ArcBest Corporation Q1 FY2026 earnings call

• Challenging operating environment with severe winter weather, higher fuel prices, but focus on executing long-term strategy. - Launched ArcBest View in May to enable customers to quote, book, and track shipments. - Asset-based segment: Daily shipments increased 2% year-over-year, deferred price increases averaged 6%, demand for managed solutions grew. - Asset-light segment: Shipments per day increased 10% and reached new first quarter record. - Progress on efficiency and innovation initiatives: Continuous improvement training implemented across ~75% of network generating $32M in annualized cost savings, city route optimization project on track with $15M in annualized savings. - AI strategy: Deliberate, aligned with business priorities, applying right tools for right needs. - Focus on removing barriers, simplifying work, enabling team collaboration.

Asset-based segment: First quarter revenue $655 million, up 2% per-day; daily shipments increased 2% to nearly 20,000 per day; ABS operating ratio 97.3%, 140 basis points higher than last year; daily tonnage increased 7% with 2% increase in shipments per day and 5% increase in weight per shipment; revenue per shipment slightly increased but revenue per hundredweight declined 4% due to freight profile shift. Asset-light segment: First quarter revenue $378 million, up 7% per-day; shipments per day increased 10% to new first quarter record led by managed solutions; revenue per shipment declined 3% due to mix of managed business; selling, general, and administrative expense per shipment declined 15% to record low, and employee productivity reached record high with shipments per person per day increasing 26%.

• Second quarter performance expected to improve sequentially by approximately 400 to 500 basis points for asset-based segment based on current trends. - Asset-light segment expected second quarter non-GAAP operating income in range of approximately $1 million to $3 million. - Returning capital to shareholders remains priority, expect to be opportunistic with repurchases based on share price while prioritizing high return organic investments. - Confident in strategic direction and ability to deliver long-term targets outlined at Investor Day.

• Severe winter weather, higher fuel prices, and continued uncertainty in the operating environment. - Regulatory enforcement and higher operating costs leading to capacity exiting the truckload industry. - Uncertainty in the timing and pace of broader recovery in freight demand. - Potential impact of recent headlines and regulatory developments on truckload brokerage, including safety and compliance risks.

Q: Ravi Shankar from Morgan Stanley asked about conditions becoming more constructive, which end markets and parts of the country are seeing it and if it's broad-based.

A: Seth responded that demand trends have stabilized but still below mid-cycle norms, manufacturing and housing pressure volumes, but shipments grew 2% in asset base, capacity fundamentals moving constructively.

Q: Chris Weatherby from Wells Fargo asked about TL rated freight and volume shift back.

A: Seth talked about truckload side with enterprise shippers granting increases, spot rates exceeding contract, and Eddie mentioned early signs of truckload rated shipments moving into asset-based network.

Q: Jason Seidel from TD Coward asked about pricing going into mid-cycle demand stage.

A: Seth said core LTL pricing continues to improve, deferred contract renewals increased 6%, and dynamic quoted freight strategy's effectiveness improves with expanded quote pool.

Q: Scott Group from Wolf Research asked about Q2 OR guide outperforming seasonality and fuel flow-through.

A: Matt said it's across the board outperformance, fuel is a driver but strength across business is primary.

Q: Jordan Oliver from Goldman Sachs asked about weight per shipment and economy impact.

A: Seth said weight per shipment still impacted by softer manufacturing economy, but dynamic shipments trending heavier and some truckload-rated shipments moving in.

Q: Bruce Chan from Stifel asked about asset light business productivity and contract mix.

A: Seth talked about asset light delivering 3M in non-gap op income, strong shipment growth led by managed, and Matt mentioned spot versus contract mix roughly 50-50.

Q: Tom Wadewitz from UBS Financial asked about pricing environment and ex-fuel revenue per shipment.

A: Seth and Eddie talked about fuel surcharge covering more than fuel costs and yield discipline.

Q: Brian Ausenbeck from JP Morgan asked about truckload brokerage safety risks.

A: Seth said focus on disciplined execution and compliance, carriers not meeting requirements not eligible.

Q: Stephanie Moore from Jefferies asked about progress towards 2028 targets.

A: Seth talked about confidence in long-term view, truckload exits and PMI reading encouraging, and progress on network and technology investments.

Q: Ari Rosa from Citigroup asked about reflections as CEO and managing the business differently.

A: Seth talked about believing in strategy, focusing on customer, accelerating strategy, and people being heart of success.

Q: Ken Huckster from Bank of America asked about stickiness of dynamic freight and timeframe from rising ISM.

A: Seth talked about dynamic mix change due to quote pool growth, optimizing mix daily based on profit maximization, and excess capacity in people, equipment, and real estate.