ARCB - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to the ArcBest First Quarter 2021 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, May 4, 2021. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. ahead. go Please

David Humphrey

ArcBest the XXXX conference earnings Welcome first call. to quarter

Cobb, morning Our could Officer this by David today. of In will better joining Judy statements help ArcBest you this We of Financial thank ArcBest. call. McReynolds, and order Executive done forward-looking us Chief and during be presentation its be for some Officer made and Chairman, ArcBest; you to Chief understand President results,

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

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

begin Judy. will We with now

Judy McReynolds

Thank we’re all any am you, of On basis, David, and best of our to we and for income company our the recorded revenue to with first a history history positive off report quarterly highest XXXX. consolidated in our in I in start pleased very operating a quarter quarter good growth morning, everyone. business. that areas

positive quarter of Our control. also yield the first impact reflect results strategies and cost

the first had and experiencing solid the were ago quarter of COVID-XX and year we a began than but that’s close a We In due in revenue we different news. XXXX, very pandemic. to April, are we place a as effects entered good declines the quarter, we

environment over testament past navigation unusual robust entered and with strength providing values-driven the and to manufacturing year of the The of as in simultaneous is well-positioned those and chains. pandemic were demand retail, a teams. we our our on we adaptability and culture pressure is resiliency our supply really successful the challenges However,

customers demand, consumer seen and recent furniture At more our Canal benefits home pre-COVID through the and unprecedented remains winter approach particularly experiencing been never improvement. levels. and of levels see lens the Retailers we historic the So Between chain congestion strong customer disruption. Suez to have below stores retail business port traffic apparent. blockage, COVID, for of are foot supply our have electronics, events, weather ArcBest,

last the and our pandemic other we’ve into year to the and supply Over impacts on chains. XXXX, effects customers the worked disruptive navigate of alongside

Our analytics data them. customer our tools are with use service sales engage and we effectively with of teams and the science, needs aligned and specific technology customers to

combinations solutions needs, us meet allows owner best identify carrier as utilize our and well changing approach to including their We to our the them. serve network operators to Our unique of Asset-Based relationships capacity. as

for growth are customer to We large by growth opportunity we services of markets. With the and within the have a opportunities, logistics $X.X domestic LTL base. in, new respect transportation customer we markets participate existing our as billion management encouraged such

XXXX. a which to We strategic By these revenue, in are comparison, of first the is our advantage well-positioned last take of year’s our opportunities. percentage of consolidated in XX% An as same Asset-Light revenue was indication XX% quarter that was quarter. of percentage progress

customers, growth, solutions. percentage To that our this find relationships, with dock we ArcBest. deeper position additional better ArcBest spend. and professionals logistics logistics hiring further as ourselves we in for drivers workers reflects capacity network experienced we’ve throughout Also, growth the we experience and our and Asset-Light As customer enrolled across and Asset-Based the transportation revenue and ABF are a grows, technology resource greater customer and base address retention and to profitability

high important significantly a services. activities of positively which This market housing cost light growth and our consumer needs. customers’ capacity. supply higher manage our first positive and another recruiting not Asset-Based effects the in revenue eventual strength weight momentum was and in We the management serve reduced consumer healthy higher less The these strength in mix emphasis result number on operational equipment truckload weight purchases our levels in was challenges. us impacted the now, Revenue to residential shipments demand the macro total plans business freight we in quarter in in partnerships quarter discuss history. environment market of business customers were of the facilitate in average opportunities operators the according investments the the the shipments in moving our periods. in increasing at building the ABF’s of and LTL-rated continued of tight the in chain we detail on look advantage Despite resulted shipments Asset-Based versus continued last first on their to in strong current utilization additional of year’s out in of In first future associated anticipation network, for change profitability. from were Efficient the to increases pushing to Obviously, first shipment quarter taking an contributing additional And U-Pack some in allow our truckload-rated conditions e-commerce of are effects Asset-Based the than to our resulted needs growth aggressively quarter will environment. quarter solving typical and to contributing offerings. business are contract effectively the focused in year. of this our owner we the non-U-Pack the network Asset-Light operating moving first per by resources them. responded We and normal in totals for CapEx decreases with We income activity. are increased with delivery last Increases earlier in ABF than effective ABF benefited quarter, revenue to of business. XXXX performance of continue capacity cyclical was our in midst see solid factors an taking to And an result shipments factor that’s to first second manner and effective industry highest I’ll were quarter on of them pandemic, which the of to service of

First both in These freight number care were metrics the our highest year’s our improvements in benefited occurred closures closure first quarter improvement significant days operational last years. February quarter. last disruptions to better in lane compared and the cargo fourth resulting linehaul further customers XX service handling and in weather mid-quarter, from quarter of and the despite that occurred recent

local elevated the network the supplement XXXX, second linehaul of we quarter use level included transportation to ABF and purchase in of As recent the resources. our half of did an

As were these year. above percentage first revenue, a of quarter costs last

average purchase on need having by impact some a increase move rationality profitability. percentage negotiated yield strategy opportunity throughout in country. our pricing part Though are of not level key the improve we revenue This into of our resulted LTL in areas success illustrated in solid for profitability. make significant the purchased market XX geographic our in hundredweight employees was and differed of in adding that contract The growth, account is The per was the strength on and overall market immediately We XXXX. of This may metric. these for The usage. while to the revenue reducing management increases is initiatives actions to lower offers progress of success environment this agreements in the hiring LTL recent contributor transportation pricing and in as later pricing transportation, that hope and Asset-Based years. quarter best to us the during we current year our first – thus improved quarter

