ARCB - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2018 Earnings Call brought to you by ArcBest.

During the presentation, all participants will be in the listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded Thursday, January 31, 2019. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead, sir.

David Humphrey

fourth earnings ArcBest call. the to quarter conference XXXX Welcome

Chief received by will Chairman, submitted received of of call. We and Our about ArcBest. as the Cobb, for release. will the statements We opening order morning reading results, a appreciate and you understand done following ArcBest; Officer be In Judy to night Judy can last Today, that we David to fourth during thank Officer today. will earnings presentation answer forward-looking better we this by comments could made our Executive ArcBest we question-and-answer be many following period McReynolds, questions during questions try David's them the of the you that we its Chief as President and us and I quarter some this help Financial remaining joining time conduct and call. with results,

statements, their nature, As we risk. by very to all are uncertainties and forward-looking know, subject

provide conference SEC the measures order certain In to in For could our results, earnings this in comparisons, tables public affect outlined recent the discussed the a and most earnings forward-looking call the press the filings. factors section company's statements company's that of information refer to future release financial please non-GAAP in company's includes in meaningful as described complete discussion press more of release.

We will now begin Judy. with

Judy McReynolds

was of the and logistics consistently the favorable solutions. this we and forward certainly quarter proud fourth the our customers year was each environment today. quarter value the strong good and our reported offer XXXX year accomplished achievements and morning, a producing the look recognize Asset-Based and The discussing year-over-year I milestones ArcBest. Thank am afternoon. everyone. strong I we that economic through results, quarter many and of Asset-Light you for David, the our very team yesterday year We of you, earnings performance to at saw throughout including with considerable highlights

$X behalf Our record total team's on solid last revenue execution non-GAAP surpass and report share. of led year earnings per ArcBest billion in to customers to

stock longevity, We high innovation a of and disappeared ABF hit industry in an are have business, celebrated that many remarkable an pleased years the XX September. prosperity story in over competitors also in our years. all-time where

are a you employees As a inflation know, Even been the customer-facing Returning ABF margins in while we maintain with providing our contract wages July, in stated benefits labor while ABF on underway, continue many and best we historical to to market, this progress. Teamster organization. allowing across labor ratified us has the process industry. goal, pleased work initiatives in five-year was of tight the different a and some low-cost long to

out achieved improved we as ensure Another are was of result the in pricing the ever the our charges ratio compensated year close provide. value billion operating low stories propelled of the profitability the space-based $X one year. revenue Asset-Based a established initiatives we surpass to to for record minimum for business of which we effort an as XXs great were the the time first in our This and in we

took environment last our solutions I'll improving On discuss we freight the profitability and year. as customer In a of offerings. a income service deepen advantage in and business, the side, positive traction to by managed carrier particular, our And now, improvement Asset-Light acceptance. saw levels solid continue the period on operating transportation detail relationships. fourth to we we compared same growing some continue and our freight of In to Asset-Based quarter performance gain

management the tonnage. The business productivity cost us were average our continuing shipments we and and able and growth experienced Combined growth year revenue on levels generate positively yield both daily last with versus Asset-Based management. Asset-Based helped year, to period For efforts the to to we first time The quarter in fourth initiatives, many in improve the benefits impacted point increase of this benefits continuing financial ratio accounts. improved pricing compared Freight's illustrates basis the our improvement same quarter ABF in year. last the operating of in results a XXX we in experienced

pass implementation we We came the are is are well today. programs of that August the foundation pricing our space-based the seeing success initiative from that XXXX that driving

on beginning In next quarter. the agreements associated and as during a Monday quarter. our will effects X.X% pricing shipments provide rate we of our that The contract we in pricing a renewal pleased good this specific were with in yield addition the positives management negotiated increase will deferred and both year-over-year We daily Cobb call. later the we David fourth continues business. be should metrics the the on result, of to impact approximately average fourth initiative, obtained the the a implement that with increase experienced general third in tonnage details good and environment to rates

tonnage each our steadily has Our business of also in some the a few in tonnage mix business. will due monthly strength and stats color quarter our of increase additional to minutes. in the the provide month fourth David improved LTL on

