Q3 2023 ArcBest Corp Earnings Call

Speaker 1: Greetings and welcome to the ARC Best Third Quarter 2023 earnings conference call. Gender presentation all participants will be in a listen only mode. Afterwards we will conduct a question and answer session. At that time if you have a question please press the one fall by the four on your telephone. If at any time during the conference you need to reach an operator please press the R0.

Greetings and welcome to the Arc Best third quarter 2023 earnings conference call during.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone.

At any time during the conference you need to each operator, Please press star zero How's.

Speaker 1: As a reminder, this conference is being recorded on Friday, October 27, 2023. I would now like to turn the conference over to Mr. David Humphrey, Vice President of Investor Relations. Please go ahead.

As a reminder, this conference is being recorded on Friday October 27, 2023, I would now like to turn the conference over to Mr. David Humphrey Vice President of Investor Relations. Please go ahead.

Speaker 2: Thank you for joining us. Today we'll provide an update on our business, walk you through the details of our third quarter 2023 results, and then answer some questions.

Thank you for joining us today, we will provide an update on our business walk you through the details of our third quarter 2023 results and then answer some questions. Joining me for the prepared remarks are Judy Mcreynolds, Chairman, President and CEO of Art best.

Speaker 2: Joining me for the prepared remarks are Judy MacRennels, Chairman, President, and CEO of ARKBEST, Matt Beasley, Chief Financial Officer and Treasurer, Seth Runzer, President ABF Freight, and Steven Leonard, Chief Commercial Officer and President of asset-like logistics.

Matt Beasley, Chief Financial Officer, and Treasurer, Seth runs, our president ABF freight and Steven Leonard Chief Commercial officer, and President of asset light logistics.

Speaker 2: In addition, Dennis Anderson, Chief Strategy Officer, and Christopher Atkins, Vice President Yield Strategy and Management, are available to answer questions.

Addition, Denise Anderson, Chief strategy Officer, and Christopher Atkins, Vice President Youll strategy and management are available to answer questions.

Speaker 2: To help you better understand art best in our results, some forward-looking statements could be made. Forward-looking statements, by their very nature, are subject to uncertainties and risks.

To help you better understand our best and our results. Some forward looking statements could be made.

Forward looking statements by their very nature are subject to uncertainties and risk for a more complete discussion of factors that could affect our best future results. Please refer to the forward looking statements section of our earnings press release, and our most recent SEC public filings.

Speaker 2: For a more complete discussion of factors that could affect our best future results, please refer to the forward-looking statements section of our earnings press release and our most recent SEC public filing.

Speaker 2: To provide meaningful comparisons, certain information discussed in this call includes non-GAF financial measures as outlined and described in the tables in our earnings press release.

To provide meaningful comparisons certain information discussed in this call includes non-GAAP financial measures as outlined and described in the tables in our earnings press release.

Speaker 2: Reconciliations of the GAAP financial measures to the related non-GAAP measures discussed in this call are also provided in the additional information section of the presentation slide.

Reconciliations of the GAAP financial measures to the related non-GAAP measures discussed in this call are also provided in the additional information section of the presentation slides.

Speaker 2: There's also a conference call slide deck that could be found on the ARTBEST website, ARCB.com, and exhibit 99.3 of the 8K that was filed earlier this morning.

There is also a conference call slide deck that can be found on the our best website <unk> Dot com in exhibit 99.3 of the 8-K that was filed earlier this morning.

Speaker 2: Now I will turn the call over to Judy for some opening comments.

Now I will turn the call over to Judy for some opening comments.

Speaker 3: Thank you, David, and good morning. Thank you for joining us. We've been celebrating ARCVEST 100th anniversary this year, an extraordinary milestone, which is a testament to the ARCVEST team and the strength of our customer focus strategy. We work every day to be trusted advisors to our customers, which includes some of the world's largest and most recognizable brands.

Thank you David and good morning, Thank you for joining us we've been celebrating art best 100th anniversary. This year, an extra ordinary milestone, which is a testament to the art best team and the strength of our customer focused strategy. We work every day to be trusted advisers to our customers which include some of the.

World's largest and most recognizable brands with our best full suite of shipping and logistics solutions. Our work is critical to our customers' businesses and we don't take that lightly.

Speaker 3: With ArcVest's full suite of shipping and logistics solutions, our work is critical to our customers' businesses and we don't take that life.

Speaker 3: We constantly work to see the world through their eyes and look ahead to help them anticipate and respond to market changes and disruptions. In fact, we view our close, collaborative and highly strategic customer relationships as an important competitive differentiator.

We constantly work to see the world through their eyes, and look ahead to help them anticipate and respond to market changes and disruptions in fact, we view, our close collaborative and highly strategic customer relationships as an important competitive differentiator.

Speaker 3: While the overall logistics market remains soft in the third quarter, we've benefited from our ability to help customers navigate market disruptions.

While the overall logistics market remained soft in the third quarter, we benefited from our ability to help customers navigate market disruption in this time of increased uncertainty I saw the strength of our strategy firsthand as we provided integrated solutions, which our customers relied on to ensure their goods continued.

Speaker 3: In this time of increased uncertainty, I saw the strength of our strategy firsthand as we provided integrated solutions, which our customers relied on to ensure their goods continued moving through the global supply.

Moving through the global supply chain, we reacted with agility and I'm encouraged by the conversations we've had with customers. They reiterated that our flexible capacity and logistics expertise has met and exceeded their needs. We significantly improved our published shipment levels and pricing in our asset.