Our continue demand competitive past capacity. our And to and experience second strong in to for has Asset-Based for as return network we value price. began success we our quarter, the been providing customers a

need During history the ArcBest for our that in to equipment best recent operating services reflects market was the stability consistent first the limited in effectively and of strong Asset-Light availability. business ArcBest rate our This able income with logistics current conditions quarter the quarter, combined to resulted segment. respond customer

had profitable it fact, of for most In quarter one segment. this we’ve the quarters any ever of was

shipment pressured increase Asset-Light market for per year-over-year equipment with contributed the partners. experienced carrier our quarter from in capacity a shipment first in significant by Solid gains we costs revenue. somewhat were along growth revenue to Margins

of maximize the incremental to However, of and resources by benefits resulted internal the us for supported which personnel quarter. utilized technologies our allowed strong more ongoing existing reported effective profits operating utilization for partners carrier we in and customers results

meet So far in working the business events the our repair activity. first second customers. of roadside increased by be in was to needs good quarter, the we total in this At driven growth and to FleetNet, diligently during quarter trends are continue

efficiencies. greater while growth, quarter combined first initiatives with continued to revenue event increase The positively higher revenue contribute to event reflected digital connectivity per the

comparable to maintain operating consistency. of investments it personnel discussion David I’ll to earnings quarter’s Cobb high And a first over workforce the turn This in ensure quarter year’s income last a operating satisfaction the results and to customer was due now, level statistics. designed of for and to with

David Cobb

Judy, everyone. Thank morning, you, good and

consolidated with information. some me begin Let

first of were last to we day quarter a income year’s $X.XX a year. basis, net net $X.XX quarter revenues in compared per first had GAAP compared share XXXX of per consolidated First million On to last This diluted XXXX $XXX million share. per quarter, increase $XXX XX%. income of

second and of payment may We the changes unrestricted first items, to with basis a by such quarter ArcBest’s in settlement tax full-year income quarter cash press in rate be XX.X%. surrender release, discrete as life investments while primarily vest rate insurance of the in did per the Combined was our current of awards XX.X% XX% GAAP value table receivable was year. debt impacted and last of short-term XX%, effective equals of our net morning’s non-GAAP GAAP effective to range tax the and quarter. share first to $X earnings million. the XXXX $X.XX period compared securitization As $X.XX of $XXX detailed credit in cash million since the share income a tax the under effective $XXX quarter $XX currently million net agreement, liquidity total per our total rate with the of reconciliation available year. the beginning Under the increase in and rate cash net of on diluted we and GAAP basis, this resources to was an tax first be of our expect in adjusted million, laws, revolver net XXXX the a share-based XXXX non-GAAP same on

revolver our of the quarter equaled million operation. includes Our $XX first notes balance rate it at the first and end earnings the the purchases our Asset-Based equipment debt debt $XXX press of end credit was of details primarily during our interest composite of total The XXXX. X.X%, million on on rate with in GAAP – of quarter for on million our $X and $XXX all the are our of what release. was consistent cash Treasury flow million, included stock at full payable

of Asset-Based revenue million, year. last to first was quarter Our daily $XXX XX% average increase compared an

versus total tonnage quarterly year’s per day increased X.X% last first Asset-Based quarter.

quarter due X% in increased by in daily first the X.X% weather by increased same January, in in mentioned, then decreased by then For by the month year last XXXX that total tonnage and that Asset-Based versus month period events X.X% February to severe Judy March.

by year’s per compared First increased first quarter. quarter day shipments last total to X.X%

billed quarter First an by by LTL-rated X.X% on Revenue customer on in average surcharge which that we were to increase as have the by the mid-single-digits, trends Form X-K fuel increased and agreements exhibit per deferred during in impacted Preliminary negotiated the in increase Asset-Based contract quarter, total surcharges. on was many press improved X.X% hundredweight Judy business business Asset-Based secured pointed years. per had lower pricing excluding the X% release. was highest been revenue hundredweight fuel out April the for provided renewals we’ve earlier and shipments

the trends quarter, significantly our the FleetNet the the in preliminary segment. at ArcBest While XXXX events strongest therefore, total, years. and versus event the April April’s last are is the businesses March XXXX to per seen strong we’ve pandemic, impacted some demand sequential Asset-Light not a revenue in year-over-year versus segment revenue In effect of last ArcBest reflecting XX representative first in in comparison improved benchmark, of and the by the year’s increased Asset-Based XX%

the quarter First of first $X.X to for was Preliminary as quarter in was well. Form million X-K first $XX.X $X.X million loss to quarter Asset-Light trends compared of April million XXXX Adjusted Asset-Light provided EBITDA EBITDA operating of to the compared release adjusted a XXXX. Asset-Light been $XXX,XXX income in business have year. exhibit last press

future that This As to included an on our unusual first our on year-over-year morning along April additional project which quarterly mentioned, financial is an the XXXX I of our and our quarter certain exhibit XXXX earnings filed X-K we business comparison pandemic release current last some along mentioned, about levels year. of shipments because the that business metrics. with effect recent some results with high I and information financial includes margin effect the expectations

