ARCB - Earnings call transcript Q2 2021

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Operator

Greetings, and welcome to the ArcBest 2Q 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 on Monday, August 2, 2021. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. sir. ahead, go Please

David Humphrey

ArcBest XXXX the conference second to earnings quarter call. Welcome

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

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

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

begin with Judy. We will now

Judy McReynolds

morning, Thank good you, David, and everyone.

and increased second company pandemic. best with revenue, I income. assured As capacity you by quarterly terms achieved logistics COVID-XX highest factors the record ArcBest’s we've had reflect saw and pleased our our records These revenue were operating in consolidated revenue of income we as customers first leading XXXX, the in second our a the economic impacted am history in our quarter of when quarter report XX% ever we that operating half to quarterly release, of and success with very over options.

On in and very for we in operating second tonnage shipment the positive year, ratio our profits substantially. XXs was pricing strong our in environment. first quarter and non-GAAP basis, far grew demand, and are customer years, time experiencing a Asset-Based this many Asset-Light a resulting the industry growth So

are customer over last grow regarding their been third needs. holistic quarter, the year experience for solution us for approaches adapting disruption, supply of decade chain chain, the high conversations and and recover. with the enter their the XXXX positioning enables to continue has strategic as levels their effectively businesses supply customers we them our we As to best our to

a customer visibility have of we and with requirements. ArcBest’s alignment data-driven have resources We ensures approach, the proper

on responsive listening more to it's helps necessary know are which pivot us solutions. focused be our agile to customers, and We to to new and when

As we I in business. mentioned, our growth anticipate

expedite to has including our delivery facilities significantly half make grown available pipeline reaching linehaul, rates it ABF easier of in through hiring new sequentially for with are win city placing recruiting network, this growth Customer through order XXXX opportunity efforts, first serve ABF address resources fleets and technologies, highs. we early, match those accelerated all-time the Our our and investing compared increasing customers, recruiting and to are XXXX capacity. and truckload to the of taking the in year-over-year various equipment orders the investments and second ABF increasing operations, and expanding first. shipments quarter upgrades, and In and including optimizing equipment dock and to

in experience. over technology we everything part improve further And best-in-class operations more for a enable invest I'll Innovation do. and continuously we innovation now, simply of customer comments. David mindset technology, a of Speaking turn It's us. than it his Cobb to for is and to

David Cobb

everyone. good and morning, Judy, you, Thank

effect year's Just information. quarter pandemic, second some by year-over-year significantly the begin with as so I our a last of want the were reminder, impacted consolidated to comparisons to

share. of in last $X.XX to net quarter per quarter second $XXX On XXXX year. $XXX share compared a XXXX to $X.XX basis, last million million to of net second compared consolidated This XX.X% GAAP income revenues second Our we diluted year's quarter. grew had per income

earnings XXXX second press the GAAP earnings non-GAAP year. the share rate compared GAAP ArcBest's second in grew period per per XXXX same tax to diluted XXX% reconciliation release, in share table in XX%. morning's detailed this quarter our effective last to to quarter As $X.XX adjusted $X.XX was

During items surrender release. the in of the in included tax quarter to Large rate reconciliation tables Asset-Light of awards the insurance. rate the share-based included business, earnings settlement impacted sale and during second moving identified a in was effective by life discrete the the value several payment quarter, items portion of the changes of vested cash

used the of non-GAAP first XX%. current tax EPS, tax the to XX%. non-GAAP tax a expect full range the XXXX, year in rate of to be we months was XXXX rate non-GAAP basis, laws, XX% a was effective Under six on to the For which calculate our

since We Of of impacted unrestricted course, million, year. be million of of with that the the $XXX discrete the of items occur the total effective ended may million of cash year. remainder the net debt debt the investments quarter short-term $XXX beginning $XXX GAAP by cash and increase resulting tax second an $XXX and could of million, in during rate of

the $XXX the at quarter, which rate million, end debt equipment of on of X%. all payable, The and credit includes of debt notes on on primarily our interest $XXX composite for was totaled balance our million $XX operation. million Our the revolver second our Asset-Based

million. revenue our $XXX liquidity investments primarily expenditures. manufacturers the results half original by cash net Our cash of and in the under capital units increase receivable resources operating with of driven majority our from build the delivered securitization our short-term total credit available agreement our year. Asset-Light and The and and solid of the for of schedule as well is in second combined being position timing equipment revolver delays Asset-Based provides has The as

also the of for mentioned to year. our increase XXXX a plans $XXX We million net expect support that catch-up fleet an in we capital $XX order six currently includes the totaled only sales quarter, first range months capital we of net additional we have demand. coming accelerated some our for million $XXX our range equipment of in so expenditures of plan upgrade expenditures year. view the and XXXX. half the the in in of second asset complete some year, to As That between result, Last customer million facility to CapEx revenue opportunities

and Judy earlier, As a upgrades priority. are in our described network Asset-Based investments

generate in customer chain City. management customers' to revenue last solutions In in have technology program, and recognize into have to confidence structure, our thus shipment an These of logistics invest year, returns. that our center in in conversations, supply lease the yield we solid we a We combined have growth Kansas increasing business driven facility that through with cycles. our number placed will distribution capacity moved together opportunities new Our us improving management leading platform, have ArcBest customer factors retention. greater

committed Salt working City. other in leased have center locations. another We're XX and to distribution updating We owned currently Lake on expanding and

in centers of as also We that an $XX the are million as existing efficiency. annual million above upgrades historical our expanding on allocate expecting $XX would resources improve to well also toward to service CapEx basis range additional energy levels