Speaker 3: We reacted with agility. And I'm encouraged by the conversations we've had with Kess.

Speaker 3: They reiterated that our flexible capacity and logistics expertise has met and exceeded their needs. We significantly improved our published ship-in-a-levels and pricing in our asset-based business on a sequential basis, and our managed transportation solution in our asset light business.

Bags business on a sequential basis, and our managed transportation solution and our asset light business.

Speaker 3: saw shipment count levels reach at all time high.

Shipment count levels reach an all time high.

Speaker 3: Our relationships with our customers and commitment to innovation have been key drivers in our revenue more than tripling and profitability significantly improving over the last decade. And we're not done. We continue to invest in facilities, technology and innovation and our team. These key areas will accelerate growth and unlock additional value moving forward.

Our relationships with our customers and commitment to innovation have been key drivers in our revenue more than tripling and profitability significantly improving over the last decade, and we're not done we continue to invest in facilities technology and innovation and our team. These key areas will access.

The rate growth and unlock additional value moving forward.

Speaker 3: First, we have a strong footprint of facilities today, which allows us to service our customers efficiently.

First we have a strong footprint and facilities today, which allows us to service our customers efficiently.

Speaker 3: We continue to invest in further expansion and see the opportunity to accelerate our facility plan in the current LTO real estate environment.

We continue to invest in further expansion and see the opportunity to accelerate our facility plan and the current L. T. L real estate environment second our deep commitment to technology and innovation has enabled us to transform our company and we continue to pursue a robust set of initiatives for example.

Speaker 3: Second, our deep commitment to technology and innovation has enabled us to transform our company and we continue to pursue a robust set of initiatives.

Speaker 3: For example, earlier this year, we deployed a generative AI tool to support an internal team that performs quality audits of our customer service interaction.

Earlier this year, we deployed a generative AI tool to support an internal team that performs quality audits of our customer service interactions. This team removes friction points and improves hundreds of processes every year and this new tool quickly provides key insights to further advance these efforts.

Speaker 3: This team removes friction points and improves hundreds of processes every year. And this new tool quickly provides key insights to further advance these F.

Speaker 3: In addition, our ABF City Route Optimization Project has leveraged AI to reduce mileage and decrease fuel consumption, which supports a more sustainable future. Looking ahead, we will continue developing and investing in solutions to support best in class service to our customers and drive business efficiency.

In addition, our ABF City route optimization project has leveraged AI to reduce mileage and decrease fuel consumption, which supports a more sustainable future. Looking ahead, we will continue developing and investing in solutions to support best in class service to our customers and drive business efficiencies.

Speaker 3: Lastly, our values-driven culture is deeply rooted in creativity, integrity, collaboration, growth, excellence, and wellness. We are committed to investing in our people and living out our core values every day. Before I hand the call over to Matt, I'd like to offer a few observations about what we're seeing in each of our business segments.

Lastly, our values driven culture is deeply rooted in creativity integrity collaboration growth excellence and wellness, we are committed to investing in our people and living out our core values every day.

Before I hand, the call over to Matt I'd like to offer a few observations about what we're seeing in each of our business segments and our asset based segment. The current LTR market dynamics are contributing to improved trends. Our team continues to respond nimbly to evolving market dynamics in real time pivoting quickly to fill.

Speaker 3: In our asset-based segment, the current LTO market dynamics are contributing to improved trends. Our team continues to respond, namely, to evolving market dynamics in real time, pivoting quickly to fill our network in the most profitable way. In our asset-light business, while we are growing customers and shipment volumes, we are not immune to market conditions and continue to work to find efficiency.

Our network and the most profitable way and our asset light business, while we are growing customers and shipment volumes, we are not immune to market conditions and continue to work to find efficiencies, we have manage down costs and our team has done a great job of growing our customer base and shipment count.

Speaker 3: We have managed down cost and our team has done a great job of growing our customer base and shipment count.

Our ability to help customers navigate market disruption over the past few months has demonstrated the strength of our highly experienced team and our broad suite of integrated logistics solutions. We were there for our customers to help them think holistically about their supply chains, while providing a service offering not available from tier.

Play operators, and we continue to see opportunities to expand our relationships with existing customers and now I'll turn it over to Matt to take you through the quarter in greater detail.

Speaker 3: And now I'll turn it over to Matt to take you through the quarter in greater detail.

Thank you Judy and good morning, everyone I will provide an overview of the quarter and give an update on our balance sheet and capital deployment plans.

Speaker 4: I'll provide an overview of the quarter and give an update on our balance sheet and capital deployment.

Speaker 4: Consolidated revenue from continuing operations was $1.1 billion for the quarter, down 9% year-to-year. On a non-gap basis, Consolidated operating income was $75 million, down 43%, and adjusted third quarter earnings per diluted share was $2.31. Consolidated operating income was $1.2 billion for the quarter, down 43% year-to-year.

Consolidated revenue from continuing operations was $1 1 billion for the quarter down 9% year over year on a non-GAAP basis consolidated operating income was $75 million down 43% and adjusted third quarter earnings per diluted share was $2 31.

Speaker 4: While our consolidated results reflect a softer overall market than last year, we have benefited by having the right capacity options and expertise to serve customers during this period of market disruption, and have also seen results from our cost savings and efficiency and issues.

While our consolidated results reflect a softer overall market and last year, we benefited by having the right capacity options and expertise to serve customers. During this period of market disruption and have also seen results from our cost savings and efficiency initiatives.

