ARCB

Market Environment Update

• Industry truckload capacity continues to tighten as supply exits the market, driving modest LTL volume gains from truckload spillover
• Broad-based industrial demand inflection has not yet occurred, but recent manufacturing PMI readings in expansion territory are encouraging, and the market environment is gradually improving
• Higher fuel prices increased industry-wide revenue in Q2, but management views this as a temporary near-term factor

Strategic and Operational Updates

• Launched ArcBest View, a new unified digital logistics platform that combines quoting, booking, shipment visibility, and reporting into a single customer-facing interface, with growing customer engagement
• Announced organizational restructuring and brand consolidation: closed 10 facilities representing ~1% of total ABF Freight network doors, with operations consolidated into nearby locations. The changes are expected to generate $40 million in annualized cost savings, with no change to the company's long-term strategy or 2028 Investor Day financial targets
• Expanded digital quote pool capabilities enable greater freight selectivity, supporting a heavier, more operationally efficient freight mix that improves profitability
• Managed Solutions delivered another exceptional quarter, with daily shipments reaching a record high, driven by a strong customer pipeline and growing demand for integrated tailored logistics
• Artificial intelligence is being integrated into core operations, with practical applications including city route optimization and AI-enabled capacity sourcing already delivering measurable productivity gains
• Restructuring charges: Q2 GAAP results include $76.5 million in non-cash impairment charges for the Panther trade name, box equipment, and other assets, plus an additional $8.8 million non-cash impairment for office space in the asset-light segment. Approximately $6 to $7 million in cash restructuring costs (primarily severance and Vox equipment disposal) will be recognized mostly in Q3 2026

Capital Allocation Priorities

• Maintain a strong balance sheet and financial flexibility
• Invest selectively in opportunities that drive profitable growth and attractive long-term returns
• Continue returning capital to shareholders as part of a balanced capital allocation strategy

• For the asset-based segment, management expects Q3 2026 adjusted operating ratio to be generally in line with Q2 2026 levels. The outlook incorporates lower expected fuel surcharge revenue, which is partially offset by cost savings from recently completed restructuring actions
• For the AssetLite segment, management expects Q3 2026 non-GAAP operating income to be in the range of $6 million to $8 million, reflecting continued pricing discipline, productivity improvements, and anticipated restructuring cost savings
• Full annual run-rate cost savings from restructuring will reach $40 million (=$10 million per quarter) by Q1 2027. Approximately $2 million in savings were realized in Q2 2026, with $6 million expected in Q3 2026
• Of the $40 million total annual restructuring savings, ~75% ($30 million) will accrue to the asset-based segment, ~20% ($8 million) to the AssetLite segment, and the remaining $2 million to other operations. The full non-GAAP annual impact is approximately $38 million
• Restructuring actions are supportive of the company's existing long-term 2028 financial targets outlined at Investor Day, and do not represent incremental upside or a change to prior targets; management reaffirmed confidence in achieving these long-term targets

ArcBest's consolidated Q2 2026 total revenue was $1.2 billion, representing a 16% year-over-year increase. Non-GAAP consolidated operating income was $74 million, up from $45 million in Q2 2025, and adjusted earnings per share was $2.38, up from $1.36 year-over-year.

1. Asset-based segment: Q2 2026 revenue was $784 million, which accounts for approximately 65% of total consolidated revenue, with a 10% year-over-year increase on a per-day basis. Non-GAAP operating income improved by $21 million year-over-year. The adjusted operating ratio improved to 90.8%, 200 basis points better than the prior year and 650 basis points better sequentially. Daily tonnage increased 5% year-over-year, driven by an 8% increase in weight per shipment, partially offset by a 3% decrease in daily shipments. Revenue per shipment increased 13% year-over-year, with a 4% increase in revenue per hundredweight primarily from higher fuel surcharge revenue.