more improvement. As quarter improved Asset-Based the of manage operational to Many network, showed metrics freight business management through operational fourth contributed cost profitability. efficiency positively used the moved and the to

more shipments results network. from ABF handling efficiencies through and financial the freight certainly Our gained benefited from

new was shipment we shipment in Asset-Light mix reduction Growth revenue changes increase efficiencies in business and during cost are year. the and implemented with an our with the experiencing tools also contributed despite reflects revenue customers quarter. in handling of shipments the opportunities throughout ArcBest count associated the them. The However, systems in planning to per fewer benefits the of

to behalf we year-over-year income. a a pleased direct pursue the resulted year's managing year we're are fourth relationships with combine various of are more of last ArcBest's total opportunity complete quarter. were growth. that flat to continue increase higher basis, on net transportation elements encountering a below solutions operating building operating last logistics opportunities However, we combination our as with were costs quarter and we and fourth more base, shipment operating On in customers. total our flat The large into we expenses a for per revenue customer Asset-Light expenses and are Within of

recent opportunities of profitable quarter, positively contributed in our the Asset-Light number During significant and these to a success improve growth winning margins.

a quarter expense period We event bidding XX%. repair XXXX net that a an costs should This two of what million XXXX, was for compared revenue with Strong successful reduction area main transportation total nonunion revenue are higher over year fourth currently on increase versus we health of growth In new last ArcBest in million annual ago. to health as driver XXXX, event in operating continue $X was in continued decreased is the these the those per approximately the fourth care in factor the opportunities primary nonunion was XXXX, was quarter that costs we're per comparable accounts, to the it $X in the if have managed and this additional of winning XXXX. $XX compared below reduction in same cost FleetNet's Combined years in great decrease in events these million year. last our average contributing care income growth to average results event. improvement. of to to total net cost despite growth contributed The revenue higher support with

health costs saving most pleased when We are care companies significant remarkable this experiencing cost increases. with are annual

it repurchase over existing for our availability. Under we total million. to approximately the value. stock million year, per our results XXXX, quarterly program, our During we back $X.X the discussion of and cash Throughout David take we shares to of to operating continue $X.XX a for statistics. $XX Cobb purchase and actions shareholder XXX,XXX bought of price I'll share paid we now, a dividend turn of have earnings enhance over And

David Cobb

Thank everyone. and you, Judy, good morning,

with million to quarter, $XXX compared information. consolidated share some X.X%. Fourth income last per quarter begin per a $X.XX me fourth of compared we of XXXX increase revenues the fourth XXXX On year. had per in a Let day diluted basis, $XXX last net $X.XX consolidated to GAAP million quarter share were year's

earnings in XXXX. release, fourth XXXX GAAP XX%, to table was tax the fourth per share rate same comparable quarter on detailed fourth in XXXX the of reconciliation yesterday effective the $X.XX income adjusted quarter ArcBest's was net rate afternoon's diluted press quarter to which compared non-GAAP tax the a GAAP basis. $X.XX was period As in to non-GAAP

$X.X compared compared the in adjusted Depreciation XXXX. release, $XXX XXXX On and costs totaled earnings the operation. XXXX, totaled equaled consolidated our $X.XX in For $X.X per in day plant equipment billion revenues diluted timings compared outlined to including was into in were $X.XX XXXX. million. basis, the were share below share which XXXX expenditures previous XXXX expenditures, year some for million, financed, compared the was press a reflecting were capital revenue $X.XX property, total majority to year X.X%. of per expectations earnings Asset-Based per shifts on non-GAAP Full full in to and ArcBest's to net $XXX $X.XX a million, which of XXXX, of equipment earnings XX amortization billion of increase as diluted XXXX. $X.XX In equipment

amortization was In intangibles million assets of addition, $X.X XXXX. in

million primarily replacements and plant net $XXX for depreciation of range associated technology real in $XXX investments. not revenue are estimated equipment from estimated and amortization range estimate $XX include equipment, projects, with XXXX million. to estimated For costs in assets, range of increase capital the million $X.X property, million, does dock from XXXX on includes operation. is million. $XXX be which million This were for to capital Asset-Based and total forklifts including equipment approximately $XXX to XXXX. to This expense to expenditures expenditure purchases ArcBest's XXXX, amortization are intangible approximately The ArcBest's primarily estate

