving needs.

Now looking ahead, we expect CapEx to normalize, averaging below 5% of revenue even as the business grows. With CapEx normalizing, we have more capacity to return capital to our shareholders, something we've consistently prioritized. Since 2019, we've returned nearly $0.5 billion through share repurchases and dividends. That shows the strength of our cash flow and our commitment to value creation.

Earlier this month, we announced a new $125 million share repurchase authorization, a clear signal of our Board's confidence in our strategy and ArcBest's long-term outlook. Looking ahead, we see real upside for our shares as the market improves and we keep executing. We'll continue to take a balanced and disciplined approach, returning capital to shareholders, investing in growth and keeping the flexibility to pursue strategic opportunities.

Now let's turn to our financial position and the strength that we built over time. So on the left side of this slide, you can see how our net debt to EBITDA has trended from 2019 through 2025 and how it's consistently stayed below the S&P 500 average. What really stands out here is the discipline we've maintained in managing leverage even as we've continued to invest in the business.

And over on the right, you'll see our liquidity position, with about $400 million in cash and available debt capacity. This strong financial foundation gives us the flexibility to keep investing in growth, navigate uncertainty and deliver long-term value for our shareholders.

So now let's put it all together and walk through how we plan to reach the midpoint of our 2028 EPS target. First, we'll start with 2024 EPS of $6.40. The first big driver is improving our asset-based operating ratio. That alone adds about $4 by 2028, taking us to above $10 per share. From there, shipment growth at ABF adds about another $1, pushing us above $11. And finally, improvements in Asset-Light operating income should contribute about $2. And if you add all that up, that gets you to around $13.50, which is the midpoint of our target range. And that's before any share count reduction from share repurchases, which could push our EPS even higher.

Beyond EPS and cash flow, we're also focused on return on capital employed or ROCE. It's a clear way to show how effectively every dollar we invest is working to create value for our shareholders. And this isn't just a number we track, it's built into both our short-term and long-term management incentive plans. Our target for ROCE for 2028 is from 16% to 19%, which is well above our cost of capital. It means that we're not just growing, we're creating real, sustainable value.

We've built a disciplined, growth-oriented plan, and we're confident we can deliver on it. When you look at these targets taken together, they show significant value creation and reinforce that ArcBest is built to deliver today and for the long term.

So let's bring it back to where we started. The future is bright for ArcBest. I'm proud of the progress we've made and even more excited about what's ahead. Premium service and operational excellence have always been fundamental at ArcBest. When you combine that with an outstanding team, a commitment to innovation, strong financial discipline and a solid balance sheet, it adds up to real sustainable value for our shareholders.

So that concludes our prepared remarks. We're going to take a very brief pause while we reset the stage, and then we'll open it up for Q&A.

Okay. We've covered a lot of ground today, and I already see the hands going up. I love it. And now we'd like to hear from you. In addition to Judy, Seth and myself, we have the broader management team here as well that we may turn it to, to answer your questions. So let's go ahead and open it up. You've already got the please raise your hands part, so we got that down. But please raise your hand. Amy will bring a microphone around. And then as I mentioned earlier, there's also an opportunity for those on the webcast to submit a question online as well.

All right. Bruce Chan from Stifel. First of all, I really appreciate the detailed look, and I'm excited to hear about the 2028 road map. .

Maybe I want to focus in on the dynamic pricing part of the story. I know that's a big part of your tech and operational road map. It's been around for a little while. I think early on in its debut, maybe it was a little bit controversial among the investment community, some bumps and bruises. So if you could talk about kind of what went wrong then. I know it's a little bit difficult to parse what was going on with that program versus the market. But talk about some of the early challenges and why, through that process, you think that it's the right path forward and how you think it's going to be helpful in the future.

Yes. So we did have some growing pains as we're piloting the technology and rolling it out in the early stages. But what we quickly realized is, as we grew that dynamic pool, we had more optionality to fill that empty capacity in our network. So the easiest way I think about it is if you need 100 dynamic shipments in the network and you're getting 10,000 quotes, you got to pick from that 10,000 quotes. But as we saw that quote pool expand, we've been able to get that same 100 shipments but have a lot better yield on those shipments because we pick it in the right locations at the right time within the network. So as we've expanded that pool and it's grown, it's given us more optionality within our network to actually select the best shipment.