Speaker 4: In the asset-based business, revenue was $741 million, down 4% over year on a daily basis. And non-gap operating income was 83 million.

In the asset base business revenue was $741 million down.

Down 4% year over year on a daily basis, and non-GAAP operating income was $83 million.

Speaker 4: Overall, pricing remains rational and has been strengthened by recent market events.

Overall pricing remains rational and has been strengthened by recent market events.

Speaker 4: For asset-based customer contract renewals and deferred pricing agreements negotiated during the third quarter, we secured a 4% averaging

For asset based customer contract renewals and deferred pricing agreements negotiated during the third quarter, we secured a 4% average increase.

Speaker 4: The benefit of our cost and efficiency efforts in this segment included a reduction in purchase transportation, cartage and equipment rental costs.

The benefit of our cost and efficiency efforts in this segment included a reduction in purchase transportation cartage and equipment rental costs.

Speaker 4: The third quarter non-gap asset based operating ratio of 88.8% reflects the sequential improvement of 400 basis points compared to second quarter, which is particularly noteworthy because our new labor agreement added approximately 350 basis points of cost relative to second

The third quarter non-GAAP asset based operating ratio of 88, 8% reflects a sequential improvement of 400 basis points compared to second quarter, which is particularly noteworthy because our new labor agreement added approximately 350 basis points of cost relative to the second quarter, excluding that increase our sequential operating ratio improvement was.

Speaker 4: Excluding that increase, our sequential operating ratio improvement was approximately 750 basis points. That impressive

Approximately 750 basis points that impressive result did not happen by accident and I'm proud of the way our team came together over the last few months to serve our customers during a time of market disruption, while remaining focused on cost inefficiency.

Speaker 4: And I'm proud of the way our team came together over the last few months to serve our customers during a time of market disruption, while remaining focused on costs in a-

Speaker 4: I'm also pleased to report that we've carried this momentum into the fourth quarter.

I'm also pleased to report that we've carried this momentum into the fourth quarter.

Speaker 4: excluding periods impacted by the pandemic. The average sequential change in ARC-BEST asset-based operating ratio from the third quarter to the fourth quarter during the prior 10 years has been an increase of 100 to 300 basis.

Excluding periods impacted by the pandemic the average sequential change in art best asset based operating ratio from the third quarter to the fourth quarter. During the prior 10 years has been an increase of 100 to 300 basis points. Despite this.

Speaker 4: Despite this historical trend, after considering the impacts of the market disruption, recent commercial successes, a general rate increase in cost reduction efforts, the asset-based operating ratio is expected to modestly decrease from 3rd quarter 2023 to 4th quarter 2021.

Historical trend after considering the impacts of the market disruption recent commercial successes, a general rate increase and cost reduction efforts. The asset based operating ratio is expected to modestly decrease from third quarter 2023 to fourth quarter 2023.

Speaker 4: Transitioning to asset line, third quarter daily revenue decreased 17% year over year. This was primarily due to lower revenue per ship.

Transitioning to asset light third quarter daily revenue decreased 17% year over year.

This was primarily due to lower revenue per shipment.

Speaker 4: The segment had a non-gap operating loss for the quarter of 4 million dollars.

The segment had a non-GAAP operating loss for the quarter of $4 million.

Speaker 4: We provided preliminary asset light business trends for October 2023 and the Form A.K. Exhibit to the press release followed this morning. An operating statistics in that business continue to reflect a softer market compared to last year.

We provided preliminary asset light business trends for October 2023, and the form 8-K exhibit to the press release filed this morning, and operating statistics in that business continued to reflect the softer market compared to last year.

Net capital expenditures totaled $155 million for the first nine months of the year and we currently expect net capital expenditures in the range of $270 million to $285 million for the full year, which is slightly lower than our previous estimate last quarter.

Speaker 4: Let capital expenditures total $155 million for the first nine months.

Speaker 4: We currently expect net capital expenditures in the range of $270 million to $285 million for the full year, which is slightly lower than our previous estimate last quarter.

Speaker 4: classic tractor orders remain in place and we currently expect to receive all ordered road tractors by the end of

Our class eight tractor orders remain in place and we currently expect to receive all ordered road tractors by the end of the year.

Speaker 4: Art Vest Cash Balance and Total Equidity remain at strong levels. As of the end of the third quarter, we had a net cash balance of $98 million and improvement of $36 million since the end of last year.

Part best cash balance and total liquidity remained at strong levels as of the end of the third quarter. We had a net cash balance of $98 million an improvement of $36 million since the end of last year.

Speaker 4: Total liquidity stands at approximately $581 million. And despite rising rates, the composite interest rate on ART Best Outstanding Dead at the end of the recent quarter was 3.3%.

Total liquidity stands at approximately $581 million and despite rising rates the composite interest rate on art best outstanding debt at the end of the recent quarter was three 3%.

Speaker 4: Our solid financial position and strong balance sheet position is welcome.

Our solid financial position and strong balance sheet position us well for the future our capital allocation strategy includes organic capital investment and new equipment purchases real estate additions and upgrades and technology investments, which will enable us to continue serving our customers with excellence now and into the future.

Speaker 4: Our capital allocation strategy includes organic capital investment, new equipment purchases, real estate additions and upgrades, and technology investments, which will enable us to continue serving our customers with excellence now and into the future.

Speaker 4: We are monitoring the market for external growth opportunities to enhance our business, and we are returning capital shareholders while targeting investment-grade credit.

We are monitoring the market for external growth opportunities to enhance our business and we are returning capital to shareholders, while targeting investment grade credit metrics.

