ArcBest Corporation Q2 FY2025 earnings call

• Business Strategy: Focus on growth, efficiency, and innovation; forward-thinking, customer-centric approach with disciplined execution. - Segment Performance: Asset-Based saw shipment growth and cost per shipment improvement; Asset-Light continued growth in Managed Solutions. - Investments: In technology (AI, predictive analytics, dock management system), talent, and infrastructure. - Board Changes: Welcomed Thom Albrecht, Steve Spinner to retire. - Investor Day: ArcBest to host first Investor Day in a decade on September 29, showcasing strategic priorities and long-term targets.

Asset-Based Segment: Second quarter revenue was $713 million, with a daily increase of 1%. ABS operating ratio was 92.8%, a 300 basis point increase over Q2 2024. Daily shipments grew by 6%, but weight per shipment decreased by 1%, leading to a 4% increase in tons per day. Revenue per hundredweight declined 3% year-over-year. Asset-Light Segment: Second quarter revenue was $342 million, a daily decrease of 13% year-over-year. Shipments per day were down 7% as less profitable Truckload volumes were reduced, offsetting double-digit growth in Managed Solutions. Non-GAAP operating income was $1 million, an improvement from last year's loss.

• Third quarter performance expected to be generally in line with historical trend of ABF's non-GAAP operating ratio improving by about 70 basis points from Q2 to Q3. - July 2025 trends: Daily shipments grew by 2% year-over-year, but weight per shipment decreased 2%, resulting in flat daily tonnage. - Announced a 5.9% general rate increase effective August 4. - Expect non-GAAP operating income for Asset-Light segment in Q3 to range from breakeven to $1 million in profit.

• Soft freight market with challenges in manufacturing and housing. - Increased operating costs due to annual contract rate increases for union labor and purchased transportation. - Competition in the LTL and Truckload markets, potential price aggression from competitors. - Impact of economic and interest rate conditions on household goods moves and yield.

Q: One question. So I believe you have some easier comps coming up in your trends year-over-year for August and September revenue per day, tons per day, et cetera. I'm just curious, do you think that could lead to sort of a step-up in the trend line on a year-over-year basis as we move past July and the trends we're seeing there? I mean, could we even see some inflection on revenue per day?

A: Yes. Jordan, this is Matt. So the trends that we saw when we moved from the first quarter to second quarter, we certainly were ahead of history when we look at shipment per day versus the 10-year historical trend. I think, as we look from the second quarter to the third quarter, in large part, just due to the commercial efforts that we have ongoing and the success that we've seen there, I do think that there's some potential to outperform a little bit versus what historical seasonality has been on shipments per day.

Q: First of all, Seth, congratulations. And then also, I should probably give a little shout out to Thom. I think he's a great addition to your Board. I wanted to look at, sort of, the push into the SMBs. We've heard that from a lot of other LTL carriers. I was just wondering, is there becoming more price aggression in that area? Or is that just sort of a market that is not as price sensitive as some of maybe the other larger national accounts? And then also sticking on that, is the freight profile different among the SMB customers? And how should we think about that in the model?

A: Yes. Jason, this is Eddie. Yes, I mean, we are remaining focused, especially with our field sales force on that SMB market, and that really kind of includes the middle market as well. I wouldn't say that there's a different price point with that. Every customer is unique in terms of their business, their location, the competitors in those markets. We like that business because we can build long-term lasting relationships. It's stickier for us. What we excel in from a sales perspective is those relationships. And so that's part of the focus. I mean, historically, SMB middle market, it is less price sensitive than what you would consider with big enterprise customers, especially in the retail space. So we like it from that perspective. Profile really is a mixed bag with those customers. And you can imagine there's a lot of verticals that are represented in the SMB and middle market spaces. So for us, it's just -- it's good business that we feel like we have a value proposition for those customers that will allow us to excel.