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

Judy McReynolds

Thank you, David.

to like Tim recognize Thorne, Freight. the I’d President First, of ABF

impact be announced he will a made and we after and people. a and together had mention I best President. June received up success experience. our to will retirement. with closely been current and a is customer ABF’s we facilitating to ABF to to Seth recent ABF the the transition Tim focused in work wish a Tim positive over on Seth going growth our On months come. has retiring who at our for few for Runser smoothly. our several us Tim best-in-class Chief end January, has As to great July company contributions both set his a leader XX-year become want for I the the is I been company. very Seth them appreciate in commitment Operating ESG in honors X, ensuring and decades Dianne, with Officer career the important of working of that and on a last continued I’ve their providing initiatives. highlight Also significant

opportunities provide learning help on commitment program our recognized XXX great Magazine’s customers. continuous and Training number equip really employee growth to XX this to and to with the This year our them Our XXth we’ve for provide to is list consecutive XXXX. training it a is on been to experience speaks employees Top

America’s included ArcBest consecutive Diversity. XXXX Best Employers third America’s Employers Forbes Best Large of its among for of for recognized as us list a and one year

makes people are awarded commitment recognizes companies people rating. to Our appreciated. our me committed all and differentiators very medal from providing that our world. sustainability and respected in and culture rated bronze puts These rating everyone makes performance proud. recognized work our for top which the a to environment EcoVadis of a The feels also and we We were us bronze XXXX diversity and industries are our sustainability the that honors and across half our value

of recognition. proud this very We’re

know toward we We what our are steps we we’re mindful is we we that our of XXXX, on to long-term determine sustainability we’re progress environmental doing increased efforts impact in Beginning focus and well commitment. robust where opportunities year, more. program a to identify upon do and In more responsibility to and those XXXX, build continuing this several can corporate took developing a efforts. ESG

our to We customers, are continuously communities. employees our committed impact improving and we how our

to we ahead, Looking continue growth a mindset. have

turn on and well strive customers they for Doing so, growth to for challenges. relationships company. to work focused now, David carrier We’re serve as supply strengthening profitable through session. our to chain we question-and-answer And our over customer their I’ll it as our leads Humphrey

David Humphrey

I to Rita, questions. Okay. think we’re some do ready

Operator

first Our question. your Please Citi. [Operator with question Wetherbee comes Instructions] you. line the Thank from of proceed Chris from

Chris Wetherbee

guys. morning good Hi, Yes.

David Humphrey

doing? you are How Chris. Hey,

Chris Wetherbee

well. Hope Good. per weight a shipment. Good, on you I thanks. guys question are had doing

April of a boost obviously and looking up per a up weight tonnage numbers at growth. nice X% step here think So and shipment, some big to in I clearly that’s the just giving

move playing are So through I there of a rebound maybe a about per that you end rest or shipment or was what’s and talk of you’re dynamics if forward that could driving type XQ that’s industrial if out the market if the are it’s seeing of little as you other wondering think more bit trends year? freight do – maybe weight the sustainable and we either

David Cobb

David. Yes. Hey, is Chris, this

think right. you’re I

that industries business have past. We’ve really contributing seen sequential higher-end that we’re strength kind the economy growth trend of good we’ve think the to is of on seeing the all I overall general just across the seen sequential environment that that. in and the in

we was that business the historical But and our trends down pandemic what line business, since we’re what in In that what terms April that’s think we move but as also last in Typically, it weight would shipment, really it per to our of type seeing guess, published see hit then slightly LTL-rated the in with we we’re higher see, continue year-over-year call there. our I sequentially historical into we’re seeing that think I guess, as I strengthen – seeing down we’ll year. is April. total, so I

really And we a had. so of as some we lighter to doing see that that kind fill weight is business that that capacity otherwise shipment that per relative empty we this transactional were of to

what we’re kind kind So of of movement that mix there that’s when sequentially you business that change. seeing occur see

say moving there’s anyway parts So there. on going lot I would of a

Judy McReynolds

we the Also to do heavier when our more consider that fact weight business when U-Pack look be tends Yes. sequentially that Chris when you business. of moving

So into factor months, too. a as like month when those that’s get March closer comparing just you’re summer you April the a to to

Chris Wetherbee

that’s talked Appreciate operating seasonality And XXX XQ, ratio normal guess I points, you of last No, Okay. from there. the excluding helpful. to year. color know about sort the I XQ XXX basis of to the

at XQ of sort serve think that rate come of of we should you very a XQ, about otherwise step down even should normal for a would influence strong XXX that relative year. maybe neighborhood year historically, certain thinking this be look specific those even XQ, we obviously was should I a that should would maybe potentially may reflect Is you see run terms a or back sort for that seasonality. somewhere cost dynamics and if of XQ there full back basis nice guys Anything in which this obviously but good more in that of there in look that reason the sort follow to the is also trends year normal to in believe if points than improvement years. of you

David Cobb

Yes.

on into did the just what of cause probably out so anything when like agreement, back but different one unusual than that gains I and comparisons. and animal is would would clear that from look But I I current XXXX thing really or to trying you seen I sequential to mix, that average got the is our don’t we’re in evaluating that we’ve those under think at XXXX large analysis, the have page and it XXXX obviously going we’re sure forward same probably we and quarter. so those there, think first quarter normal be and I this asset different labor to trends worth historically see from – think make you yes. do you to really not a maybe first think

Chris Wetherbee

Okay, great. time this Appreciate guys. the Well, that’s Thanks very helpful. morning.