Speaker 4: So far this year through yesterday, our settles share repurchases and dividends paid have returned approximately $86 million of capital to share.

So far this year through yesterday are subtle share repurchases and dividends paid have returned approximately $86 million of capital to shareholders.

Speaker 4: Based on those share repurchases, approximately $48 million remains available under the current repurchase authorization for future common stock purchases. In conclusion,

Just on those share repurchases approximately $48 million remains available under the current repurchase authorization for future common stock purchases.

In conclusion, I'm excited about our future.

Speaker 4: We are helping guide our customers through the current market with a century of experience under our belt. Our proven ability to excel across different cycles is a testament to our resilience and our strategy, and our robust balance sheet stands out, especially when customers are in search of stability in uncertain times.

We are helping guide our customers through the current market with a century of experience under our belt.

Our proven ability to excel across different cycles is a testament to our resilience and our strategy and a robust balance sheet stands out, especially when customers are in search of stability and uncertain times now I will turn the call over to Seth to discuss our asset based business.

Speaker 4: Now I'll turn the call over to Seth to discuss our asset-based.

Speaker 5: Good morning. I am pleased to report ABF grew daily shipment during the quarter over 1% year-over-year while aggressively managing costs and focusing on efficiency without limiting growth. With a large amount of capacity leaving the market, customers came to us to keep their freight moving. This helped in achieving a more optimal mix of freight in our network, which improved profitability.

Good morning, I am pleased to report ABF grew daily shipments during the quarter over 1% year over year, while aggressively managing costs and focusing on efficiency without limiting growth.

With a large amount of capacity, leaving the market customers came to us to keep their freight moving this helped in achieving a more optimal mix of freight in our network, which improved profitability.

Speaker 5: In short, we've been able to reduce costs while improving service.

In short, we have been able to reduce costs, while improving service.

Speaker 5: As Matt said, we have reduced cost in purchase transportation, cartage, and rental equipment. And we continue to enhance dashboards for our leaders, which provides real-time visibility to business and productivity levels.

As Matt said, we have reduced cost and purchase transportation cartage and rental equipment and we continue to enhance dashboards for our leaders, which provides real time visibility to business and productivity levels.

Speaker 5: This enables our team to quickly and effectively take action to ensure we're using our resources in the most effective manner.

<unk> enables our team to quickly and effectively take action to ensure we are using our resources in the most effective manner.

Speaker 5: As we enter our 101st year, we continue to transform ABF through innovation, investment, and an intense focus on quality. For the past two years, we've been working to improve some foundational systems and processes. We've completed over a dozen initiatives to improve our operation, and we have many more in progress. You can see the results of these efforts and the sequential improvement in our operating ratio, but our continuous improvement journey is ongoing.

As we enter our 101st year, we continue to transform ABF through innovation investment and an intense focus on quality for the past two years, we've been working to improve some foundational systems and processes. We've completed over a dozen initiatives to improve our operation and we have many more in progress.

You can see the results of these efforts and the sequential improvement in our operating ratio, but our continuous improvement journey is ongoing.

Speaker 5: We are a high quality carrier, and that means our product must be high quality. I'm pleased with our progress, but we still have more work to do.

We are a high quality carrier and that means our product must be high quality I am pleased with our progress, but we still have more work to do.

Speaker 5: In closing, I want to highlight our approach to managing our shipping levels and optimizing our network. Our long history of using data to make decisions and the sheer amount of data we have enables us to optimize our business daily.

In closing I want to highlight our approach to managing our shipment levels and optimizing our network our long history of using data to make decisions and the sheer amount of data we have enables us to optimize our business daily.

Operator: Greetings and welcome to the ArcBest 3rd quarter, 2023 earnings conference call. During the presentation, all participants will be in the listen only mode. Afterwards, we will conduct a question and answer session.

Speaker 5: And our levers of using dynamic pricing and UPAC to fill empty capacity are key strategic differentiators. I'm grateful for the collaboration between our teams in the third quarter where we quickly adapted to the market to increase our mix of core business.

And our levers of using dynamic pricing and iupac to fill empty capacity are key strategic Differentiators I'm grateful for the collaboration between our teams in the third quarter, where we quickly adapted to the market to increase our mix of core business through our facility investments. We have added over 200 doors this year.

Operator: At that time, if you have a question, please press the one fall by the four on your telephone. If at any time during the conference, you need to reach an operator, please press star zero.

David Humphrey: As our minor disc conference is being recorded on Friday, October 27, 2023, I would now like to turn the conference over to Mr. David Humphrey, vice president of Invest Relations. Please go ahead. Thank you for joining us. Today we will provide an update on our business, walk you through the details of our third quarter 2023 results and then answer some questions.

Speaker 5: Through our facility investments, we have added over 200 doors this year and planned to add more than 500 additional between now and the first quarter of 2025. Our focus remains on service, efficiency and profitable growth, and we're not slowing down. Now I'll turn the call over to...

And plan to add more than 500 additional between now and the first quarter of 2025, our focus remains on service efficiency and profitable growth and we're not slowing down now I will turn the call over to Steven.

Speaker 5: Thanks, Seth. And good morning, everyone. In the asset light business, truckload margins remain soft, but we grew shipments despite weak demand.

Thanks, Seth and good morning, everyone.

In the asset light business truckload margin to remain soft, but we grew shipments despite weak demand.