As term portion are future many will I but included and are impact of XXXX projects investments XXXX mentioned, of a and updated longer our these in our CapEx, years.

to for providing have understanding we acts as partner As increasingly a customers ArcBest discussed our solutions our of seeing in perspective through we on are through and rely a more customer-centric our as trusted transportation, more our capacity to chain leverage multiple us team expertise. assets supply customers' logistics strategic or before, through and responding off other intelligent whether our of on pay we approach can approach across behalf own allows customers' that access providers. needs. modes This analytics

our and logistics our release. serving quarter. cash our and GAAP shareholders with included So, and can capacity details net space Along provide our to with these to for of are projects, a staying repurchased flow customers' year, of believe platform continue are add press to our investments share trade capacity dividend share Full in capital our acquisitions our we continued undervalued share return the needs. technology for exceeded additions we transactions in to million cash should this excess repurchase to present to and utilizing earnings invest and these scale opportunities the serve higher. that buybacks. price to Earlier value opportunities of is during needs. our program, program ability we second in are positive we close as advance good that were opportunities we These Likewise, the stock mindful $X

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

The the first versus second points quarter of in non-GAAP quarter the operating Asset-Based ratio basis in sequential the for But improvement. sequentially Asset-Based improved the first the business XXX business adjusting sale basis-point XXXX. XXX gain produced a quarter, property large

last per tonnage XX.X% total quarterly day versus second year's increased Asset-Based quarter.

June. versus second Asset-Based by XX.X% by month, XX.X% of by quarter daily same in last increased the XXXX For April, in increased in total increased by year May, and XX.X% tonnage period

by quarter shipments compared increased day Second year's quarter. XX.X% last total to second per

hundredweight many year the year. percentage the surcharge, Preliminary increases X-K to pricing have renewals shipments exhibit Asset-Based of on surcharges compares the hundredweight release. per secured tonnage excluding one negotiated impacted percentages which increase LTL-rated customer on to This revenue digits. higher fuel average business, for provided prior deferred Asset-Based first second business the during the last agreements mid-single on been quarter above July daily in press shipments was July highest digits. XX.X%, billed in and by quarter, total in and an trends per we've years. average we X.X% fuel the a on by quarter. pricing versus were contract had by quarter Form customer secured X.X% Second increase increased We was agreements Revenue mid-single the during improved these the the in month

shipments than As shipment the previously business in our are the level shipments stay elevated second typical household the an managed mentioned, longer. system These goods, quarter. U-Pack LTL larger of and Asset-Based during

for shipments number continues our shipments growing of of principal the in services to serve U-Pack our strengthen, to these moderated customers. household as well order we As demand goods customer LTL base spot-quoted have as other core

heavier this As than was average change from historical decline sequential these result, because tonnage shipments. average spot to June sequential our average daily of below in U-Pack a and in greater the July

our for and average changes historical business, higher sequential in revenue shipment tonnage averages. LTL were than Importantly, per core daily in the

experienced As in of U-Pack year-over-year a reminder, larger shipments. in XXXX, growth beginning quarter in we demand mid-third these significant

strong improved increased demand second to segment segment. total, tonnage serve be of and our expected prior reflecting our year's In the by this and in customers to FleetNet we impacted to ArcBest ArcBest network and XX% continue in event and our the are shipment last forward, Going element businesses the revenue. manage to comparisons the revenue events quarter, revenue business our as year per versus Asset-Light optimize unique in

million. $X.X services gain in basis, quarter non-GAAP on Second excluding of compared the million $X.X the resulting million quarter, during labor second quarter operating year. gain last Asset-Light ArcBest business was sold the of moving portion a a Asset-Light On operating segment’s sales, income the income We $XX.X million. was to net Asset-Light $X.X

XXXX including exhibit July quarter provided million, EBITDA million in the compared to quarter business Form the been Preliminary X-K XXXX. moving Second have Asset-Light to was of benefit of trends sales second $XX EBITDA press Asset-Light of release. filed That additional the on certain our $X.X that information about financial the for in earnings was business included I metrics. recent expectations our Form with quarterly mentioned, this morning which exhibit includes levels along our our future some results current X-K an with financial that release and business

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

Judy McReynolds

you, Thank David.