And what we really saw from 2019 and even before that was customers want to engage digitally with us. And we really didn't have a channel say yes to those customers. So a lot of our business pre-Dynamic was contractual. And contractual business and core LTL is still a key focus of ours. It's the vast majority of our business gives us consistency with labor planning, knowing where the drivers are going to go, and it's also more profitable for us. But Dynamic was a channel that we just did not utilize as much on those more transactional customers, customers who want to quote every single shipment. And as we've expanded that pool, we've been able to get more selective with the freight we've been able to have, and that's improved our profitability on that mix.

So as that pool grows and we're able to say yes to more of those transactional customers, our yield should improve. But our key growth strategy on how we're going to create long-term shareholder value is really focused around that core business that we mentioned. That's why we're putting focus there. But dynamic is always -- it helps us fill that empty capacity. And we think as that quote pool continues to grow, it's going to really open the doors to us to improve that profitability.

Yes. And so like Seth said, we are focused on our core LTL shipments, but we're very pleased with the profitability of our dynamic shipments. And part of that is just the how vast the quote pool is now, I mean, at 250,000 quotes a day, we just have a lot of options for finding the right shipments that fit well in our network.

And so we've, like we talked about, we've tested it through a few different periods in the industry, and certainly, it was helpful as we went into COVID and saw a reduction in volumes, we were certainly using it in early 2023 as we were experiencing some weakness in the industry, that was helpful for us just to continue to maintain a strong network. And so as things strengthened in the back half of 2023, we have the capacity to be able to serve our customers. But like we talked about, as you're looking for a smaller amount of quotes in an ever-expanding pool, the profitability just continues to increase for us. And we're pleased with what we see and the direction that that's headed.

Ken Hoexter from BofA. Just a question, I guess, last Analyst Day, you talked about doubling revenues from $4 billion to $8 billion, now you're talking about more than doubling earnings. How much -- but you're also talking about the potential for economic upturn after we've been in this for 3.5 years. What -- maybe divide it up a little bit? What is coming from kind of in that breakdown, top line growth, costs, maybe delve into that a little bit on the ranges and how much we can expect from that breakdown. .

Yes. So Ken, appreciate the question. We try to focus on the metrics that we felt like would be most meaningful for investors today and certainly thinking that the asset-based operating ratio in the shipment growth would be the 2 most important factors to discuss. But just thinking about revenue, and I would say the most important piece of that for us was looking at a number of different scenarios to make sure that we were comfortable that over this period that we're looking at, we could increase revenue per shipment more than 80 basis points over cost per shipment.

And so when you look at the story that we have, I mean, we've got a very strong efficiency story, and I'm sure as we continue the Q&A, we'll have the opportunity to bring Matt Godfrey into the conversation just to talk more about what they're doing at the ABF operation and just the runway that we see there across line haul and dock street and yard productivity. And then on the revenue side, I mean, the steps that we've taken to focus on core LTL business, grow our Managed business that feeds into the asset-based network into our other solutions, our pricing discipline that we have, we feel like that all of that is going to come together to drive the 80 basis points.

I mean, we did look at a number of different scenarios. I'd say, generally, if you're looking at a revenue number for ABF, so we talked about low single-digit shipment growth, and then certainly, we've looked at a number of different scenarios on revenue per shipment. But I think if you combine reasonable assumptions on revenue per shipment, assuming reasonable inflation levels over the next few years, you're probably talking a mid-single-digit growth in revenue and ABF over this period.

And then Asset-Light, that's -- we think of that a little bit more just in terms of the net margins that drive out of that business. But certainly from the $1.75 billion of revenue that we saw in 2024, we see significant pathways to upside on revenue. But we really think operating income as being the most important item that we're focused on there.

It's Tom Wadewitz from UBS. Two questions for you. So one would be, I think you've emphasized the importance of having multiple solutions and managing how that's progressed with customers. What are the areas where you maybe don't have a solution today and you would like to or perhaps you don't have as much scale in the service you offer?

And then the second would just be, okay, across the time frame, how do you think the industry evolves? Do you assume it's kind of 4%, 5% pricing a year? Or how do you think about the kind of industry pricing assumption behind the forecast?

Yes. Thanks, Tom. We feel like we have all the solutions that we need to service our customers with excellence. We're always scanning the market based on organic investments or what we can do from an M&A standpoint. But we feel great on the trajectory that we're on with the solutions.

What I really want to highlight and why we went and provided multiple slides on Managed Solutions is because that's been our highest growth territory because it's resonating with customers. We have over $1 billion pipeline, as we highlighted within Managed, and it's because supply chains are getting more and more complex. And that's really the way we've built this company and what our strategy is around, it's saying yes to customers. And we feel like we have all the solutions that we need to service our customers with excellence.