of items XX.X%. million. full securitization GAAP release revolver our in on our currently short-term of our to currently effective total expect Combined XXXX our in press year tax with which non-GAAP to the rate XXXX, while of receivable be was effective by fourth to XXXX. approximately Page discrete and period. tax quarter under full liquidity XX rate $XXX We the cash unrestricted of the GAAP ended our with reconciliation reconciliation be rate, available agreement, We tax effective that $XXX impacted table equals investments earnings quarter the may XX%, million. credit and The was the resources shows non-GAAP XX.X% year For

revolver, the of rate of notes our debt receivable on in at Our press details of included operation. on release. million The $XX primarily of total Asset-Based cash includes our debt are securitization $XX $XXX borrowed flow our XXXX our the equipment GAAP all on Full our million credit X.X%. and of composite million payable, for the balance interest is $XXX end million on earnings

is experience and customer made our our to technology in previously segments. As improve have in disclosed, also ArcBest investments a technology been of optimize areas variety operating

productivity delivery as ArcBest and in segment, For example, Asset-Based predictive common investments. and work development. ongoing and transitioned scanning be require demonstrated, the initial technologies segments serves and Asset-Light In live into analytics to we these tools which tablets Once an in improve success pickup enhanced extensive equipment. continuous the field are tools operating incubator ArcBest development, and as technology described may all of with such in ongoing of undergoing currently systems a have for city level segment, the feedback use of coding and development. more for an initiatives is phases testing the barcoding,

exceeding important some Such business. a evolving of the there for Asset-Based If $X.X are customers' the year, million rapidly we expect future in the initiatives us impact our million cost broader incur estimated during in first estimate be successful, expectations We throughout As our we for XXXX. approximately that $XX additional increase meeting business approximately would and application expect benefits these investments of result, place. continue to in to with quarter will market our XXXX. a of cost

was year. Asset-Based fourth increase quarter to revenue compared $XXX of XX.X% an million, last

Asset-Based Asset-Based by year's XXXX versus same for fourth increased versus year and the per increased And December. by by quarter quarterly month, X.X% day tonnage daily total fourth in X.X% X.X% X.X% period in October, last in tonnage quarter. last by increased increased November

the price upper the the figures tonnage were by more in of tonnage impacts XX% acceptable mentioned solid network availability range Judy total the throughout Truckload year below included was monthly months LTL-rated each of levels as rated shipments quarter. prior as than Asset-Based at in increases these were earlier, of fourth limited. ABF quarter the gains single-digit-percentage these more in As the shipments

X.X% same the period average with business, quarter Fourth more by In fourth customers our hundredweight needs. needs of of and our an was the LTL-rated of the total $XX.XX, available serve our our count X.X% capacity increased in versus to XXXX billed that have with year. experiencing the last compared workforce Fourth fourth addition quarter. per Asset-Based been we we're to equipment per quarter utilizing This total last increase was quarter revenue growth day shipments last daily to of LTL first the year's increased compared shipment shipments on quarter year. of

quarter Excluding during increase LTL-rated in on increase the We the digits. pricing on and mid-single contract Asset-Based an billed fuel surcharge, revenue hundredweight quarter. the secured fourth freight average negotiated customer in Asset-Based per agreements renewals X.X% was deferred

in As continued focus increase on levels we pricing to environment percentages emphasis yield XXXX. X% improvement increases continue the will This to XXXX. an compare whose is ratio return maintaining year, belief week's and in range fourth account general mentioned, next XX%, between quarter we pricing adjusted look expect ahead more price timing group. XXXX, our our healthy. basis, we Earlier, across to On to rate XX.X% as levels that we Judy illustrates yield our on our operating back acceptable the Asset-Based XX.X% Asset-Based quarterly normal was compared average to Asset-Based and when XXXX to year-over-year increase