David Humphrey: Joining me for the prepared remarks are Judy McRennels, Chairman, President and CEO of ArcBest, Matt Beasley, Chief Financial Officer and Treasurer, Seth Runser, President ABF Bray, and Steven Leonard, Chief Commercial Officer and President of asset-like logistics. In addition, Dennis Anderson, Chief Strategy Officer, and Christopher Adkins, Vice President Yield's Strategy and Management are available to answer questions. To help you better understand ArcBest and our results, some forward-looking statements could be made. Forward-looking statements by their very nature are subject to uncertainties and risks.

Speaker 5: and even achieve record shipment levels for our managed transportation businesses. We help customers navigate market disruption, which is a testament to the strength of our solutions and deep customer relationship.

And even.

Achieved record shipment levels for our managed transportation business as we help customers navigate market disruption, which is a testament to the strength of our solutions deep customer relationships.

Speaker 5: As Matt mentioned, we've been aggressively managing costs and continue to look for ways to further align costs with business levels and improve efficiency.

Matt mentioned, we've been aggressively managing costs and continue to look for ways to further align costs with business levels and improve efficiency.

Speaker 5: While market disruptions continue, our breadth of integrated solutions positions us well to serve customers. Using our managed transportation solution, we were able to help shippers who were impacted by the reduction in LTO capacity.

While market disruptions continue our breadth of integrated solutions positions us well to serve customers. Our managed transportation wood and are using our managed transportation solution. We were able to help shippers who were impacted by the reduction in LDL capacity.

David Humphrey: For a more complete discussion of factors that could affect ArcBest future results, please refer to the forward-looking statements section of our earnings press release and our most recent SEC public filings. To provide meaningful comparisons, certain information discussed in this call includes non-gap financial measures as outline and describe in the tables in our earnings press release. Reconciliation of the gap financial measures to the related non-gap measures discussed in this call are also provided in the additional information section of the presentation slides. There is also a conference call slide deck that could be found on the ArcBest website, arcb.com, and exhibit 99.3 of the 8K that was followed over this morning.

Speaker 5: We partnered with them to understand their supply chain needs.

We partnered with them to understand their supply chain needs.

Speaker 5: and help them avoid the capacity constraints others may have experienced.

Help them avoid the capacity constraints others may have experienced.

Speaker 5: We offer creative solutions using multiple modes to keep our customer supply chains moving, resulting in a better outcome for our customers.

We offered creative solutions using multiple modes to keep our customer supply chains, moving resulting in a better outcome for our customer.

Speaker 5: And as customers have seen significant disruptions in the market, our stability and financial strength are differentiators.

And as customers have seen significant disruptions in the market, our stability and financial strength are differentiators customers need a partner they can count on and we are well positioned to meet their needs now back to Judy for some final thoughts. Thank you Steven our success has been deeply tied to the ongoing pursuit.

Speaker 3: Customers need a partner they can count on, and we are well positioned to meet their needs. Now back to Judy for some final thoughts. Thank you, Stephen. Our success has been deeply tied to the ongoing pursuit of our mission to connect and positively impact the world through solving logistics challenges.

Our mission to connect and positively impact the world is solving logistics challenges. We live this mission to the fullest this quarter as we navigated and successfully responded to industry disruptions.

Judy Mcreynolds: Now I will turn the call over to Judy for some opening comments. Thank you, David, and good morning. Thank you for joining us.

Speaker 3: We live this mission to the fullest this quarter as we navigated and successfully responded to industry disruption.

Speaker 3: We are well positioned to understand and address customer needs with powerful capabilities and the deep expertise of a trusted team.

Judy Mcreynolds: We've been celebrating ArcBest 100th anniversary this year, an extraordinary milestone, which is a testament to the ArcBest team and the strength of our customer focus strategy. We work every day to be trusted advisors to our customers, which includes some of the world's largest and most recognizable brands. With ArcBest full suite of shipping and logistics solutions, our work is critical to our customers' businesses, and we don't take that lightly. We constantly work to see the world through their eyes and look ahead to help them anticipate and respond to market changes and disruptions.

We are well positioned to understand and address customer needs with powerful capabilities and the deep expertise of a trusted team as we look to the future. We are confident that this strong position and a keen focus on our three strategic pillars of growth efficiency and innovation will enable us to accelerate.

Speaker 3: As we look to the future, we are confident that this strong position and a keen focus on our three strategic pillars of growth, efficiency and innovation will enable us to accelerate from here. This concludes our prepared remarks and we'll now open the call up for questions.

From here. This concludes our prepared remarks, and well now open the call up for questions.

Okay. Thank you were ready for some questions.

Thank you.

Speaker 1: If you would like to register a question, please press the 1-4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. One moment please for the first question.

If you would like to register a question. Please press the one four on your telephone.

You will hear it <unk> prompt technology a request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three one moment. Please for the first question.

Judy Mcreynolds: In fact, we view our close, collaborative, and highly strategic customer relationships as an important competitive differentiator. While the overall logistics market remains soft in the third quarter, we've benefited from our ability to help customers navigate market disruptions. In this time of increased uncertainty, I saw the strength of our strategy firsthand as we provided integrated solutions which our customers relied on to ensure their goods continued moving through the global supply chain. We reacted with agility and I'm encouraged by the conversations we've had with customers.

Speaker 1: Our first question comes from Robbie Shanker with Morgan Thanley. Please proceed.

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

Speaker 6: Thanks very much. Good morning, everybody. So when everybody in the space is looking at the volume and revenue opportunities, you guys crush it on costs, which was truly remarkable.

Thanks, very much good morning, everybody.