approach Over while purposely carrier more several solutions and customers. new growth and driving could This partners effectively so serving that customers years, we and us also is relationships. strengthen with relationships past creating well as partner the we our integrated we with serve

with only of capacity Today, that and experience one us almost companies changing and meet and to years needs. of meet the they channels their well-positioned both XXX are important We It's a desire. we exceed we to they adapting and few have sources, customer asset those the full-service logistics needs where expectations. we in customers to are asset-light are

demonstrating Looking they for will is important us enabled success. to with staying of evolve, desire continue is The them. very are accelerate, position expectations customer the to we but for know unique by closely rate will as listening and forward, that we solutions change continued logistics tune agility in

focused long-term we're our positioning growth the on are underlying in in strength business, any We confident ArcBest our strategy environment. of and for and

quarter, toward steps more several governance As taken social environmental, we've a last robust and program. mentioned I developing

corporate a As program an we our currently manager. update, are We've hired latest responsibility compiling ESG social report.

inclusion We our equity diversity, are and road developing and map. strategy

undergoing usable can are that project. into We environmental our and a establish data so assessment we more format consolidating goals we a materiality are

of way. aspects in with to prioritize ethical goal been we've conducting is the ESG. long-term all in Our corporate responsible business to highly all our our assessment citizen of across communities, be strive We and committed a initiatives a to always

regard members. in to documenting We more employee committed our want sustainability, to team are a well-being, I about governance say our publicly involvement, ethics. word to and actions community also

Our people very of for every differentiator creating of who our customers our it great thousands living and the day. our for Company. to And strength for dedicated our over culture, employees turn session. they are value-driven helping success, I'll to question-and-answer our out drive I'm a thankful and our are Humphrey values David now,

David Humphrey

Okay. I for ready we're Frank, think questions. some

Operator

Our Cowen and Seidl [Operator with Instructions] question first from proceed. Please Jason comes Company.

Jason Seidl

traditional Judy I profitability roll business? saying guys network numbers on over on wanted good should you, guys hope it, putting team, for comparisons. morning. you your business type business, core is and I operator. a of that you this how U-Pack to Thank going about any of to we are bit a Without which get the direct this versus were think sense

Judy McReynolds

looking late information I trends of of about Its one think, combined about we're spot-quoted or residential years, tends But, core been is our have many, what what any April like one business reason we've just XX% business. our begins developed that when really with XX% why would spot-quoted has point shipments to peak many we published what historically of It's maybe where Well, we fairly a many, I really is out over mid-September, a in it's season That's But that, consistent equate runs business. you think non-U-Pack XXXX. for typically years. like strength to something shipments. And business, business, specific some we back our I is because manage truckload-graded, our And it is that bring trends many as pointing it I important we sequential can again, June. the you in think. that strengthens, that's think business shifted incidentally, you haven't and whenever business been out wouldn't. segments down up and I typically trends. since July good. so to are look normally some the whenever in just think the the this disclosed spot-quoted to very the at would LTL you're have And a experienced pandemic, we And we business And periods through it. core that managed

make to you color strength sure gave we that So, you we wanted that that demand understand could that the so we're experiencing.

Jason Seidl

right. All

core business? you because have a in So, the all-in-all, strength good thing, the

Judy McReynolds

have it's of Well, look optimizes we all when that so. how success And business work And more we've it's these yes, that our that businesses for have for ever. these I than would you through experienced can good to. that interesting think in years. all at way us that And we from, options, we fortunate we spot-quoted a the business like

Jason Seidl

David, a for On the additional CapEx improving color. great That's follow-up, Okay. lot facilities. talked you of a about

to million $XX above You normalized said levels. $XX million

just 'XX? be to this on or it is going in continue And to it's the said logistics all facilities side? You definitely 'XX, beyond going non-asset-based is

David Cobb

longer is our in a in But, Well, it. of over place. in years feeling have of right customers yield kind what that customer now team from business. we're part opportunity we the seeing and done we've mentioned, of changing tremendous things a as term lot our programs of just of management think we're and I the Judy terms structure technologies in And

So, ability our this about our our -- grow. confidence is in really to all guess, I of

to million is that $XX be of an to suggest, is I this basis. think air. on The annual timing in so, million would now, at the $XX right going looking And number I

here upgrade We'll at many our expand primarily pinned updates to as looking know into for would is we is and facilities what Asset-Based XXXX how this to But we're you haven't We hopefully much this those going of at point. network in them. down be give more. that fall

of there. lot a so, And opportunity

are challenging that use So, helps. those were we longer to buy into, to real as get certain we and estate want in facilities, we cases, anyway, hopefully, projects lease But term some if would have places to could. some may

Jason Seidl

I’ll on And does. to expansion just looking many No, you’re upgrading at. the type of it we’re door and facilities look how updates forward

David Cobb

I Thanks appreciate it. lot, a Jason.