David Humphrey

a lot, Thanks Chris.

Operator

Thank you.

Our next from question. Atkins Stephens. the proceed of question comes your Please from line with Jack

Jack Atkins

and great morning, on good congrats Hey, quarter. a

Judy McReynolds

you, Thank Jack.

David Cobb

Thanks.

Judy McReynolds

morning. Good

David Cobb

Jack. Thanks,

Jack Atkins

sure. Good morning for

last So, constant I XXXX your maybe tonnage what’s comment just think guess, of would of spending business the or remarks go it’s you time of indicate could mean, comment that that happening pretty prepared for Judy, asset capital of Asset-Based over the over see of around frame, there trends been five business if around look initial to growth I expectations based the the XXXX in kind in the if plans. sustainability and sort on broader back years that that additional I I level coming but about around market. plans the

for of some your years term next couple some and could the growth So, you on that potential capital you based Asset-Based plans? maybe on accelerating over in then the business longer see that comment growth

Judy McReynolds

those or you make sure the that great lot certainly transportation pointed the the with that’s and in business linehaul tend quarter something good was sustainability I we our very it’s of service through a cost use the the whether as and and we environment we’re opportunities serving that see want that ourselves. think And well we able the seeing parts we’re in in of mentioned, and our opportunities we local types when of one of of things our is demand handle we sure I plus we’re think the to to different customer operations. business, Yes, that of about stays replacing I work purchased out in and think a customers those best place, mean to make robust

but and that we’ve think year challenge think, we people this we’re done we’ve X,XXX adjusting people for talked of progress. about to so well, making we we’ve want this is just a that, continue and headwind is but hire also and Last of We’ve I challenging other had a hiring environment challenge. so laid-off a to this it The hundreds time, hired more. I at had against year the about far,

only a to XXXX. of but about not And driving some so that And customers, and demand again us as feel like purchase capacity our it do of but those network also it cost. great us for I it transportation I are source I as time elements think replacing those that, think of increased comments what’s will take some having two

Jack Atkins

Okay. guess change. cash to market Judy, And about or $XX end closer a year. share question, the $XX you per ended There you helpful potential $XX or your quarter my That’s cap hear. of could in I with in by be the think follow-up for the to maybe of I then even XX% cash is the

talk can balance is balance about of capital some prioritizing you’re that using and the shareholders cash you about the could maybe potential of there think to returns as that year? the increased you we So see how

Judy McReynolds

the capital problem to really characterize that decisions. path appropriate you what have described certainly important would we continue down we about lot that those and make think get and to I allocation a a and great hope Well, is

progress things that that project capital that’s use working there. XXXX we’ve So, our pilot we of two The well. also as elements that’s our involved be and on we’ve and there in dollars our share are discussion in have us a then repurchase that thinking. good for in a And a have as and program capital solid locations this about we we been City have Indiana Kansas XXXX dividend of that in could had we see

and to about being although close time all Asset-Light really that it’s very multiples sometimes price there those multiples are we to stay to a so plus companies. the And continue that potential used business, the think acquisition that to revenue difficult given of in possibilities

and that that appropriate that certainly through that way you – dividends but hear consider we the make, and being so we consideration either And that. shareholders share repurchases the to we’ve a whether or got increasing distributions for is make always we’re in capital agree we sure in we that allocate

Jack Atkins

the Okay, time. for great. Thanks again

Judy McReynolds

you. Thank

David Cobb

Thanks, Jack.

Operator

you. Thank

comes Jason from Seidl line next Cowen. the question. of proceed question from Please your Our with

Jason Seidl

Thank Hey, and team, you, operator. Judy morning. good

Judy McReynolds

Good morning, Jason.

Jason Seidl

wanted it I percent that in goals non-asset-based sort believe of your to on get business. XX%. were focus to of about to of terms revenue previous your I

Given that look accelerated recent the growth now in that on segment, timeline what’s the mark? achieving XX%

Judy McReynolds

us, Well, better already key there, that. we would because were wish if that customer we I’ve it that’s spend out element our always certainly for we were, pointed of and reflect a

And progress. so we’re good think I making

again really that to size see really business, to there. And wanting we growth in discussed, on although percentage relative to the the we go a we starting as relative lot And of opportunity. opportunity like customer to a feel just the we’re business have Asset-Based it’s more our total. with We’re increases Asset-Light

for is One us working of our the area. management in that things have is relatively customer leadership we now really new

And well to I I they’re think information they decision really use we both the think use really those and that love segments really of And their within And identify chain, much leaders our they’re customers. Leonard making and customers customer that do either that analytics facing more existing that is just environment, what or Anderson in Steven play target April. and to as customers I we especially announced with. new we try experiencing. customers visibility, our solutions focused of last are to combination the data would able effects with ones with that opportunities in on many and about deepen the doing it’s well and and we’re Dennis disruptive in with relationships what we’re the in optimization the issues that the supply seeing flexibility and that, this

that we a progress challenges that few in that, the that hope But to So, on have growing so would is business to anyway, next problem helps. years. make I really the hope accelerated again great a way in Asset-Based that but be