So we feel good, but we're constantly evaluating where can we accelerate our growth, where can we accelerate innovation or efficiency. So we're going to keep our eyes open there.

And then remind me your second question? The landscape? Yes. I think industry pricing, I'll have Eddie chime in here in a minute, but I think the industry, we see it remaining rational right now through one of the most challenging times that we've experienced in recent memory. So in reality, the cost of equipment is going up, health care, all the different things. And that's why we focus so much on efficiency because that's what our customers are demanding of us. We want to make sure we're efficient with our resources because we want to keep -- help keep our customers cost in line.

So Eddie, if you want to add any key points about yield and pricing.

Yes. I think yield is going to continue, especially in the LTL space, it's pretty rational with the number of carriers that really own that market. So I don't see anything changing over the next few years in terms of price discipline and the ability to be able to capture the increases necessary to cover inflationary costs. So I feel really good about that.

I would say truckload is a little harder to predict. I mean, I think we're all expecting that to improve from a price level. But if you asked us tell us a specific time, we're going to all struggle to tell you when is that moment in time. I think the last 3 years, we always thought it was the back half of that year or that next year. and we've yet to see that happen.

But that's things we're thinking about. And we're not really waiting for the market to turn in order to try to achieve these goals. Really we have great initiatives to grow from a low single-digit standpoint across all of our solutions and improve price, and we're looking forward to that.

And I thought it was important too, when we moved Eddie into his role at the beginning of the year, he has significant yield expertise. He led our yield team for 27 of your 30 years. And I thought that was really important because we want to make sure that our growth is profitable. We don't want to grow just for growth's sake. We want to make sure we maintain that yield discipline. And that was important to me and having him on the leadership team.

Stephanie Moore with Jefferies. Looking at your 2028 targets, just rough math at the midpoint, plus or minus, it's about, call it, 300 basis points of improvement. And then if you look at the improvement you generated kind of, I think, 2019 to 2024 is kind of the target that you gave, it sounds like there's probably a lot of more initiatives or it seems like just from today a lot more initiatives at your backs here, and you are also assuming a bit of a market recovery too. So as you think about the potential for upside, maybe just talk about initiatives that you have underway where you think could drive maybe even further improvement.

Yes. We can have multiple of these leaders up here to talk, and I'll start with Matt, and then anyone else who wants to chime in. But we tried to outline kind of our key initiatives within the presentation today. We think if we can grow the core LTL base, that's going to help us with efficiency and profitable growth by delivering that value to customers. We're in the early stages of city route optimization. We got the first phase done, but the next 2 phases are going.

The reason we highlighted the network is because it's just such a large cost center for us that if we optimize and improve just 1%, it's a huge cost savings for us. When I look at MoLo, we bought MoLo in 2021, we've improved productivity over 200%. And Judy and I talk a lot, we feel like we're just getting started, not just with MoLo, I'm talking the entire company. So that optimization portfolio of 70 different projects, we think, is going to continue to drive real value.

I'll turn it over to Matt to give a few comments, and then [ Sarah ], I think we can have you talk about Asset-Light.

Thanks, Seth. Appreciate it. And what I think is most important to call out is what we highlighted in the presentation that we've continued to invest throughout the cycles. And so we highlighted our investment in the network that Seth talked about. We've also invested heavily in technology initiatives, which we'll highlight later during the reception, and we can go into some further detail on.

But Seth mentioned our City Route Optimization being in the early innings of that. the return we're seeing there. The investments we're making in customer visibility tools, the investments we're making in the appointment process, the investments that we're making in our linehaul network. And what I'm most excited about is, is we have these rolled out, we're utilizing them right now to generate return, but I know and I feel that the potential for return is even greater as we see the results of these growth initiatives that we're undertaking.

We'll have more opportunity to optimize. We'll have more opportunities to be more efficient. And that will allow us to take even further advantage of the growth that we're seeing.

So I'm very excited about the investments we made. I'm very excited of what's on our road map and still to come. And what I'm really confident is we'll continue to invest in these initiatives as we move forward.

And I'll turn it over to Sarah to talk about the MoLo.

Yes, and I can't turn it over without saying one quick thing. One of the great upsides we see potentially happening with Managed Solutions, it's our fastest-growing solution, but that's with a significant headwind of customers who are just down because of the macroeconomic environment. We haven't lost them, but they're just not shipping as much. So think about that continued growth rate along with customers coming back, shipping more in that solution, we could see a lot of upside with Managed.