day For of full billion $X.X X.X%. to Asset-Based XXXX, a in per year increase the of $X.X compared revenue was billion XXXX, ArcBest's

segment. growth On increase XXXX XXXX. quarter, to businesses fourth million ArcBest operating $XXX in revenue On compared shipments the adjusted daily compared last flat income was In X.X% adjusted Asset-Light was daily was $X.X full of total and the year year in our ratio an to Asset-Based Asset-Light FleetNet total, decreased resulting quarter Asset-Light increased Full basis, in reflecting over year. to operating by XXXX shipment. previous segment basis, ArcBest's per the Asset-Based average in per year's in $X.X day million XX.X% million the X.X%, last businesses both XX% revenue was an total the compared fourth XX.X% for revenue year pounds tonnage Full quarterly that of recent $XX.X helpful expectations X-K should XXXX. XXXX, million XXXX we million adjusted an a earnings in that our our quarter included XXXX financial XX.X%. along fourth to compared modeling future an year along to with operating our for million in compared current to income financial daily some information levels about business compared expectations release, $XX.X provided $XXX $XX.X additional these XXXX was adjusted was our in of our financial million year for filed million be XXXX. results, full XXXX EBITDA Asset-Light businesses afternoon, of metrics. on exhibit in increase Yesterday certain and information $XX.X EBITDA with This results. Adjusted a

it Judy comments. turn for I'll over to closing Now some

Judy McReynolds

Thanks, David.

company and Davis, XXX finalists ABF quarterly Sammy for recognized Scott on for and for this its Now list annual Team as the for year. outstanding fifth as top Road were Also October, them October, of In Inbound XXXX-XXXX, congratulate drivers consecutive the each selected Todd Brewster, ArcBest XXXX the four in Brian for for honor. Petrovcic logistics Wilemon America's highlights. trucker I

pleased country and immediately Todd These we selected. the see group service across general for drivers Road premier to the XX the importance the creating who as of awareness and Once Sammy, will drivers congratulations public, this the were members of each of officials Team among the very were of begin week, their the ATA them. and winners safety ambassadors, industry the Just industry announced media. elected in again, the to Scott of trucking

events driver, recognize as to National a We his American Freight Boyer ambassador the the challenging. was Smith quarter superior And in will David, SmartWay around the Driver profession, finally, now, Award David his last companies the after and receive ABF to in the year XX Truck this Fort some year of I'll XXXX. country accomplishment and And several and additional pleased amongst be about of by ABF XXXX, In XX thoughts dedicated as emissions. performance and of true to for I the performance were Associations. mentioned service Certainly, for November honor remarkable addition, during quarter, was his comparisons environment ATA to freight the named ABF. years some Excellence at actions reduce quarterly of the share Trucking

or the to solutions we are naturally as we always made revolved of a heading a when trends emerges. through for past we some as conversations points access. years, with we've we very a are offer continue in parallel intend the around do customers choices marketplace more direction solutions was to track about on In is last particularly of monitor result effectively of LTL, customers dips chain unified manage more through any chain freight. through company, supply are as year. the strong This primary that will we focusing offering strategic On our and environments to supply streamlined any changes positive one the and track, We

Now solve conversations that able chain solutions the are about advice expert on our to deeper and to customer's in selections. with optimization much more of value our how are and added supply we mode have and problems, disposal terms overall

optionality in shareholders. management team me and our want with conclude, session. outstanding enhance and I'll It way to over for employees, to and customers conduct it customers an To carriers. And David that gratifying tangible for technologies our the of as the such to is that to appreciate question-and-answer realized our to our enabled engagement combined see ease and we operations, turn come improve to That more sales the in a our capacity. invest digital total doing of by with customers platforms our invested of the be There'll team we that that customer. has ensure been our this Our business other whom has we a I we've resources continue and year. entire team assured in bring, turn business Humphrey thank now, entire for view facilitate goals