So when everybody in the space is looking at the volume and revenue opportunities you guys crush it on costs, which was truly remarkable to see can you just unpack that a little bit more was this just operating leverage from getting more density with more volumes coming into the network or these explicit cost.

Speaker 6: Can you just unpack that a little bit more? Was this just operating leverage from getting more density with more volumes coming into the network? Were these explicit cost actions that were in the pipeline for a while? Are there more to come? I think the number one question people's minds this morning is how sustainable is this? So I would love to get there, please.

Judy Mcreynolds: They reiterated that our flexible capacity and logistics expertise has met and exceeded their needs. We significantly improved our published shipment levels and pricing in our asset begs business on a sequential basis and our managed transportation solution in our asset light business saw shipment count levels reach an all time high.

Actions that we are in the pipeline for a while are there more to come I think the number one question in People's minds. This morning. Some of it is how sustainable is this so I would love to get to.

Please.

Speaker 3: Well, yeah, thanks for the question, Robbie. And it's a good one. You know, we saw the opportunity to better address our costs as we were adding people over the years of 2022 and 2021 and making sure that we had them to have proficient productivity levels and a good experience and that sort of thing. And, you know, we've always in the past you. You.

Yeah. Thanks for the question Ravi and it's it's a good one.

We saw the opportunity.

Judy Mcreynolds: Our relationships with our customers and commitment to innovation have been key drivers in our revenue more than tripling and profitability significantly improving over the last decade, and we're not done. We continue to invest in facilities, technology and innovation and our team. These key areas will accelerate growth and unlock additional value moving forward. First, we have a strong footprint of facilities today which allows us to service our customers efficiently. We continue to invest in further expansion and see the opportunity to accelerate our facility plan in the current LTO real estate environment.

To better address our costs as we were adding people over the years of 2022, and 2021 and making sure that we had them too proficient productivity levels and a good experience and that sort of thing and we've always in the past used.

Speaker 3: variable costs such as, you know, purchase transportation, cartage, and rented equipment to help facilitate our growth needs.

Variable costs, such as purchase transportation cartage and rented equipment to help facilitate our growth needs, but you know as we were finalizing our labor deal looking at the.

Speaker 3: But, you know, as we were finalizing our labor deal, looking at the proficiency level of our people and just the backdrop of the economy and the opportunity set, you know, we saw a better answer and really got focused on reducing some of those variable costs and making sure that we had the right business mix as we were going into the third quarter.

The proficiency level of our people and just the backdrop that the economy and the opportunity set you know we saw a better.

Judy Mcreynolds: Second, our deep commitment to technology and innovation has enabled us to transform our company and we continue to pursue a robust set of initiatives. For example, earlier this year, we deployed a generative AI tool to support an internal team that performs quality audits of our customer service interactions. This team removes friction points and improves hundreds of processes every year and this new tool quickly provides key insights to further advance these efforts.

Answer and really got focused on reducing some of those variable costs and making sure that we had the right business mix and as we were going into the third quarter.

Speaker 6: Great. And so is this considered to be like a one-time reset or do you think there's kind of more to come in the pipeline?

Great and so is this considered to be like a one time reset or do you think there's kind of more to come in the pipeline.

Well you know what I think is.

Speaker 3: Well, you know, what I think is, uh, we're always adjusting and we're wanting to make sure, you know, that we have the right resources serving the best business.

We're always adjusting and we're wanting to make sure that we have the right resources, serving the best business mix and.

Judy Mcreynolds: In addition, our ABF city route optimization project has leveraged AI to reduce mileage and decrease fuel consumption which supports a more sustainable future. Looking ahead, we will continue developing and investing in solutions to support besting class service to our customers and drive business efficiencies.

Speaker 3: And, you know, I think that the asset-based team does a great job of that along with working with our sales opportunities and our yield managers. We really see this as an ongoing effort to make sure, you know, that our resources that we're deploying are the most efficient and effective while also just having a keen focus on serving our customers well.

I think that the asset base team does a great job of that along with working with our sales opportunities in our yield managers, we really see this as an ongoing effort to make sure you know that our resources that we're deploying are the most efficient and effective while also just having a keen focus on serving our.

Judy Mcreynolds: Lastly, our value-driven culture is deeply rooted in creativity, integrity, collaboration, growth, excellence, and wellness. We are committed to investing in our people and living out our core values every day.

<unk> as well.

Great. Thanks, Judy.

Speaker 5: I like question comes from my Jason Sidal with TD Cowan. Please proceed. Thank you, operator. Judy and team. Good morning. Appreciate it.

Our next question comes from Jason Seidl with TD Cowen. Please proceed.

Judy Mcreynolds: Before I hand the call over to Matt, I'd like to offer a few observations about what we're seeing in each of our business segments. In our asset-based segment, the current LTL market dynamics are contributing to improved trends. Our team continues to respond nimbly to evolving market dynamics in real-time, pivoting quickly to fill our network in the most profitable way. In our asset-light business, while we are growing customers and shipment volumes, we are not immune to market conditions and continue to work to find efficiencies.

Thank you operator, Judy and team good morning appreciate the time.

Morning.

Speaker 5: Wanted to ask a quick question on some of the October trends.

Wanted to ask.

Ask a quick question on some of the October trends did you guys see any benefit from the cyber attack in STS and then if I look at cost real quickly. If you exclude labor are you guys starting to see a little bit of a deterioration in sort of the inflationary cost environment.