Operator

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

Ken Hoexter

the Dave, in years. OR and on best Judy congrats impressive. XX It's Hey, definitely Great.

similar Judy, give You did your at note and this the the XXs. quarter be on third stay and on sustainability thoughts, should OR just X-K -- going thoughts or level, that in forward? in Dave, Maybe

Judy McReynolds

interesting want the Yes. through. retention. done we conversation. And our that getting overall a of good was at this have the our we the were are all approach a When a a that. that we over those Well, that out we way and be actions first taken the our we're charge. multiple some speak, overall opportunities recent ways XXXX, the have We're that particularly of business in customers we that is there. to and that. with more all, it's on think these we approach can When really thinking Ken, things trailer. direction interesting. logistics minimum it's working from. We years if customers, in point to looking it's we opportunities of we've have know we the that that and words, In value, gave made company really achieve And taking result we preparing those very you back, terms so had about look involved about to it's confidence see you it's the bulky I last company. capable. the business, since But, at opportunities the it's In as I the coming place sure shipments And approach I great important increasing logistics the more right up a we've where impact we've other you were cubic growing. call, confidence history the you're guidance assets and the actually giving XX our And customer in And really that also evolved, demand us bringing of I space both, years. that's strategic for that the that of in And profitability do not But, we conversations, customer. was in put and just for as through that to

introduced and which into us have in imbalance transactional fill the LTL, also capacity a the is system. helping with us helping We

tools more business I the model. think we that really advanced at We more business as are those significant really on a us that of but resilient focus opportunities. a help and doing a business right David is do have with circumstance, the that to given the we increased, model, need and periods something is us visibility mentioned, that And we analytics a and use sustainable have The with helps that think hiring challenge. we I providing really also unique to time

them And into And them really, we to And to time. on for with as of bring we of as to it's on period well consistency we that want so, bringing a that our put that ourselves development as people. and there. stay some training important really with we're us provide a people longer lot

visibility And think, our have. that XXXX use it's so, place just, in all that the opportunity and versus really set -- with visibility improving we I one to range, that our mid-XXXX, we and improves the say, approach improves XX our I the had that is management our customer approach what profitability, overall we customers think, today in

in be of also me confident and very ability manage last then, through others one all environment. our thing. our And to of I just company that So, at any type helps think

is something as during note to our look last take really you back we of agility that well. If pandemic the year,

ability even the adjust. really So, to it gets we have whenever challenging,

Ken. I'll at it so, And Thanks, leave that.

Ken Hoexter

going added, see So, that long adding the secular need And just you Judy. change right? in then, your others think to term on do you you what being thoughts you're capacity. take, forward? the hurts over of in here capacity adding, Do there LTL are Thanks, demand terms or a

Judy McReynolds

right be. looks very-focused network Hopefully, possible there's now, in time. it I demand. growth in I on a spans demand test know in and resources, mean, best a that utilizing one the there's secular we're there And But the could e-commerce. I that we're really our as great think way. for that's change seeing if those of this

exciting. model to in with and the of industrial able digital take the in to the is the of growth the last sometimes consumers be to also serve availability the last adoption is down side turnover of pretty to is note I customers several years. and as that's really, and by go to the a businesses that's over our we in relative think think well. very it to then, the who's our most reliable. something as And resources year And something even coming be I next But, terms I sense drivers just -- boils through our continue low consistency going think important, from

Operator

next comes Atkins question from Stephens Jack with Our Incorporated.

Jack Atkins

morning. Okay, Congrats great. on great a Good here. quarter

Judy, me you of guess, ask So, kind I moment. a let about for allocation capital

be a You your guys cash are to lot know in market cap don't invest sheet. or the opportunities on XX% business. have the I the there balance of of right net But guess, have you in XX% now I to your the about also nonunion historical understand aggressive, to to more the trading buyback? more why peers? averages you're flexibility I a discount aren't just at relative and significant aggressive curious being guys was given on you bit maybe

Judy McReynolds

answer think, our basic part the overall capital is that a that I to of allocation program. Well, is,

have targets. We certain

levels got backdrop investment increased some use on well think and uses it of real we've I for dividend. Asset-Based increased went use repurchase the capital on for is terms and and detail prepared is I use to estate. to outlined, significant our left in intend a that business a share that remarks we're amount pretty we available about in level of of And see. what think spending his our into million describing spending in our as we of for we've us what good $XX of have we equipment as David And

company. We're that places a realize, in Now, mature the we should we're be.

We do are we but needs. have that facilities expansion have well-placed,

needs. upgrade some have We

some to We in these the environmental some advance and in also create an facilities. efficiencies area opportunity of see

those interest as we feel from So, point of view, well. investor really of like, an are

our so, for on forward some we some And resources estate. our opportunity real allows then, a used think purposeful more a and as to see approach plan and would maintain that march have because is increased capital capital also, of that. acquisition of benefit And strategic level I event an of that we spending find scale. us that we level needed from add in we is the And to we scale

all about things are So, really, capital those on our allocation. minds as thinking we're

Jack Atkins

it's several Okay. Kansas for areas to you of invest and next that potential City that efficiency could kind follow-up that could can if the in No, technology I the just to appreciate a I would update insight think to speaking have the greater be insight we're and I curious, think, into able When an provide you years? scale on Indianapolis. us the I the my related? initiatives your question, there. guess, going be where impact you maybe over business of in get in do and on business,