David Humphrey

session. now we Thank Judy. you And that. begin will question-and-answer for our Okay

on renewal monthly note all, had few addressed and questions me a couple in that were our rates growth a ago. let tonnage we contract opening remarks of directly of minutes that First

of So had holding target LTL the do Citi, now. What you expectation of of per pace that price Jason quarter color in SunTrust in I you provide And of your contract Cowen are some These questions included, in to renewals won't up? XXXX. take a during in you Seaport, do those XXXX? of hundredweight X% Chris questions Seidl similar growth on one? Will is realistic rates Milby rates XXXX January? for believe contract XXXX? expected LTL pricing Wetherbee revenue and the We and read increases Benjamin contract still from Stephanie X% and is David, fourth on for to want achieved finally, Can

David Cobb

Yes, I of pricing A for David, environment. the questions here, lot thanks and and questions about will. interest the

increases our in in mentioned XXXX price individually we longer in XXXX. are results. hundredweight renewal reflects in anticipate per of business, the Asset-Based improvement so return of been of average As average periods single slightly annual our quarter our low below but earlier, we January, to in X.X%. revenue With to contract annual the levels and far digits average seeing coming are respect time, results more negotiated yield fourth XXXX, favorable normal particularly, increases to our light had these Over

However, we terms believe rational is pricing. do still market in the of

prices we have and business have those for shipments. inefficient margins for higher for We ourselves operational new raised set

David Humphrey

advantage XXXX? want inflation Judy, if volume He gives and Will leverage wanted market our thoughts? give locked-in to this do and Okay. share you will drive asked benefit growth. to to if try Milby we in a to know your us wage pricing

Judy McReynolds

questions. Will's I Sure. appreciate certainly

costs, about the of of end will Asset-Based that union cost contract labor labor June average for and in life of that includes total XXXX. contract annual the per current year majority the our On X% our increases

at that It's cost next and increase years. stability fortunate cost that me labor Let the the X.X to say outlined, known first that think have we very over feel level manageable. we we've is

role We solutions account the basis particularly, an decisions see opportunity plays with structure customers. the cost our on we are our heavily typically in and the the do provide pricing offering our network. capacity our and value account-by-account that marketplace that our are and the to made place has on more by grow we are conditions Although the decisions, a that provide, we're in an impact influenced business,

David Humphrey

and had the ABF line Okay. on whether Stephens Brad Will at Freight? Delco fuel during impact prices asked or line of the falling any bottom noticeable top either quarter the

David Cobb

will point average, and level to the Thanks back On Will. Brad year-over-year prices revenue that the impact the Asset-Light per our lower relatively than from diesel though, XXXX. total highs moved in fourth on Asset-Based comparison that third the the fuel quarter that important in have Diesel the I and October was businesses. in were of comparable from It's third shipment to prices agree. recent fuel out, both quarter. of was our would remember quarter lower though, I quarter. increase fourth year-over-year that

significant on fuel did we surcharge reset believe impact do fourth quarter our we have this As every results. week, our that not a

David Humphrey

question received first much we given to quarter second asked late April Easter this the year? the in Easter from foresee Another and quarter XXXX, split holiday we impact in timing compared year-over-year if being that year last

David Cobb

Good business well, I levels, falls, in second in But say as quarterly to based interesting the holiday always though. are compare that David that historical the There some of quarters business how year day's day as calculation. our in there total of when timing always first in day a working calendar the the periods last we that competitive and impact Friday a it’s and Yes think as will as these Because both the well impacts you count on important other XXXX, be impact to in calendar that XXXX less though. there'll half and economic factors are half periods environments levels. same freight

David Humphrey

getting from trend pricing we wording mentioned on a Does this this more and removed follow-up, side. shipment a as revenue surrounding equipment continues of spoke a the environment? customers? reflect you competitive per tight Was better do freight this question And within you balanced pricing capacity is cost XXXX? the ArcBest And the or Asset-Light believe was better to that through that segment. due mix from Another it

Judy McReynolds

customers, increases that shipment do reflect more we capacity. agree revenue per is better balanced from there quarter fourth and pricing Our

at team in our we as competitive in capacity effective and improving in sourcing job area did XXXX, prices Our we success that an see enter XXXX.