Jason Seidl

It problems does. And you hope great have come. I guys to

the industrial taken at they’re How competitor of very about which at look going this for over side? we in morning even behind the LTL sort year UPS seems who and market. come was it raising mentioning on the year? the I tends the the of it’s about right like one back think when environment business, is increases drive competitors least The now of lot now that. LTL the LTL to good to how your pricing a TFI on being sector, by sort one because they’ve with half back raise of really half So we and demand potentially starting TFI back Freight pricing being environment should vocal in of to there, the of Could a industrial better been prices see now rates then the market,

David Cobb

cost for is environment their think inflation increase. us, commented they’ve pretty you the the reasonable got peers there reasonable in just as is emphasizing price. that got space start have our contract, I and a – also others in the I’ll there, their cost they’ve think cost. mentioned, – fortunately with, good in and I a Yes. increased And union with And we’ve

as an it’s As business. on X% the about benefit annual best is now we’ve talked basis before well, one of about including in package also the which

say And would us is – pushing as But the environment there as the much I think as peers so forward. our are. aren’t the cost I

and toward are, that. you continues foreseeable strong The I are out, the positive be think for as the trends future. capacity pointed tight economic to

business somewhat I PMI, been a as where of positive it’s far yes, looking of as leading at, like what is this see look indicator that So, at we’re in – can the and to going. strong. terms It’s in again, and we

to as environment other be that a watch economic all seems for to continue price. it we’ll trends, as but well the So good

David Humphrey

move along. we’ll go Hey, Jason, think I

Jason Seidl

Appreciated.

Judy McReynolds

Thanks, Jason.

Jason Seidl

man. Thanks

Operator

you. Thank

Hoexter question line Bank comes next of question. from Our from proceed with of Ken your America. Please the

Ken Hoexter

Great. Good morning.

look So, back little I get gains nearly would What lower. the take ratio to you Asset-Based. Judy the not at or a were had through XXXX still or David, operating XXXX, given gain, that XX% yield there? you guess it X% bit LTL to if you’re yield breaking

Would broke leverage that? given still greater XX%. not you just kind You now increases. be steady mentioned cost of the Dave, And

it would what get there still much is to be – so – structure get able changed these wouldn’t possible to So pricing given to you or are that it that gains? the level cost

David Cobb

Hi, Ken.

I could would seen, this I to that environment a mean think remains try problem be to for good it we that drive the have. to that. is be but

than as the a before service. that’s of productivity pricing measures I our providing how productivity shipment help a transportation us not purchase imbalances hiring putting imbalances these mentioned to and We customer in that visibility and – is we other our around about it available. so that said, and of Judy as like right that think our think to of then I that hope is there. is, but lot because imbalances I capacity in we better. the and we’re value but or say to have yield into terms in that in mentioned, resources that through, good are As network place too right as use ahead into when are opportunities would costly so price toward available more I’d and places us increase place cost, work And supports so having good a a necessarily all getting bit some as our caused more decent in personnel freight cost we, of, some would well of and is we’ve talk is has little there’s opportunity as management the supply but supply terms of And in work just the that per environment this to but the chain visibility filling our and having having well, thing price a and the of our for increases, through

Judy McReynolds

And... Yes.

Ken Hoexter

Okay.

Judy McReynolds

just that, to add I’ll Ken.

a operation technology trying that I in on again of that’s that what the toward was Something have we’re focused significant are David think, just linehaul. is mean, very really I word, our the efforts to accomplish in spend we cost. in we optimization city describing is and what

transactional is dynamic shipments much place I think more. with our ability to

of us I through our going just in of the we in that pricing working serve more here, better it’s go of say, have well, as allows or business cost better much part visibility work or have. because it’s with business on And the side would or on of work way just visibility We’re it, time to us. capable that with greater a we we’re just that much optimize to the the yes, that to whether customers

Asset-Based business Asset-Light that cross-selling, on. we again, and so very both those we it’s profitability revenue, retention do and things And that’s a we work – formula increased just winning the and increased a increased we’re when our and affect focused

Ken Hoexter

facility and looking Wonderful. you’re guess maybe need adding not capital detail And just are talking you when just then expansion? increased you investments I the benefits you purchase more of I doors, that you’re about the right, physical tech refining could talked transportation the about or

Judy McReynolds

the made would on that equipment that more we made are number or spending I are sure balance, I our optimization opportunities. appropriate the mean could for equipment doors do related both. I that things. facilities But to opportunities we other to appropriate, comments I are But related comments anticipate say, side look make of are but related of the the Well, to certainly to – we doing and

David Humphrey

Thanks, Appreciated. man.

Ken Hoexter

Thanks.

You got it.

Operator

Thank you.

with line comes Group Our Please of with next Research. question your proceed Scott question. from the Wolfe

Scott Group

guys. thanks. Hey, Morning,

Judy McReynolds

morning. Good

David Cobb

Hi, Scott.