And then on the truckload side, I mean, you've heard us speak a lot today about the efficiency improvement. Our investment in tech has, and our pilots that we have going on in tech, inbound call automation, automated appointment scheduling, automated load building, all of those things are improving our employee efficiency and then allowing us to repurpose some of those people and some of those roles into the outbound solicitation for SMB specifically. So every time that we make efficiency progress, we're also able to shift resources towards sort of that accelerated SMB growth.

And so with the sort of efficiency improvement, we get like a subsequent growth output too with some of the SMB goals that we have.

Ari Rosa with Citi. Two questions if I could, they're kind of related. So Stephanie asked about the upside. I'm actually kind of curious to hear your thoughts on the downside. Because one of the frustrations we hear when we talk to investors about ArcBest, it feels like there's a lot of progress made in upcycles, and then in down cycles, kind of a lot of that progress is given back. So just curious how you think about what's kind of the sustainable progress here that can be made and what the downside might look like, assuming we don't get some of these recovery effects.

And then for Seth, I'm curious how you think about your role coming in as CEO and what you might be doing differently from how Judy has done things in the past.

I mean maybe I'll just comment on the cycles and how we think about this. So one, certainly on the ABF side, we don't feel like that we've built in a lot of upside into the outlook range just from the macro. I mean, like I said, we've put in 100 basis points, which you could definitely see scenarios where that ends up being a stronger macro environment.

But I think all the different items that we've talked about in terms of technology investment and efficiency investment, I mean, there's a lot that's within our control. I would say, certainly, most of the improvement in operating ratio that we're talking about is kind of outside of the macro. And so all the different steps that we're taking on the revenue side, just continued progress on the efficiency side, those are things that we expect to make incremental progress over this period.

And then the macro, we -- looking ahead, we expect that that's going to add to that as well.

Yes, I agree. And when I think about coming into this role, when I first transitioned into the ArcBest President role, I talked about that listening to where I went around listened to our customers, I listened to our employees. And in all the feedback I heard from our customers, it was, hey, we need a logistics company that can provide holistic solutions across the board.

A lot of our customer supply chains are getting more and more complex, not less complex, right, with everything that's gone on these last 5 years. So we're built right. Our strategy is resonating with customers. And I feel like my responsibility in this role is to accelerate that progress.

That's partly why we wanted to do Investor Day today. We thought it was great timing with Judy and I's transition because we've talked a lot about the foundation is built, now we have to execute and accelerate on that progress. So I see a lot more of that. It's going to be driven by technology. Our people all working together. And my leadership style, I talked about earlier, I like to listen to our customers, see what they're -- see what they're thinking and then build solutions that align with their needs to support them over the long term.

And I do feel like our performance throughout this downturn is much better than in the past, when you think about a lot of people are comparing this time to the '09 recession, we lost about $100 million as Judy went into her role. And then fast forward to where we are now as a logistics company, we're doing pretty good, we're holding our own through all of these challenges that we've had. And we feel like we have a ton of upside, a ton of operating leverage as we move into the future. Because we stay close to our people, we stay close to our customers, we invest through the cycles to ensure that we are positioned to deliver shareholder value over the long term.

Can I talk about Seth? Well, what I would say about that is he is urgent. He's urgent about growth and he's urgent about continuous improvement. And rarely do you see someone that is so focused on accomplishing initiatives, just breaking down whatever the barriers are. I mean I think when he did his listening tour, he heard different obstacles, different difficulties people were having whether it was on the growth side or the efficiency side. And he's broken some of those down. You talked about some of those today.

And so that's what I love about Seth, is that he's urgent, aggressive toward wanting to grow the company, but doing it with a lot of initiatives around efficiency so that that growth can be profitable. And I really like that. It's meant something to me to have someone so capable and so focused in this role.

Chris Wetherbee from Wells Fargo. I guess, I think you have low single-digit volume growth in the LTL assumptions over the forecast period. I was wondering if you could maybe break down what you think the market growth opportunity looks like, and then maybe think about that in contrast to what we've seen in truckload. Obviously, the pricing spread between LTL and TL is as wide as probably it's ever been. So how much of a recovery do we need to see in truckload? And then I guess the follow-up question would be on the Dynamic Pricing piece. Where are these loads coming from? So where were they either in your portfolio or outside of your portfolio that you're now able to kind of tap into?

Yes. So I think you were asking about truckload rates and kind of what we see there. So you were asking about the LTL market opportunity too and just kind of where we see volume growth over the next few years.

How much does the market grow and how are you able to sort of tap into that, I guess, the relationship with [indiscernible] the LTL volume opportunity?