David Humphrey

Will few a whether about Jason questions was business from impact first this levels? XXXX. forward of pull There freight had regarding questions the We tariffs, on quarter impacting trade of into and were particularly, Stephanie,

David Cobb

I'll take that one, David.

some the customers forward fourth from third quarters have into We they and that of pulled some business XXXX. heard

I our measure think they these but think weakness think, this it's ready difficult team issues. to supply customers though, that with some far so chain XXXX, created I adjusting has if to their of we in and work our believe is about and consider because

David Humphrey

Okay. January. are about Asset-Based several trends Stephanie Shanker of in sign that These in from Morgan end from December you you business any you deceleration? Jason demand included, reflecting questions the a slowdown current Ravi largely Are seeing It color We've Seidl. overall a particular environment? truck and environment decelerated comp-driven economic tonnage that in underlying the in some demand U.S. any Chris Do seeing the had markets? of came Is and impact demand deceleration Stanley, our Benjamin Wetherbee, is provide loosening January activity appears on or capacity? in

Judy McReynolds

from issue I the we and the answers into XXXX. on turn Well, appreciate as page this XXXX

be So end averages. January on comparison is both compared with and at to out we this basis difficult could that really from to factors, or respect this Asset-Based it's to other the trends, the shutdown say historical to are sequential contributing of a our when December, point. tariffs markets really We result, weaker experiencing on normal short-term but impact the end some have. to look on we speak It's hard we're government the tonnage shipment or certain the falling to business, based at information

useful the weaker these I on tonnage is, increased enter of it end historical Although, we as we're pleased our with are norms. that point levels to out XXXX, think, trends LTL our

David Humphrey

perspective, and from truckload balanced Asset-Light wanted trends. our He the expectations across end, it and dynamics contract the are In more market rate like stated becoming demand moderating. are on an that supply those Brad thoughts Delco seems

Judy McReynolds

more are and as moved few this per January, I Brad's weakness With experiencing relate has business, daily truckload ago. with Well, in be our and Tim to that to I market revenue respect balanced, market. agree appears slight a to shipment really shipments We to appreciate that said in the balanced Asset-Light more we minutes question.

and continue Net good with up our we success with having improvement of of our ability in some having source revenue solutions opportunities managed customers and growth or see result our in However, that positive to partners are per and reflects continued – better day carrier changes. for capacity, us. as these business to a market is which

technology are also helping playing the analytics to and margin. Our net in our role this in right us success, investments strike balance a

David Humphrey

points How we implies that seasonality initiative the Ravi Shanker seems deterioration have quarter OR approximately pricing forward? going mentioned seasonality to fourth basis OR think but XXX that. the of quarter, from to first about changed should

David Cobb

the approximately the much point to from to first quarter it really with Yes, been fourth fourth XXX average change, thanks, historical XXXX, Ravi. operating ratio XXX basis we income quarter XXXX Asset-Based back We to agree was you that historical has look operating range. quarter the increase the in average. than When Asset-Based the first quarter better

quarter be But timing and versus effect quarter operating initiatives the made improvement. of really that improvements X-K You ratio well. sequential first some from space-based impacted which that to in think contributed yield We February the strong ABF change will general last things the effect history was X of prior other two year in sequential months impacted the XXXX the the that in sequential as Freight's those pricing XXXX. that be to The should pricing cost on in first spot ratio during positively X-K, the did the also the the benefited quoted considered comparisons and operating should mention mentioned items by Asset-Based significant about we rate be we due increase, truckload-rated management also the that could shipment.

David Humphrey

clarify impact fourth negative comments first from the from to the bonus? OR for XXX – we segment can Chris basis profit-sharing in captures, the if the historical quarter on would point union to fourth asked regarding our that potential wondered progression first bonus, quarter includes OR He accrue sequential accruing if were to Asset-Based first for a Wetherbee we whether have change? historical our union the quarter to a XXX it and

David Cobb

Thanks, question. clarifying Chris, for the

about the commentary have incentive it retaining of depending further engagement be also an objectives, the X-K quarter the other growth the for some quarter, employees would first accrual high-quality the expense historical in this on We item employees. an that our and incentive union comparison. attracting ratio aids believe and but our in and expectations We the and aligns drivers union value in your that impacts for operating the program