Judy McReynolds

Yes. I rollout have we're there. go that we've more talk few plans more particularly a on City before in to pilot, ready quarters about hopeful the the got that mean, we we're to Kansas

those in We the our there. other in are are. and Elkhart pilot projects targets Indianapolis, facilities is have in seeing some meeting where the terms of facilities we which We're two

city you center And City, facility, type about Kansas as at. testing but is that, think a of Indianapolis we've we're you that move to larger has then got end it Elkhart you've If facilities also a what operation. the distribution line done, and

different work we when we really, it's facilities to So, three facilities, in. they that are this need say pilot three do

our involves involves process, also And we're see process. to we well, And and handle we this and And whole glad and forward. it. things could excited if to and the that able more good roll we be very about the it out the but Anyway, and that to we involves it we value do development we be but training of continuing we talk so. know, software Company, again, go testing, it the continue you broadly need as but to, have it the about progress, about more so pilot equipment, people, across then we'll asked -- I'm

Operator

Our next Please Ravi question Morgan Shanker from Stanley. with proceed. comes

Christyne McGarvey

Hey. Ravi my This morning, taking is Shanker. for guys. Christyne on Thanks for questions. Good

that the Let me just commentary want just confidence, customer conversations But in you’re outlook from what year can kind bit giving side about go are rest the talk the things back of to a step just about a how of how inventory take a maybe demand. playing Maybe to demand bit picture, into little next? -- here, of back a the you on and the of you for here. out Obviously, going? confident is the see you little of maybe some even guys early

Judy McReynolds

great customers. They're some we And Yes. thoughts. having are amazing conversations with

XXXX conversations. to a supply One have there's no disruptions of sorts and like how kinds chains. of of It's have just in the things as logistics that different those ourselves we did several years time position ago their was customers company, amazing to

in can to to them, a help great then conversation integrated bring. we to willing assets to, they're short that's and our them, use of think us modes brings place network where out being bring approach I equipment we able the tell customers. the have so, holistic term, a of can because future expedite-type with situation of to we really all of that about ground because or conversations even because our where them a the solution that and in I we bail you conversation that And this, And to that a of planning, could and have more that

are timing the able of trusted way are they're partner plan that things. there's to with think life Some they're seeing them still been beyond But others of sort struggling I this shifts some with And levels. in play. thinking think for I be a disruptive inventory about to as looking

with as mentioned, beginning conversation a our a increasingly more for have And management solutions that's ago, And of talking that's approach, our And I'm elevating that Asset-Light term. conversation it customer more of a discussion doesn't assets longer team maybe from the and multi-mode the -- us. and pleased as I've where involves always our about we about it's place has assets, think brings first. company, with done beneficial one our with a to. years were but lot so to I our approach, it job there, logistics a but customer A goes also for times, great

Christyne McGarvey

very in side labor Got about. to That's the back I conversation, I think things. squeeze maybe more. Maybe particularly to to want if helpful could the just circle of capacity it. one around

front that on availability has a quarter. of kind think I been this theme big

on that guys you if you you around with kind recruiting the of you touch of recruiting, are experiencing. picking you I up mentioned union the of actually do So, on guys agreement things. helpful. Maybe expect to type edges what is quite right can bonuses, sort can the maybe anything now touch hiring imagine

that So, as I helpful would think well. be

Judy McReynolds

Yes.

are think the is, one making net but that we progress. We've we've Asset-Based by are our people XXX X,XXX in We as I challenged close are in of to business, hired every that around in that's our process. and industry got

are going well. So, things

like into say still that, program a appreciate retiring to And Teamsters And military. put have has was to talk folks because them say hired things that always I hope do. I that. that the have that yet, as it for that like And we I XXX many we lot for we've every years mention a about we that that great But, it partnership hired there. bring have through arrangement over to lot almost soldiers this our when We to still the military. great that people with hire. the soldier us. the partnership we have we would from and we we a would really the It's of our been we've that are One is and on

from purchased to have. resources Now, overall at a standpoint necessarily that transportation. network, we the of of level from But, to some high own standpoint. we per an levels shipments transportation purchase not experience using bad of replace going is that cost of all elevated customer utilization that's mile for and the we through know, part. that like We're move other And an most rail our

are we as and that in have we hire purchase to reduction may that devote people, something see you time hope those to. And and as that's think, in And transportation our recruiting of variable those us marketing later But your to it. 'XX, strategies But, partners and before see more But, so, question, it's probably resource. in We're into great of resources levels. pretty a digital lot working we so. XXXX hiring energy I Christyne. well, anyway, answers terms I well address a help that

Christyne McGarvey

appreciate time always. insight, I definitely. Thanks, sir. Yes, as the and

Judy McReynolds

Thank you.