Scott Group

on to start pricing. wanted I

about one pushing inflation so others? your renewals LTLs of X%, maybe I So there the as that see as we’ve is we’re less cost guess, the get do on point of some you talked not an or price got opportunity hard of to

David Cobb

I appropriately. I I – would in the for I for that mean But it I that place just very good our price our in had costs package going to and market benefit employees. value and catch way. would price we’re a we’ve maybe think say agree, I Well, are would a just manageable

in that’s all place. a good So

we’re would So get going – but there. to think the what I market again provide

our of Some and customers will … sometime

Judy McReynolds

best your overall opportunity add improvement, David like for would volume I in per to share And earnings Yes. price. this, environment have that growth improvement and appropriately is an

just and it balance demand about evaluate the and opportunities to that so that at think, that and the let’s those that the customers, on right basis at accomplishing we’re sure And seeing, to good say. we’re is all is opportunities we you’re to I such best make that ability look can our look of what’s make satisfying sure that

David Cobb

Yes.

Scott Group

any thinking to And in been there should weather of improvement is I’m impact from that said then the those we of but given it if normal, the right, ever sort and And of that, this try of there? gains, quarter thinking in sequential seen, guessing and sequential quarter. you’ve about to exclude way April on than sales again one you’ve March guess the be quantify Okay. best probably weather think I’m margin excluding the if mind the I better I right, we perspective, larger sort about thoughts first you those gains

David Cobb

Well, just years, I in had say impact back number from the March one think us, come is rough – but we’ve worst as that seen – bouncing I we did a February of would for it weather pretty a of decent that.

that hard through not on significant standpoint. of profit think a us overall quarter impact for to I sort from had sort it’s the whether

I about bigger property OR to quarter gains think we the sequential probably thing to is in trying comparison. in of terms had normalize first the the think that a

Scott Group

Thank guys. all Okay, right. you,

David Humphrey

Scott. lot, a Thanks

Operator

Thank you.

line the question. Fowler question next proceed Our Markets. Please Capital of from Todd KeyBanc your from with comes

Todd Fowler

Hey, and morning. good great. Thanks

Judy McReynolds

Good morning, Todd.

David Cobb

Hi, Todd.

Todd Fowler

everyone. good morning, Hey,

grow haven’t couple you years past about the tonnage just in is and kind a time can feel around this finally grow it that of where of on we’re we in maybe maybe or of Judy, renewals there tonnage some to grow that So, forward. and about less lever of really little the Does message narrative Or improvements that in push in seen contract the bit environment continue network? an to side that of this the thinking is growth to like pricing going now kind a yield seeing? get the and is the is the volume the

Judy McReynolds

think important I’m think it’s do it, XXXX it that overstating mean, but I was since the to particularly say the business, lot in done yield I overall business. address Asset-Based may a sorry, I be that wouldn’t the I latter. to acknowledge we’ve that

I the we back that one significant we really think that that that would and coordination included customers have to have more to and disruption yield of with and that that that. it operations that in is the challenge our network. the and I accomplish move it’s we’re think going everybody And from those we the how with And and to through the some that, to winter doing do you make February of better together business time and in lot service help is to be than with where at to well are from doing a make want I really long We that is we well But else. understand constraints environment those would you’re through And anything the where handle for think them it, like so I that and keep come to that so us want We growth opportunities make with an a well. be sales, the and positioned the sure testament That us mean, mind. have make that going it that. here that that we in stepping look we’re I be some been period as optimizing an in to of sure Asset-Based good And lasting that trying can want for year, with to other has business that’s experienced to I challenges the hiring particularly well. that things we sure think team we sure to was that we’re we of the in handling look and weather. come think best it’s do order sure well our success we’ve hiring peak now interesting to I and go can at opportunities seeing to do customers first them say we’re grow really and it’s going season. that you

trends are, last had success with the think more and robust you now will model I’m the of we have. of if coming and our of really strong business. that into the in quarter that that in second all we the role about in in quarter quality So, that and that third we reductions year, where proud of had the we challenges, business the then fourth the plays and the a resiliency adaptability we’ve people And the have and the

Todd Fowler

said, your the you asked of pricing the I And team up, all but way with sense. yields Yes. done kind was like the going I and That forward. it couple years that of agree over makes has past moving the general positioning growth yourself of comment, going the you work knew that, more for weren’t to the

I So appreciate that.

should if network higher that a that where with going sequential know spot forward? So on normal job maybe is Thanks. of of the you weighted you’ve a be demand underlying patterns shipments. of And capacity at good weight available comment the that shipments now. per do truckload you level? of right for Judy, kind just some you just back can and follow-up, where balance I it see normalized Is think that see of kind balancing a done you tonnage kind

Judy McReynolds

predict, issues some had It’s too want I capacity I it’s that the to I really, say past is that customers. business LTL to doing driven but the that think also empty over of that business is it some want year, Todd, transactional we’re the the mean, hard Yes. responsive that but by to approach customers to do of we’ve channel in. some a obviously our

to both that. better And by role network going as continue a so to we’re piece we’re It’s play doing the be created what well and visibility in is opportunities connecting able customers. with on in to as we do that move to as glad forward those

this. considered about So, thinking I that to when think of has that be all

Todd Fowler

it, okay. Got Yes.

David Humphrey

Todd, we appreciate you.