2. AssetLite segment: Q2 2026 revenue was $439 million, which accounts for approximately 35% of total consolidated revenue, with a 28% year-over-year increase on a per-day basis. Non-GAAP operating income was $6 million, representing a $5 million year-over-year improvement. Daily shipments increased 15% year-over-year, led by strong growth in Managed Solutions. Revenue per shipment improved 12%, and selling, general, and administrative expense per shipment declined 12%. Employee productivity hit a record, with shipments per person per day increasing 35% year-over-year.

• Market conditions can shift quickly despite gradual recent improvement, and a broad-based inflection in industrial demand has not yet materialized, creating uncertainty for near-term volume growth
• Fuel price volatility impacts both revenue (via fuel surcharges) and operating costs, creating variability in quarterly margin performance
• Post-SCOTUS Montgomery decision, the legal and insurance landscape for brokerage operations is still evolving, which may lead to industry-wide changes to insurance costs and liability requirements that are not yet fully predictable
• Restructuring actions affect employees and local communities, creating potential near-term operational disruption during the consolidation of facilities and operations
• Housing construction demand remains weak, which continues to pressure the UPAC business segment, which historically contributes heavier average shipments, impacting overall segment weight mix
• If industrial demand does not improve as expected, the company may not realize the expected volume and margin benefits from tightening truckload capacity

Q: How does higher fuel prices impact Q2 results, and what is the expected impact for Q3? Also, what is driving accelerating July tonnage trends, and can the company handle continued growth while maintaining service quality? / A: Q2's sequential operating ratio improvement came from multiple factors including typical seasonal improvement from Q1 weather, higher weight per shipment, strong pricing, and productivity gains in addition to higher fuel prices. For Q3, fuel prices are expected to be lower than Q2, but even with this headwind, management still expects asset-based operating ratio to be flat sequentially relative to Q2, as restructuring cost savings offset the fuel impact. July tonnage trends are stronger than historical seasonal norms, driven by a heavier freight mix from improved freight selectivity via the expanded digital quote pool, and the company is well-positioned to handle growth with excess capacity and ongoing network optimization. (478 chars)

Q: What triggered the recent restructuring, and what is your expectation for near-term yield increases amid tightening truckload capacity? / A: Restructuring is not a response to weak demand, but an acceleration of the long-term strategy outlined at Investor Day. It is designed to simplify go-to-market, eliminate organizational duplication, improve decision-making, and capture value from prior technology and commercial investments. Even after closing 1% of network doors, the company still has 8% more doors than it did in 2021, so it remains positioned for future demand growth. For asset-light truckload rates, management expects low double-digit near-term increases, which aligns with current industry trends, and tightening capacity is already benefiting expedite margins. (481 chars)

Q: What is your outlook for truckload spillover growth, and how has the SCOTUS Montgomery decision impacted your insurance and liability outlook for brokerage operations? / A: The company is already seeing early modest improvements in heavier truckload spillover shipments, primarily in shipments over 10,000 pounds. As truckload capacity continues to exit the market and carriers face margin pressure, management expects more of this heavier, complex freight to shift back to LTL, and the company's pre-cycle network investments position it well to capture this growth. The Montgomery decision provides clearer legal framework for broker carrier selection and liability, and the company has long maintained strict structured risk-based carrier vetting and monitoring processes. While the industry is still evaluating the ruling's impact on insurance costs, management does not expect any material change to ArcBest's outlook due to its existing strong compliance processes. (569 chars)

Q: What is driving the significant increase in average weight per shipment, and what is the mix of core versus transactional freight? / A: The vast majority of ArcBest's business is core LTL, where customer retention remains strong but average shipment volumes per customer are still down due to weak end demand. The increase in average weight per shipment primarily comes from two factors: (1) the expanded digital quote pool allows greater selectivity for heavier, more profitable shipments that optimize network empty miles and improve profitability, and (2) the slower UPAC business (tied to weak housing) which historically contributed many smaller but heavier shipments, has dragged down overall shipment count more than total tonnage, pushing up the average weight per remaining shipment. Core business mix remains largely consistent, with dynamic/transactional freight used primarily to optimize network utilization and profitability. (532 chars)