Operator

from comes Please Our with next question Wetherbee Citi. proceed. Chris

James Ronnigan

trends [Technical of indication a seems and more guys. seeing James Chris. I your through LTL what a wanted Difficulty] negative touch core were rest you tonnage the basically maybe of the on to for in bit what morning, bit business. the on on just seeing you're Good comps, and or wanted terms but an in to of the in get year? just -- expecting August, trend

David Cobb

you And last in that think happened that of talk our about some This element little have think. seeing. year that part in larger kind shipments, we of business. about we we the unique I'll the about U-Pack I talked of when what what growth a industry, David. plays is into this bit these particularly, had Yes. just tremendous to we're It's And

than are substantially larger our so, typical shipments And LTL-type shipment. those

so, in us mid-third last some -- took demand historical into that became on really business. for just -- an for had increased we And beginning that when and quarter the levels with really year,

last be forward year. had per So, move as we here, we we're heavier shipment comping from that against weight to going that

like think when -- weight the increased we're that's June and is but core we're mid-single-digit large down per seeing about But, total of so, July said, our that down kind accounts. we're that's And those range, demand and managing basis, to trending because you having our due in to that compared accounts. LTL I on shipment for

And time, flat business having July business. so, of strength essentially June we're the LTL in in that. see published in shipment we the decrease, per guess, same Historically, weight revenue that revenue core that versus a on kind slight core on or I But shipment is and July per to at from June.

the greater happening is have how have we visibility the that at around customers have core And solutions Judy we're for lot we -- we're have as to having mentioned we customers, come in measures rate the a We're solutions customers. rate. we're customers customers. We're a for what's So, back. higher our customer, other the how past. for retaining at them that's than A retaining adding

core that in we're of growth our that all this So, seeing is move forward. contributing to as we LTL business

So hopefully, that on there. helps you of understand going kind dynamics the

Christyne McGarvey

The just per that the the as Is down due of in it July, the difficult? continuing of a level and like right basically was large to up about hundredweight on or X% basically the of base the that that be size harder revenue so does. it sequentially, that run sort sort comps there could little of and It businesses being a be -- that given way relatively, down we get it, should And or follow rate. basically Xst just maybe just done? then the trend step bit. think this step-down to the can exceed more And is is the is a

David Cobb

third shipment say this we in some XXXX, forward quarter came essentially, U-Pack the the we larger -- quarter second comparison the volatility as beginning to go gets and Well, if business would of because this in activity, back I it will, then went in had but away you it. had this tougher,

comp that So, we tougher yes, as forward. move gets

Operator

from proceed. comes question next Our with Sachs. Alliger Goldman Please Jordan

Jordan Alliger

an the know hiring I of I of in we going as that more how sort sort Just when Do that chain, in see might have a quick to follow-up should transport around I'm purchase sense the the inflection other ensure on has supply purchased mean, we're then, third-party the been of And transport. sort you're any curious, need? it people, way? you with just hard Thanks. you lessen. capacity environment

Judy McReynolds

Thank you. well. I'd only difficulty service goes not and resource. be in say might though, The thing that that what sometimes accessing they issues having is Well, is have we it, as whatever with it experienced about

some you demand would to elevated the I you know this I have do. suggest level. we So, of And that that that to the we're what and third-party needs with of year we you are a accept and whenever the resource use for to hiring, would going XXXX, in have business, have is we suspect because I where of

that hopefully, back want thinking that better to to of end mislead the significantly year, pare And don't the we it's able at you towards I year. be into so, to some going some. were But, point this

continue. it's to I So, that really anticipate going

Operator

Please Our next question Bruce Stifel. from comes with proceed. Chan

Matt Milask

you us is on on that remind profit scale result what the I great note, on at And sharing and how ABF, maybe This big the just perhaps this for Matt just retention a in specifically hiring morning. echo be? to market. easier congrats threshold OR want you it the LTL. can works making the market? Thanks might recruit the you have a challenges follow-up, as lot and And think sharing measures in for a we've a to in this profit heard about been lot. Bruce Do

David Cobb

I provides Asset-Based would comp say of the that the and our in most benefits packages business really one industry. generous

some mean, the in have And should our drivers. I so, in industry. think recruiting certainly It out. rates that as on that I us of lowest helps help we turnover you the point us in effort, the our

some these by pension the to firms include a health So, and think begin programs of positive employee-focused and favorable the program sustainability it will welfare benefit for recognition have being that is and also I investment encouraging workforce. which

than these higher So, the have costs industry. been

maybe how experiencing point additional included at we But, only a asset a information tracking, our works, incentive think this it. you time. embedded And should that, the that release and basis, on one But way at obviously, think and results our the year-to-date have union way this less about think out, levels to levels. that's they’re is through earnings the it We've incentive the metric has how in this GAAP are in -- look acknowledge to I year in have at but certain current others some I we the to finalized be halfway inflation OR the than about contract. works. as is and OR

year-to-date so, a And the a through XX.X% quarter was OR the XX.X% Asset-Based second versus XXXX. GAAP in

pay XX%, we X%. at below So, a

And on so, again, basis. GAAP calculated a that's

each the so, $X percent a million about million for union. to is amount incentive $X And

profit we the -- just just we're year. Asset-Based accruing I for go percentage as of as So, the that a of to kind and

would so, I And of kind as you look to are trying matrix performing encourage models model that our it and out. would that to model how we're expenses

help, does that So, Matt?