Todd Fowler

Tim to David. Yes. I wanted Thorne, congratulations just say to

David Cobb

absolutely. Absolutely,

Judy McReynolds

Yes.

his We’re that. excited and Tim for saying for next sure. phase for Thank you

Todd Fowler

guys. Yes. Thanks,

Operator

Thank you.

Sachs. line from Goldman with Jordan question the question. from comes next Alliger Our Please your of proceed

Jordan Alliger

Hi, morning. Yes.

curious... of sort Just

Judy McReynolds

Good morning, Jordan.

David Cobb

Jordan. Hi,

Jordan Alliger

driving to. the you you that’s if given few are customers can Asset-Light, Hi. I’m just could any line, better spots. a top addressed services over not you but there this, asking Thanks. when for on margins thoughts sure the maybe And think highlight the profitability about time in key of where the get

Judy McReynolds

having number at achievable. that’s like quarter we’ve kind helps our people, over to and kind time, of but is out how of really looked that the margins I operating so dropped the more at to us about that the, I line are to margins of I think, think the great years that leverage, people yes, invest we’re the Over first effective said and during the added the first of and people training of the the the come Asset-Light best-in-class did, looking we’re enablement that line our quarter to really much it I quite bottom really our revenue think quarter. Well, first efficient. operators targeting that certainly And me continuing the in minds really about past question. that. a speaks technologies they but stood comparison, of also in to in and things whenever of we just few one think business And service of was X% really That there, by

training so that we But I effectively pursue same saw the people, at that elements running and and And we’re quarter a expedite ground and contributor going think as of so obviously success first to the that are into in up business, to April. time, us been for the development that and of quicker. the more to they continuing working well working have we and as technology has

be I that’s described we better margin and we’ve there But time. we’ll to type to able opportunity Our have that’s get in with us there ready we have truckload then in environment, better to all really And in business to to to for their that of time over a help hopefully should lot doing that to advantage. like able are that profitability. this aggressively I a first. but opportunity where to one some would sources initiatives us to technology even, managed think capacity just the and improve be over that solutions well – of a where customers do frankly the of managing be to got continues our be lead grow And way that

Jordan Alliger

Great. Thank you so much.

Judy McReynolds

Thank you.

David Humphrey

Thanks, Jordan.

Operator

Thank you.

Truist. line Our next question. the with of from Stephanie Benjamin question with Please your proceed comes

Stephanie Benjamin

good Hi, morning.

Judy McReynolds

Good morning, Stephanie.

David Cobb

morning. Good

David Humphrey

Stephanie. Hi,

Stephanie Benjamin

it. Got

looking the on just to hear as for I’m overall this, just forward, this kind I’d customer of at on those of you follow-up digital even just your but how for LTL to to loved opportunity the pretty that I think dock some technology productivity of investments the year, is maybe love quarter. and really carrier of strong technology, overall question. be as last productivity to tech there I’m looking touched matching would you and an just fully balance – think opportunities impacted or improve and anything incremental to curious maybe initiatives look you. it you side front, you’re and planned current some on for then cash I helpful. year, wrapping at your up, kind make the think Just some And Thank

Judy McReynolds

I looking with And Asset-Light for we to Stephanie. questions, handling our – really things, people have that technologies around at And side some it’s you’re sitting Great shipment evaluate of When multiple allow our like the you talking. solutions mean on-demand not clear customer sound order serve a customers. what best just they go, what route the it’s is first in type solution this to equipment that which always because reason I should their to bring they needs. use, disrupted environment, in need up of should us, they

shipment the profile that the of they that the need kind when they they’re or characteristics help. freight of the And service so looking at and need of the perhaps

and us been helped for many, years. really in many that’s that’s development So

partner awards the their matching We and carriers preferences profiles also includes greater their shipment down have continuing platform there. of that automation and a path us given that have we’re to freight auto

and Our assets things. capacity a really potential know best solutions these the on kind think at then both focused solutions customer customer even beauties the maybe just the can place headed are assign automatically even a and where we navigate of decision visibility in And we have of circumstance. toward for tracking with is given that tracing the look are greater help involved the having a are also or of capacity as along and to technologies source in involved of making advanced and one us status I

more take we go we’re customers. every those that I connect customer that connecting so, of with on our TMS service with just as And allow carrier appropriately We advancements think more day with options us to and assign is And systems forward allowing arcb.com our capacity. self customers. our orders by

and or optimized last the working And on to side, summary. network, a two routes. that things our the we’ve over been optimizing so then toward like years, opportunities see have continue lanes city the that’s really light Asset-Light we And to three and Asset-Based more

to place accomplish early We’re that there we lot to is laid actually a a before that. more that and of getting just in had the could work automated of stages be ground

that’s do capital that I technology in Of and There’s and I on we’re and is are radar customer pilot that that screen that course, could I Kansas we Hope Indiana some beyond. doing our business and there. think business in advantage transactional place certainly resources extent so results many the in our for what well. City the and that’s a bigger as our business the our those Asset-Based we to work to And there then you it And the XXXX, leap mentioned really being new see helps. think good – in a example earlier, in to LTL tech but influence more. deployed the of XXXX the mentioned to those in of utilization for future great maybe projects

Stephanie Benjamin

color all much, Thanks appreciate always. the really No, so as guys. Absolutely.

Judy McReynolds

Thank you.