Yes. So we are assuming low single-digit market growth over this horizon. And we're at about 3.25% of the overall LTL market as is. And so we've looked at a lot of different scenarios, but I would say, in general, we're only talking about slightly increasing our market share with this forecast, maybe going from like 3.25% to maybe a little bit closer to 3.5%, maybe 3.4%.

On the truckload side, we've looked at this and we do see a relationship between truckload pricing and the longer haul, heavier shipments that we have in our network, greater than 5,000 pounds, greater than 1,000 pounds, and so when we're talking -- again, it's not the biggest piece of the macro improvement that we're looking at, but that piece, that 40 basis points of improvement, we're talking about adding maybe another 150 or so truckload shipments per day back into the LTL network.

And a lot of it is just we've done some modeling on truckload markets. And so based on historical market performance, we have some expectations for how truckload prices are going to play out over the next few years. And kind of based on where we see things for 2028, we think that that's likely to drive some level of LTL shipments that have moved to truckload back into the LTL space.

Yes. And I wanted to highlight, and we're not waiting on the market. That's what's key, is we're investing in the truckload SMB team, we've removed those barriers, we reorganized the sales function under Eddie's leadership. We've seen that growth in core LTL. So we're not waiting on the market to see that growth. And we're seeing some results. Our pipeline is the highest it's ever been. Managed is at all-time highs last quarter. Our core business continues to grow. So we feel good about the initiatives regardless of what's going on in the environment.

To your Dynamic question, a lot of those customers in the past were really small transactional customers that we really didn't get a shot at. They were quoting every single shipment, it was kind of onesie, twosies. And then a large portion of the Dynamic business is actually 3PLs. So it's our 3PL channel who are quoting every single shipment for customers. So it's a mix between those 2.

In the past, we really didn't have a way to say yes or have an answer for those customers because they'd have to go to our website, they'd have to go to a competitor website. They'd have to go all these different places. So Dynamic gives them the ability to see all the different options at their fingertips on that given day. And then we optimize our network for profit on a daily basis where we need that shipment that day. And that's really helped us with network balance and reducing that 9 million miles that we mentioned earlier in the presentation.

Chris, you could talk, Seth, also about just the visibility of what you need in the network. I think that's the other side of that, is because your confidence comes from being able to see what you need, right? And so you have the source of those that are quoting, but you have an understanding of where you need them, that's better than maybe historical.

Yes. I completely agree. We've been we've been utilizing AI really since the '90s. I know it's the new buzzword because of GenAI and all of that, but we've really been using AI. And that's really what that tool is built on, is seeing where do we have labor capacity, network capacity, line haul capacity, and instead of running that driver empty from which dock Kansas -- back to Kansas City, let's try to put some freight on that, right? Because it's moving anyways, that helps cover some of the cost of that fuel. And as we've seen that quote pool grow, we've seen the profitability of that business improve dramatically. And that's why we're going to continue to invest in digital tools like ArcBest View to make it even more seamless for our customers to get access to our capacity.

Yes. And Seth, one thing I'd add about Dynamic Pricing with 3PLs, we're very unique. We're the only ones who really are offering a transactional, truly dynamic price to 3PLs. And that allows us to not get stuck with a lot of business we don't want. If you put in a published price, a long-term committed price, even if you're allowed to update it quarterly or twice a year, you still kind of live with the results of that pricing decision.

With Dynamic, we can, on a day-by-day basis, regulate how much of that 3PL business comes in and we can optimize for profit. So it's very unique. It gives us a lot of ability to be reactive to what our network needs without being tied to a business that we really don't want, it's not good for the system.

It's Scott Group from Wolfe. So a couple of questions. You've added a bunch of the door count in recent years. I think you said CapEx coming down a little bit. How should we think about LTL door count going forward?

And then another one on the pricing side. So you talked about 80 basis points of price above cost. That's just a very specific number. So I guess, what are you seeing now? What's been the historical price/cost for you guys? Any reason to think it's better or worse? I know it's a long question, but just the targets are relative to '24 and margins are a couple of points lower this year, so do we need to assume that 80 basis points is actually 100-plus per year, just to sort of make up for this year? Is that the right way to think about what you guys are saying?

Yes, I'll start with the network question. So really what we've done throughout 2021 through 2025 is we've added about those 800 doors to the network. On a go-forward basis, we really just have a handful of locations that we need to address that we just haven't found the right opportunity so far. But for the most part, the majority of that work is done. And as we grow shipment count to reach these targets, we don't need to invest additional CapEx over just kind of our maintenance spend. So we feel like we positioned the network in a great spot.