Matt Milask

it does. for Thanks color. Absolutely, the

David Cobb

Sure.

Operator

question comes Please with next Truist. from Our proceed. Moore Stephanie

Stephanie Moore

have X has it's just we of could now about any of offering you number updated versus any already, and given value Judy, you helpful. your or questions understood this customer that hear really brought last the but the responses you I'm sure of customers of discussed benefits the whether suite I terms amongst or how that logistics metrics differentiates metrics been? X your have before, customers and of full -- would kind you. really But, up of just peers. volatile One year had, be retention and in you many of how services the do in especially proposition, really use KPIs but one services the Thank

Judy McReynolds

experiencing -- times X shipment to we're thinking. have really cross-sold, when in range when and Yes. When the revenue account amazing. we X at is That's retention that our an mean, are look from we profitability great sell levels what it's we pretty And, a of I typically, standpoint, higher. levels

a for I of benefit both accounts XX% look When our source have a we or that. there's us coming words, think an have LTL active that to been for accounts About want truckload. a to of XX% to our the I great is we as from maybe like customer second secondary doing about, what XX% entered -- say, and us. XX% So, opportunity so other at -- cross-sold. And we this you that and or the say, ahead accounts customer highlight -- In the we will is from secondary our customer or of source. call revenue

LTL on come secondary. as in seeing customers then increasingly resource wanting we're Now, truckload side the the and

we're kind levels. coming But, were really quarter-to-quarter about cross-sold a of and bullish experience as when And too. about, we excited and about we've on that looking retention our does that's it the increase revenue very year-over-year So, customer been it. talking from very interesting, that's that that -- has, look we

because one a when to utilizing customer. of the come of majority to network as our LTL words, can that those of loads the other is that's as have business kind that say, interesting into see up our an they delivered. one words, freight network coordination them. or can of is and going provide full injecting expedite a enters been customer doing we of thing our In And well. truckload that end of services, Asset-Light Asset-Light-type In being Another locations or other and part we in,

want And and itself just I pretty those that's again, way exciting. to want be really we customers that. they Company think the that the lends I built options. think, have options So, assured And to

Operator

Our comes with Wolfe proceed. from Please Group Research. next Scott question

Scott Group

to you think into of a the was do accelerate the trends GRI year? for you second continue should that this wondering pricing Do half the I back see potential year.

Judy McReynolds

since to in That's been experiencing some And a is, XXXX. on terms the address price historic question. trying good we've of Really, we're levels. this of of I of really think, some our you I'll what accounts remind that path

that I on opportunities time which really I'm environment we the But And to kind of what evaluating will that spending, looking customer of so, have, displace, because built the work Scott, is best thankful at very and for most we the of in. us. the think for we're is that we're that for

well works But, We what it well. conversation into for environment. a and on where this feels have more needed visibility enters than whole as like And ever that strong freight us. is

the that today certainly, a while. conversations levels it for strong always place. with for I been in we've to that that having And think, continue the anticipate in I area demand and we're

Scott Group

how those Okay. just to And relative about trends in July? seasonality you versus June? expedited Can normal talk the trended

Judy McReynolds

answer David to that. Cobb let going I'm

David Cobb

we've our and of that we're able the And to that Sure. It's logistics as that in that all first just service the in expedite with full we provide and But, service. in well saw I we had we're conducive mentioned for enhances, thankful opportunities quarter. expedite, offerings and our is we've this business, strength release -- environment guess, the as that goes have.

And operate of that going continuing about of be demand as how and July the manufacturing plants some demand, this rest auto guess, the auto business. expedite yet. been for or talk product I that plants It's And Part July moves that -- I were interesting hasn't met from to some is think We through in and of as growth. so, see revenue year. large to that there needs well. how we the as there's kind

encouraging So, that Scott? an forward we thing could that move be Does as as help, well, so.

Scott Group

if talk number When this? way And you And around, ask about like It to last there increase count something thing. did does, maybe about I when was the can rough one network, a time just or increase? yes. put the you. you the a is upgrading talk just door the terminal Thank like count last

Judy McReynolds

us we've Well, on we've addressed that us the the facilities that leads things level that? dollars confidence right of seen. to business we information the David decision. do want what always based greater that demand David, level being or And demand from gave that you that a anticipates. our I you anything customers is just of But, typically What continuing that business I and to on add have levels into we've one we think that in this is helps future consistent think years. done whenever the to environment doors the But added with are he hearing

David Cobb

over timing and But so. counts there capacity factors, of of just or the increase that is or months XX would to around added target to X% in currently Well, lot projects. around a really including depend have the add be that next going door think selection to could that XX% -- is on a we it of I site those

improve through as move as So, there's existing we opportunity forward well. think to doors, we also productivity

So, does that help?

Scott Group

Very the time. helpful. Thank appreciate I guys. you,

David Humphrey

We've a couple got want to in. we Scott. get to more Thanks, try

So, go ahead, Frank.