David Cobb

Stephanie. Thanks,

David Humphrey

Thanks, Stephanie. time one we’ve more question. think And I got for Rita,

Operator

you. Thank

Kauffman Research with last from Jeff line your question. Vertical comes with the Partners. question proceed of Our Please

Jeff Kauffman

and very Hi, you Judy, much. Thank David David.

David Cobb

Hi, Jeff.

Judy McReynolds

Hi, Jeff.

Jeff Kauffman

Hey, me thanks in. for squeezing

Judy McReynolds

to you here. on Good hear

Jeff Kauffman

been thank back, smart asked this at all point. really be have to questions Good the you. Well,

additional kind be fantastic just Sunday, I thing Easter to speak. here the church to So about to mean careful let the that me we market is of and think is some wanted The And follow-up. just just I for one you’re capacity what itself straightforward you we building is fundamental is there change? I ones there structural to happening so don’t think is throw want want little a not sustained business I think But out that that going overbuild capacity on versus is think. what that tight a here than longer about, and concerned probably people

Judy McReynolds

Yes.

I many and we David as Cobb. think through have, as Humphrey David cycles you’ve about been

David Cobb

Kind of scary.

Jeff Kauffman

Yes.

Judy McReynolds

we as say that we do I’ll in that, the well change, factors mechanisms, and kinds we those the coming. as the to impact mindful well When that and the Yes. I a keeping respect weakness. I the We’ll think months. intelligence But there to and some to have when I – limited predict that a importance to able of think by statement of about think to I that those. happen. four good there the passing discussed going eventual if is know of know weakness but that uncertain, ability think can’t the indicator inflationary and that about comment increases being six I mean to to do of opening mindful tax are as that is made you you of those have out change to if manufacturing think, which to we’re just are I about my cycle cost that be number have really see know, there PMI and are I there you things we in for we do be as starting that’s about mind, that we of a you’re think policy, being that of But along, think tends index in know just so with us a leading

I helps ourselves their seeing to for it’s that us customer be important business think through think of retailers they margins lens, the view why I and fashion. in the things have tight so optimized it us and an in because that’s to

the that hold for particular, watch and we’ve addresses have some our really making got of things, on speak that were we we’ve all demand utilize. purchase it’s and there the mindful cost and trailers on stay I we’re of trying But it in XXXX, of business that that average it. sure know ultimately. tractor the got to our lives with our that so could dampening on be I age so inflation in to if we effect we’re to think take city we of level are maybe to And think inefficiencies plan capital were about solve certain Asset-Based and that specific when to minds robust having more transportation a to that a be top And

what And of so more we’re sustainable go makes I if and that’s environment we really that any think just that through the focused really regard think you it on. company in as

Jeff Kauffman

company follow-up thank Co. could If Asset-Light it’s then at This just the history of businesses strategic more recently recognizing and please, has tremendous growing Tread Okay, in, you. you’re I’m doing Clipper value growth. thinking I I a of and and a look at you’ve and tremendous more But got nature. what get

many ways Contract of to business Can achieve have recognize just we multiple. engage I’m think going business. why to the I’m I strategic it may revenues of with and same and since they that be in And XX% doubled a Are the about nearly benefits to there higher at you the has gets strategic discussion with Logistics separate stand-alone? look be if company that of is I we’re differential. theory is parent a XPO reasons valuation when guarantee okay, part the investors sure not company? those reward which now thinking to to stocks a the decided said, Asset-Light there But were

Judy McReynolds

to is, an way XPO. in speaking when minds it really really it’s business both. the it’s our I’m course, of seen I highly as and with question. that what the team this network the not very what am their specific that approaching Well, is And interesting – have I’m along say. to because as that – ready it’s say with we management strategy And on customer is Asset-Light the getting to that I integrated people’s beneficial of you’ve solutions Asset-Based And ours much

outside want do right lots of that that’s if optimized points really environment that a the chain of that customers mode. ability happens the standing customer, now that inevitably whatever to as customer rather sure as to as and And growing instance, from participate and to that certain there optimized us. we be excitement around but make at partner robust LTL and having specific will that, For that something their is is a can are supply we to further a recognize in have with which what than conversation is it have happen that

is And is. beneficial so we’ve different strategic the just we’ve how that learned through steps think that I what taken

over this to we and change know look you with mean, the Things But that that at time. relationships when see company business years, we I Now, the strengthening serve have our several customers how obviously ability we and is. them. next our

so very of way. integrated and And it a think we in beneficial

Jeff Kauffman

Okay.

So have three, to it’s your one equals it is plus one in-house. view

Judy McReynolds

Yes.

Jeff Kauffman

Well, congratulations quarter on thank a and fantastic you.

Judy McReynolds

you, Well, Jeff. thank

David Humphrey

you. to lot. Good a thanks have Jeff,

Judy McReynolds

you Congratulations too. to

Jeff Kauffman

Thank you.

David Humphrey

I our call. concludes Rita, think Well, that

We’re end at of the the hour.

everybody Thanks thank for being us with we to And so I and just you call. three look wanted talking our forward to to in This months. a lot. concludes

Operator

your ask does and your you for conference We the please That you. disconnect lines. for that conclude you thank participation Thank today. call

ArcBest (ARCB) 4 May 212021 Q1 Earnings call transcript