When you think about everything that's transpired, when I was ABF President at the height of the pandemic, we had pinch points in the network where it limited our ability to grow because we would have a location get backlogged and cycle times for the whole network got messed up. And that's why we strategically invested in those certain sites to add that 800 doors.

And we didn't overspend either. We were very disciplined to make sure that we invested in the right areas, and that's allowed us to see that we can get to these shipment targets without that additional growth. So on a go-forward basis, you'll probably see around $40 million to $50 million around our maintenance CapEx for real estate. That's what we've said publicly, and there's just a handful of locations that we still have to address. And as opportunities come up, we'll address those.

Yes. And so then on the 80 basis points, you're right, it is very specific. But we looked at a lot of different scenarios and, based on that, the 87 -- sorry, yes, the 87 to 90 with an 88.5 midpoint looked like the most reasonable midpoint for 2028. And so just based on the 91.2 OR that we had, that was the general average of the revenue per shipment improvement in excess of cost per shipment and just a number that we felt comfortable and confident about hitting. So some of it was just the factor of kind of the starting point and then where we expect to end at the endpoint.

And so to your question about progress, I would say, certainly, on the cost side, we expect continued progress on cost. And so we've continued to do that. This year, if you look at our cost per shipment, and those are things that are more in our control, we're going to keep executing on certainly on the commercial initiatives, a lot of that is within our control, and we're going to keep executing on. But there could be some macroeconomic headwinds that we're facing here. Certainly, we faced some this year that we weren't expecting when we started the year. But I think as we look ahead, particularly into the back half of '26 and into '27 and '28, and we see the recovery that drives, just the overall average of 80 basis points over the period.

But yes, that's not to say that the end result is completely flat. Each particular year, it's just kind of incremental step-by-step progress, just given what some of the macroeconomic changes can be over the period.

Jordan Alliger at Goldman Sachs. I just wanted to come back to maybe a broader industry question. You spoke a lot about idiosyncratic opportunities around yield, which is great. But can you maybe talk to overall industry capacity now, your assessment of it going into the next up-cycle, the tailwind that could be, especially given that Yellow is no longer around?

Yes. Well, I think it creates tremendous potential for us on the upside. When you look just over the long term -- in the short term, you've heard a lot of stories about carriers adding capacity and things like that. But over the long term, for over 20 years, door capacity in the LTL market is significantly below where it was 10, 20 years ago.

So I was in frontline operations and a Regional Vice President of Operations in 2018 when we had a strong market. I couldn't imagine doing that without Yellow in the picture, from a market standpoint. We were so busy. And that's what we recognized throughout 2021 and the pandemic, that boom, we'd say, we have to invest in efficiency, in our network, in our equipment. And that's what we did, investing and expanding our facilities in strategic locations.

But it's not just about door count. It's not just about real estate. It's all about the efficiency side of things. Because if we can improve our efficiency 5%, 10%, 20% that allows us to say yes to more customers without adding additional cost. So I'm glad that we've taken a dual approach in expanding our network capacity while also improving efficiency because that allows us, on the next up cycle, we don't have to bring in as much labor, train as many new people because, generally, that's what leads to damages or comp issues or any of that type of stuff.

So we feel really good about the initiatives that we've outlined, and we think that we're positioned better than we have ever been in our history for the next up cycle and realize that operating leverage.

Bascome Majors, Susquehanna. Seth, maybe, Matt, you've laid out a series of cyclical and structural initiatives to get you to $400 million, $500 million in operating cash flow in 3 years, maybe $200 million, $300 million in free cash flow based on the CapEx guidance you have under that. But you've got the balance sheet you've talked about, you're going to be generating cash here on this path. How likely are scenarios where the portfolio looks meaningfully different than what you've laid out when we get to that 3 years? How are you thinking about M&A, potential transformational deals? Anything you like to talk on that?

Yes. Well, we're constantly evaluating M&A. We think that's important for us. So we take a balanced approach to capital, and I'll have Matt chime in with extra details. But we really look at organic investments, and say, where can we see the greatest return from our organic investments? That's in real estate, the fleet, technology, all the different initiatives that we outlined today. Then we're looking at share buybacks, dividends, and Matt shared a great chart of how we've accelerated that since 2019 and given more capital back to shareholders.

Then the last phase is really around M&A. So what we're looking for with M&A is does it align with our strategy and is it going to accelerate our results. And that could be in a certain area or it could be in a certain technology. So we have deals come across our desks all day long, and we're constantly evaluating, but we want to make sure that we're -- it's the right strategic fit for our companies. which ultimately will deliver value for our customers, which will translate to value for our shareholders.

So we're going to continue to look at M&A and make sure it's the right deal that aligns with our long-term strategy. And then, Matt, if you want to add anything to that.