Speaker 5: Did you guys see any benefit from the cyber attack at SD's? And then if I look at costs real quickly, if you exclude labor, are you guys starting to see a little bit of a deterioration and sort of the inflationary?

Speaker 7: Hey Jason, this is Christopher Atkins all kind of report on the cyber event as it relates to our business. We did see an influx of some of that business the first couple weeks of October and largely that was from customers existing customers of ABF that were able to help them during that time of disruption since then that has largely gone back to the you know the carrier that was handling that previously. But we're still even apart from that seeing substantial growth in our core business

Hey, Jason This is Christopher reconcile kind of report on the cyber event as it relates to our business. We did see an influx of of some of that business. The first couple of weeks of October and largely that was from customers existing customers of ABF that we're able to help them during that time of disruption. Since then that is.

Judy Mcreynolds: We have managed down-cost and our team has done a great job of growing our customer base and shipment count. Our ability to help customers navigate market disruption over the past few months has demonstrated the strength of our highly experienced team and our broad suite of integrated logistic solutions. We were there for our customers to help them think holistically about their supply chains while providing a service offering not available from pure play operators. And we continue to see opportunities to expand our relationships with existing customers.

Largely gone back to the carrier that was handling that previously, but we are still even apart from that seeing substantial growth in our core business.

Speaker 2: You know, as we've talked about, that business is still up 20% in October and compared to June of 23.

As we've talked about that business is still up 20% in October and compared to June of 'twenty three.

Okay, that's good color and on the cost side.

Matt Beasley: and now I'll turn it over to Matt to take you through the quarter in greater detail. Thank you, Judy, and good morning, everyone. I'll provide an overview of the quarter and give an update on our balance sheet and capital deployment plans. Consolidated revenue from continuing operations was $1.1 billion for the quarter, down 9% year-to-year. On a non-gap basis, consolidated operating income was $75 million, down 43% and adjusted third quarter earnings per diluted share was $2.31.

Speaker 5: I would say on the cost, this is Seth. I would say on the cost side, we're starting to see some things normalize, you know, but there's other areas, you know, like trailers, for example, where the cost is still inflated versus historical averages. But we are seeing some things start to normalize quite a bit on the cost side.

Yes, I would say on the call. This is Seth I would say on the cost side, we're starting to see some things normalize but theres other areas like trailers for example, or the cost is still inflated versus historical averages, but we are seeing some things start to normalize quite a bit on the cost side, Yeah. I would want one you know just.

Speaker 3: Yeah, I would want one, you know, just recent conversation that I've been in. I think the insurance market, they're pretty hardened right now. And so, you know, we're working through the answer there, but, you know, that's going to be one that we're watching just to highlight it.

Conversation that I've been and I think the insurance market.

They are pretty hard right now and so we're working through the answer there, but that's you know that's going to be one that we're watching just to.

Matt Beasley: While our consolidated results reflect a softer overall market than last year, we have benefited by having the right capacity options and expertise to serve customers during this period of market disruption and have also seen results from our cost savings and efficiency initiatives. In the asset-based business, revenue was $741 million, down 4% year-to-year on a daily basis, and non-gap operating income was $83 million. Overall, pricing remains rational and has been strengthened by recent market events.

Highlighted.

Sounds good I appreciate the time as always guys.

Yes.

Speaker 1: Our next question comes from Ken Hexter with B of A. Please proceed. Hey, great. Good morning.

Our next question comes from Ken <unk> with Bofa. Please proceed.

Hey, great good morning.

Speaker 8: So, just two questions. Shipments were up 4% year-over year in October . Thoughts on your capacity availability now. How much can you handle the growth? You talked about adding 500 doors, but between now and 25. And then I guess on the financial side to Robbie's question, what change from targeting flat OR to up 400 basis points? I mean, you gave mid-quarter updates. I'm just wondering on that cross side to the permanency question he's asking.

So just two questions shipments were up 4% year over year and October thoughts on your capacity availability now how much can you handle the growth you talked about adding 500 doors, but between now and 'twenty five and then I guess on the financial side to Robbie's question, what changed from targeting flat to up 400 basis points. I mean, you gave mid.

Matt Beasley: For asset-based customer contract renewals and deferred pricing agreements negotiated during the third quarter, we secured a 4% average increase. The benefit of our cost and efficiency efforts in this segment included a reduction in purchase transportation, cartage, and equipment rental costs. The third quarter non-gap asset-based operating ratio of 88.8% reflects the sequential improvement of 400 basis points compared to second quarter, which is particularly noteworthy because our new labor agreement added approximately 350 basis points of cost relative to second quarter.

Quarter update so I'm, just wondering on that cost side to the apartment at the question you're asking.

Speaker 8: you know what what change from your point of view aside from yellow bankruptcy which you knew by that point uh... just to see the sustainability of those costs thank you

What changed from your point of view aside from yellow bankruptcy, what you knew by that point.

Just to see the sustainability of those costs. Thanks.

Yeah, Hey, good morning, Ken This is Matt So maybe I'll start with your last part of your question then I'll turn it over to Seth to cover the first part.

Speaker 4: Yeah. Hey, morning, Ken. This is Matt. So maybe I'll start with your

Speaker 4: Last part of your question, then I'll turn it over to Seth to cover the first part. You know, certainly.

Matt Beasley: Excluding that increase, our sequential operating ratio improvement was approximately 750 basis points. That impressive result did not happen by accident, and I'm proud of the way our team came together over the last few months to serve our customers during a time of market disruption while remaining focused on cost and efficiency. I'm also pleased to report that we have carried this momentum into the fourth quarter. Excluding periods impacted by the pandemic, the average sequential change in our best asset-based operating ratio from the third quarter to the fourth quarter during the prior 10 years has been an increase of 100 to 300 basis points.