David Humphrey

levers wanted Ravi a slowdown? of can to case in performance know we a Shaker maintain to what strong pull

Judy McReynolds

good question, one you Ravi's pull. are those a have is when you your environments, and can on certainly that about levers it's useful changing to hands thinking David,

have number adjust have doing can a levers to as business and change, experience we lot that. a our operations pull our of levels We that we of in

time. actions, point variable can our business, of others to respect I'll expenses. be really adjust implemented out, to have more flexibility quickly With Some Asset-Based take the and our we

levels that downturned we're of customers we making rented costs third-party situations, these to adjusted other providing equipment the facility keep costs do shipment in mind reduce have service and we're although examples severe needed. we as equipment to transportation headcount, ability be Some I'd cartage, point include out to in can more that if changes. levels, that and

through a there's we're of again, kind and, those changes. experienced in levers pull So number very can we of working

David Humphrey

GRI our yesterday's in last expense in discrete some mentioned included we questions items are Next, of the it February, months in discussed by remarks. X-K. about a expense is than Offset Brad two earlier we over Delco had prepared announcement that lot the items year. of

Chris grow ArcBest Wetherbee think and in Asset-Based you seems takes both feel sense that Research operating Based you our expenses puts XXXX. you these are a we Scott company us of it will is expanding and like growth, in tonnage Could affect As total expenses profit will a on expenses Group impact XXXX? additional of LTL margins could XXXX? Asset-Based to give there a not lot these or in of out any whether operating pointed margins do result, slowing that profit. and Wolfe from in prevent number likely

Judy McReynolds

issues. did consider your these number We mention understanding Well, modeling. of in we for a appreciate the items interest you in to

in things. is related grow the improve executed on really really of a and just but outlook, business, and all as are for give very a We but necessary these to to and trends. creating we'll were and in account benefits additional me you page number and the team well regardless in logistics information turn continues resulting great operating as be could for positive really to to profitability our guidance those resulted our them, year that over outlined and margins. tonnage greater taken are effects macro But solutions that understand, our don’t short-term our we're profit the we seen results. offer we can focused customers, business to wanted growing expenses business to retention, actions our more our into We our let future and anticipate on adjust to of we team which first have and we But that margins, to strategy we impact us. that XXXX, execute XXXX you that aware have well and know, say of investments that's to overall were of prudent the others believe Some investments that long-term

David Humphrey

question cash a on had levels. our We

top You share in of have are approximately balance cash per What XXXX? the priorities the $XX for on cash sheet.

David Cobb

this about XXXX. with talking We're the enjoyed pleased solid in cash David. generation I flow one,

investment the company part really $XX We talked initiatives strategy, continued And our with in the We we our efficiencies, and strategy, continue that got A We've existing return to to there. though, in operating we we and our priorities. have that technology we a shareholders. business high buyback believe those remaining have, available is program, capital to a are those program of developing to quarterly process talked million share buyback though, grow and allocation our share all a as program. have – the plans our and dividend CapEx and about, balanced about. capital that our services about dividend

specific, Although to acquisition do we aren't continue working targets. on review anything really we potential

David Humphrey

you business this platforms? as digital this are is making types of with Should something think different? what compete around brokerage platforms? Next, we something investments digital Or other of to

Judy McReynolds

we've improve and experience the address We development our our digital opportunity got carrier and customer and an really business increasing through of see focus platforms experience improvement our and to an there.

digital of serve improving the that seamless Our with. our effectively have will thinking. help on we those attract them same new customers and in more opportunities and believe, channels customers our business to people doing, do that us business work seamlessly channels the that our carrier and with we and influences with more the are side interactions We our of nature we The interact we're we customers terms believe on. bring desiring existing more serve in effectively the

area focus so we're about talking to it. you our in And we initiatives this forward with for look more an it's excited us and and about increasing

David Humphrey

X% driver shipment while have it combined for Delco is what with the of tonnage shipments growth to operating flat typically the expenses, wrong Brad think tonnage on revenue? margins? of direct incremental driver a Is impact wondered as