I told you, you could have done my section. You did a great job. So you're right. We've got a strong balance sheet, we've got plenty of capacity. If you look at the forecast, there's a lot of cash flow generation that it shows over the next few years. And so like Seth said, really for us, and that's something that I think is really a strength that we have. I mean some companies like to look at M&A just to look at M&A, but it really starts with our strategy. And so if you look back through our history and our transformation into a logistics company, certainly, we have used M&A to do that. We talked about the Panther acquisition, the MoLo acquisition, several other acquisitions over the last decade or so. And so that's something that we'll continue to evaluate. But certainly, we'll start with our strategy and just making sure that we're continuing to maintain a strong balance sheet as well.

Reed Seay from Stephens Inc. I just wanted to ask a quick one on asset light. The net revenue per shipment of $75 translating to $3.5 million for every $10 of margin per shipment expansion, where do you expect to gain that net revenue per shipment? As you have a tightening truckload market, you have a lot of tech investments, obviously, but a lot of them seem to be back office right now. What tech investments do you expect to get you there or operation improvements? And what kind of cadence could we expect from that?

Yes. So I'll pass it over to [ Sarah ]. But you're right. So what we highlighted is the $75 -- the improvement of, sorry, $3.5 million for the improvement in the truckload margins, that is an improvement versus kind of where we were looking at in 2024, we were at around $175 per shipment of net revenue that we were driving.

And so certainly, starting from that standpoint, we've already seen significant improvement. That team on the truckload side has already done a great business -- great job focusing on our most profitable business there. And so you can see our volume levels have come down a little bit as we've done that, but it's been to the benefit of margin. And that's one of the reasons why we had our profitable quarter that we did in the second quarter and why we feel good about the outlook.

But maybe Sarah, if you just want to talk high level about how we expect to achieve that improvement in margin per shipment that we were talking about.

Yes. And I don't know, Christopher, if you have anything to add to this. But when you think about some of the investments that we're making in tech, look, we focus on inbound call automation, for example, we are going to have significantly more data, and that data directly ties to sort of real-time appetite for freight.

So if you take an example what a carrier we might post a load today and get x number of calls and post the same load tomorrow and get 5x. That information, we're kind of aggregating in the background, that can help inform the way that we buy potentially and the way that we price. Before a lot of these tech initiatives and pilots that we're working on now, we don't have that real-time data, but it's a big, big part of our long-term strategy, is what we can do with that data to inform our pricing on both the buy side and the pricing sent to customers.

Yes. I think we've already commented on this, but just the mix of enterprise versus SMB, just that mix change that will drive net revenue per shipment improvement as well.

Yes. And on the overall Asset-Light standpoint, there'll be a mix adjustment as well. We do expect Managed to continue to grow. That generally has a lower net revenue per shipment because it's closer to LTL than truckload. But there's going to be a lot of moving parts here, but ultimately, it's all about improved profitability, whether it's truckload, Managed, Expedite, international, any of our Asset-Light solutions.

It's Ken Hoexter again from BofA, and thank you very much for hosting the Analyst Day after a decade, Great to see you all. Enjoy your time in New York. So just a couple of questions. Just maybe where you are here and now, right? So the asset backside, union constraints, can you talk a little bit about as you go through these changes, what kind of incrementally do you need from the unions to get more advanced on as you roll out digital? Are there constraints in terms of how far you can get?

Used to have manual bills of lading, when I go to a dock and the driver would move it from one to one or another, and I saw that you said that that's more automated now. But how far are you now in measuring each shipment, or simple things like another peer talks about airbags and ratchet traps. Is that something you've deployed in terms of lowering your cargo. Maybe talk about your cargo claims, on-time performance. Just trying to understand where you are now. And then the Vaux pictures were great, but what's going on now versus what is coming?

Yes. So we really view our unionized team as an advantage for us. So we get to hire the best people in the industry. If you looked at the stats that Judy shared about our tenure and how long our employees have been here, that allows us to provide a best-in-class customer experience because our turnover is so low. The #1 reason people leave ABF is because of retirement. And that's a great thing. We want them to have great retirements. But what that does is it allows them to build relationships with our customers that are critical in driving that profitable growth and that value creation.

So we really view it as a competitive advantage because we don't need to continuously hire people. And when we do need to hire people, employees know that we have the best job in town. So we had a hiring event at our Chicago facility about a month or 2 ago, Matt, we needed about 30 dock positions filled, we had 600 people show up to that hiring event, which tells you what our brand means in the marketplace. So we get to select the best people to service our customers with excellence.