Operator

question Our with Todd from KeyBanc comes proceed. Markets. next Please Capital Fowler

Zach Haggerty

towards spot. what spot. there. up? hear moving on guess, back Zach Just and moving for your back the for Good guys morning, percentage this on the basis? maybe go of to thoughts and to want just Todd. is that you go normalized mix see Hey. percentage that Thanks. everyone. U-Pack just then to want to And I This guess kind U-Pack of do to pick Thanks. past core a is a the just level, to I I like continue normalized and I

Judy McReynolds

On non-U-Pack including not a excuse is mean shipment basis, is what Yes. say, to non-residential XX%. it's residential to XX% non-residential, -- our me, I

Christyne McGarvey

guess, current. be? That's I But, that what normalized, would more number

Judy McReynolds

number. the That's normalized

Christyne McGarvey

XXXX Okay. can Got Longer you I X% you towards level Asset-Light maybe And term, piece. guess, it. guys on then then move number just, operating what XXXX? maybe guess, the past, to that guys about the guess, levers and the big are I margin. seen in higher in pull have I

Judy McReynolds

look fixed you you’re certainly make to to and the there we’ve and in the are are want have progress costs get ahead it, of. order numbers, when Well, that that to as made you some benefit at more. we growing some hire some costs In there then business,

people And lot year. hired of a this so, we’ve

over time, maybe of And is period little efficiency. would a so, one that folks six a of reach a the things probably a look we of to for bit longer, those level at year, least months

will to be helpful that us. so, And

it to cost fixed us of dollars us add to nature. line, because fixed we As achieving useful to us is scale Adding bottom line business, improvement the that the again with net help will with costs. because revenue it helps

investments technology our in have capabilities. that of in because advance to We larger business than fixed you cost a the we've amount that might expect made digital

that to Asset-Light. dollars we be think, and have net I but the that scale in business in would -- is true so, line. thing main line every And And the revenue

David Humphrey

All right.

got we've more. think, one I

can we if to this get we'll up. try wrap So, to them,

Operator

Jeff Our Vertical Research next with Please from Partners. proceed. question comes Kauffman

Jeff Kauffman

And to just is you just not This a very terrific quarter, Thank me everybody. squeezing for LTL. thank around, much. Congratulations you in. all

to great it's So, see.

Judy McReynolds

Thank you.

Jeff Kauffman

a then things little every the think that with little coming terminal the how -- stores. are signaling Thank you. waters on. and less waters this capacity And little you're so upgrade the of UPS in shoreline other in going a water almost from a looks recede the online, I heard we kind come more we picture like adapt But, some of recession, and people hurricane we've question and here, and flood a the comes different. a it's time in and have always Bigger back,

kind Amazon think that. hinted of at I

the industry at changes and some to groups tell here you're on is of recede groups your some getting are early looking of or purpose? asking floodwaters the and and in to different whether chain, floodwaters what just noticing, entire As come some what are curious of starting look that what is back, are their I'm and world? coming you're they're business more different it are receding, you too basis, changing distribution industry a like bigger the a of normalized see we're the picture serve as to a kind you post-COVID clearer kind

Judy McReynolds

That's I think Jeff, insight think lot that that some about conversations Yes. one question, we're great experiencing us that. a and we are into give a

say But, strategic seeing first And me our some well, these set. let's of positioning let this may we're in all, conversations. level be what -- this, of

retail. tied Our industrial business is in to the and economy

there. quarter, in is those been retail, second of that we we the We interesting construction, companies we strength wholesale, strength have some And do large, what's the look a at and with. good small medium about even in business I'm saw mixture every you mean, of sectors. manufacturing, And one talking saw I it,

And reevaluate. for been them. they're at this so, chain management. again, solution I think relook them a that customers different a we're for that approach about their conversations has we multiple backdrop. that's willing mean, ways is with -- is I And company lot that it's to useful things, is what can very a a good to But, much is we've us, in supply of

freight And we're those at or in know for network network I is well type Asset-Based what In asset other advance. and more they different in partners, what carrier -- they'll think want look just we the When they want, the in advancements fact, what thing our conversation it the lanes other which tell -- even they we've because visibility. but we about in. that, what words, our of carrier that's also well works the the works partners. In of us

a we level some conversation mode. of they And been they really the a in just the And that many desiring good really chain, have that and top to wanted and bid, it. wanted They RFP, options wanted that understand past one the do was where to was can solutions offer customer. challenges for there a supply customer have more do can years That an mode. then one so, we

You more conversations. weren't having

and So, really this customers that changing me changing conversations is environment in. what's to invest different the our willing environment is to are

Jeff Kauffman

you Thank much. That’s one. very my

Judy McReynolds

you. Thank

David Humphrey

appreciate Thanks All your for Listen, this everybody us right. Thanks we a ArcBest. a our lot, conference this We lot. morning. And Jeff. interest concludes call. joining thank in

Operator

today. We ask thank Have please That does for participation disconnect conclude the a conference your and your that everyone. for you you call great line. day,

ArcBest (ARCB) 2 Aug 212021 Q2 Earnings call transcript