David Cobb

a out, I driver revenue. Yes. I the direct shipments driver Thanks, for tonnage agree, as is expenses Brad. and point think, are operating you typically of

pricing truckload-rated require implemented have And we And which in spot LTL-rated offset generally declines mentioned be and in growth the a handling, should double-digit and the well. cost necessarily density, S&Y in drive the by cost. shipments, X-K, are mid-single much our shipments because not the However, is which less CMC result truckload-rated our so digit is that line-haul business. tonnage as they flat larger something space-based program, we've the as considered of our addresses

along line low tonnage Our increases January single-digit increases in with with more LTL in increases revenue shipment. with LTL shipment are for –

David Humphrey

Chris investments. on us Wetherbee to technology elaborate our asked

Judy McReynolds

customer our conversation those as create through improve single better digital of view access Historically, day. interest becomes the of examples website of multiple it logistics Chris' worked this to we've awareness some and city operations, the our more needs to our are appreciate a on of customers' area, more every improving solutions. initiatives a for of number and in direct capabilities and our I

shippers we're to the and Our improve The to delivery costs costs expecting we experience. operations about because and are faster in cost-effective to fact business million additional that freight We're costs related growth our in Asset-Based our and acknowledge are that are being shipment us really making $XX visibility margins the solutions impacted. for their will talked additional investing that developmental increasingly going are technologies more forward above of investments XXXX times, believe promote spends. our greater their and in over the they business and customer optimize the that really we help technology normal want

initiatives business. benefits broader the of there expect our future be However, really for these application that we would in some

David Humphrey

analyst inflation, a can cost labor if sense the Another our asked of provide contract. expectations for excluding

David Cobb

Excluding that to the is labor what that's particular expect would guess, I just say, we're contract, to I cost And one obviously. there at above think, any predict, areas the aware a level of not norm. I we fuel really hard is all, increase that

David Humphrey

We'll Stephanie conclude the Benjamin. call with two from questions

the you of quarter initiatives could savings examples were the provide that specific place Asset-Light and in during cost-cutting margin First, for drive fourth to help technology improvement other business?

David Cobb

Stephanie. thanks, Yes,

and are quoting we've you're earlier, mentioned use systems, and these specifically Asset-Based about, – have all asking in technologies. helping recently our of systems improve implemented margins. undergoing capacity in these us systems and development ArcBest our common businesses the predictive are sourcing As that and implemented from tools Asset-Light And that segments continuous Asset-Light analytics benefited

David Humphrey

there asked our a expand was business overall expedite opportunity want if there bigger expedited And likelihood portion company in of Stephanie revenue? future? for any an then to Is lastly, the that become we to

Judy McReynolds

we Stephanie's of we path back Asset-Light a our a we commentary longer-term our in this to solutions happen. pleased our make there. revenues part very that have our There's way of this overlap that And in expedite Asset-Based that Well, goal yes, XXXX business we becoming very made to is expedite total appreciate now in business integrated Stephanie, of XX% a and Panther all as acquisitions company. with we are business, base. to have I our the outlined are our including increase little around customer working on the

services an ground expedite we cross-selling for enjoyed our sales that. there. customer we're So opportunity see pleased success about some with our we've force, growth base the and And to

the direction internally customers many access service and the of our of we from to enhanced we've for as just thought company approach market add here positive more which that to these in seamless create grow anniversary been the really is teams of we lap our the to our feedback gives of we've that our efforts sources. response restructuring We approach, easy two-year the serve that a so overwhelmingly in have all them to and and create the together Another brought capacity has customer. better on under gotten Asset-Light us and them to surveyed experience company confidence our And offerings. and to –

you. thank So,

David Humphrey

us interest your Okay. afternoon. We able this our in to that all appreciate we Well, the of lot. concludes a your our we company. those want you that interest and in were concludes morning. questions appreciate thank appreciate yesterday joining we to This And our to We call. say for Thanks ArcBest. question-and-answer everyone period. we pleased address I'm in, that received sending

Operator

your participation Ladies you and gentlemen, today. does that for lines. the conference We please thank and for ask call your conclude that disconnect you

ArcBest (ARCB) 31 Jan 192018 Q4 Earnings call transcript