From a restriction standpoint, there isn't too many. We can operate implementing technologies. We have a technology committee within our contract where we meet with the IBT leadership, and we negotiate and talk through those things. So we really haven't been limited by anything that we've been implementing.

Most recently, we've rolled out the dock software that we've talked about publicly on our earnings call. We're still early stages into that, but that's giving us more visibility into our dock operation than we've ever had in our history. It's employee-level productivity. It's giving us the ability to have the data to create digital twins, a lot of different things that we're experiencing right now. But we really haven't experienced much limitation. I do feel like we are just getting started. We've talked about city route, dock, we're really -- we've got a long runway of optimization projects that I think is going to deliver real value over the long term because of where we're going. I just feel great about that.

And Seth, I would add, when we think about the resources for the job, and you mentioned some of those things, when you really think about paper in the process, the only real piece of paper is at a time of pickup. From there on, it's moving through our network in a paperless fashion, right? So Seth talked about the dock software. We also have software at the time of pickup, at the time of delivery to handle all those. When we think about freight handling, not only have we used airbags and straps and those things throughout the years, we've co-developed tools with vendors based on employee feedback to mount air compressors on our forklifts to make the use of airbags even easier to handle our freight.

And we also -- we have like our road team captains, we have a low team and a road team made up of our best of our best drivers. And they give us all sorts of feedback, from freight handling equipment, to our city equipment, the tractors and trailers that we spec and purchase and buy, all geared at making our employees' jobs easier, safer and allowing us to serve the customers better.

And he won't brag here, but we've got our low -- our highest paid claim frequency, and maybe all time. and we have our highest density adjusted raw load average than we've ever seen. And I'll give you an anecdotal example, but we've spent a lot of time at our service centers with our people this year, especially through this transition with Seth and the reorganization, and I can't tell you the last time I've seen our trailers look this good from a loaded standpoint. It is high and tight. It is -- these loads look great. And it's leading to better load average and less claims.

And it resonates with our customers, it's what -- it's allowing us from a sales standpoint to be more successful with customers to acquire that business because the proof is in the pudding. We're able to say that we're really good at handling freight and then we back it up. And it's been very beneficial to us.

We've got time for one more question before I hand it back over to Judy for some closing comments. As a reminder, you will have the opportunity to continue conversations with our team during the reception that will start as soon as we wrap up here. So one more question, anyone? Stephanie, I think you had another one maybe.

I like your last answer. But I just had one maybe high-level question, and maybe Judy or anyone on the team. We've seen a lot on the truckload side about just the growth in private fleets and the impact that might be having or is having on the supply and just this prolonged freight recession. But I think we've also -- I've at least seen some data where it's talked about private fleets are also kind of expanding their number of locations and getting closer to their own customers. So do you think this dynamic, which I think is certainly having an impact on the truckload side, could be having any impact on the LTL side? Your thoughts.

Yes. I don't -- I personally don't believe so. I'm sure there's a little bit of impact on private fleets where they may be used to ship LTL and converted it to a private fleet or maybe a truckload model. But that's why we're built the way we are. And we're able to do that for the customer. If they don't want to invest in a private fleet, we can do pool distribution models through our managed solution offering.

So I think long term, what's going on with people investing in their own private fleet, they're realizing the cost of equipment and operating and recruiting drivers and all those different things. That's why they're looking for logistics partners who offer multiple solutions to solve through that. So we haven't seen it as much so far, but the future could hold anything. What we really try to do is deliver value to our customers, to answer those types of supply chain so that they don't have to invest in driver and all the DOT certification and all the things you have to do to run a carrier base, whether it's private or [indiscernible].

All right. Well, we've come to the end of the Q&A part of this. And you've heard from this leadership team that I'm so proud of. I mean I just really am, and just reinforces my confidence. But we are built to deliver and we've got a strategic differentiated approach, which you've heard a lot about today and purposeful execution. This team is ready to execute.

And we hope you leave with a deeper understanding of the strength of the foundation that we've laid, the clarity that we have in our vision and that confidence that we have in our ability to achieve our targets and drive sustainable long-term value for our shareholders.

And so I want to thank our team for the work that they've done to get ready for this. There's a lot of work involved in these. And I just want to thank you all for your time, your questions, your interest. We want to continue this conversation. And so we hope that there's follow-up. We hope that you want to talk about more of this because there's some great information here and great execution plans and what I feel like is a differentiated but yet amazing strategy.

So thank you for your interest and your time and your dedication to our story. And we really appreciate it, and we're here for you. So thank you.