Certainly we saw continued momentum through the quarter and so you could see that in how we talked about it. So when we were talking on the call in July we were talking about being able to target a flat or.

Speaker 4: We saw continued momentum through the quarter, and so you could see that in how we talked about it. So when we were talking on the call in July , we were talking about being able to target a flat OR even after the impacts of the new contract. Then we rolled forward to the update that we provided in August , and that's when

Even after the impact of the new contract then we rolled forward to the update that we provided in August and that's when.

Speaker 4: We're really starting to see the impact of the cost and efficiency measures that we have put in place.

We're really starting to see the impact of the cost and efficiency measures that we have put in place certainly the market impacts are really starting to be felt and so at that point in time, we were saying that we thought we could not only overcome those increased costs, but actually should be able to show some modest improvement in the or and certainly that momentum just.

Speaker 4: Certainly the market impacts are really starting to be felt and so you know at that point time We were saying that we thought we could not only Overcome those increased costs, but but actually should be able to show some modest improvement in the OR and certainly that momentum Just continue to carry into September and so you know that's ultimately, you know what resulted in the ability to be able to Improve it by 400 basis point

Matt Beasley: Despite this historical trend, after considering the impacts of the market disruption, recent commercial successes, a general rate increase, and cost reduction efforts, the asset-based operating ratio is expected to modestly decrease from third quarter to 2023 to fourth quarter to 2023. Transitioning to asset line, third quarter daily revenue decreased 17% year over year. This was primarily due to lower revenue per shipment. The segment had a non-gap operating loss for the quarter of $4 million.

Continue to carry into September and so that's ultimately what resulted in the ability to be able to improve it by 400 basis points sequentially, and then I'd say that kind of progression.

Speaker 4: sequentially, and then I'd say, you know, that kind of progression.

Speaker 4: really spells out and plus in conjunction with the GRI that was put in early in October for us to continue that momentum into the fourth quarter, which is why we said that we think we can see potentially a decrease sequentially into the fourth quarter as well. And then I'll turn it over to Seth to cover the rest.

Really spells out and plus in conjunction with the <unk> that was put in early in October for us to continue that momentum into the fourth fourth quarter, which is why we said that we think we can see potentially decrease sequentially into the fourth quarter as well and then I'll turn it over to Seth to cover the first part yes, so when I.

Matt Beasley: We provided preliminary asset light business trends for October 2023 in the form AK Exhibit to the press release file this morning, and operating statistics in that business continued to reflect a softer market compared to last year. Net capital expenditures totaled $155 million for the first nine months of the year, and we currently expect net capital expenditures in the range of $270 million to $285 million for the full year, which is slightly lower than our previous estimate last quarter.

Speaker 8: Yeah, so when I think about excess capacity in the market, it really comes down to four different things, the first is people, and we feel pretty good that we're properly staffed for our current business levels, and we continue to replace the tuition in strategic locations. We have a good line of sight on our growth pipelines, so, and we feel like we can bring on labor.

About excess capacity in the market. It really comes down to four different things. The first is people and we feel pretty good that we're properly staffed for our current business levels and we continue to replace attrition in strategic locations. We have a good line of sight on our growth pipeline, so and we feel like we can bring on labor.

Speaker 5: much easier and quicker than we did throughout the pandemic, which is a good thing. So feel pretty good about people.

Matt Beasley: Our classic tractor orders remain in place, and we currently expect to receive all ordered road tractors by the end of the year. Art best cash balance and total liquidity remain at strong levels. As of the end of the third quarter, we had a net cash balance of $98 million, and improvement of $36 million since the end of last year. Tonal liquidity stands at approximately $581 million, and despite rising rates, the composite interest rate on ArcBest Outstanding Dead at the end of the recent quarter was 3.3%.

Easier and quicker than we did throughout the pandemic, which is a good thing so feel pretty good about people on the equipment front, we continued to invest in the fleet like we have for many years, we have one of the newest fleets on the road.

Speaker 5: On the equipment front, we continue to invest in the fleet. Like we have for many years, we have one of the newest fleets on the road.

Speaker 5: Our fleet's slightly bigger and we're working on getting some of those higher cost units out now, but we could pivot for growth, but I really don't see any concerns on equipment capacity for growth.

<unk> slightly bigger and we're working on getting some of those higher cost units out now, but we could pivot for growth, but I really don't see any concerns on equipment capacity for growth. The third is real estate.

Speaker 5: The third is real estate. We've been working on our long-term real estate plan for the past two or three years. You need to be positioned well ahead of the cycle from a real estate perspective. And we have a mature network. And we believe we're positioned well in those key markets.

Been working on our long term real estate plan for the past two years or three years, you need to be positioned well ahead of the cycle from a real estate perspective, and we have a mature network.

Matt Beasley: Our solid financial position and strong balance sheet position us well for the future. Our capital allocation strategy includes organic capital investment and new equipment purchases, real estate additions and upgrades and technology investments, which will enable us to continue serving our customers with excellence now and into the future. We are monitoring the market for external growth opportunities to enhance our business and we are returning capital shareholders while targeting investment-grade credit metrics. So far this year through yesterday, our settled share repurchases and dividends paid have returned approximately $86 million of capital to shareholders. Based on those share repurchases, approximately $48 million remains available under the current repurchase authorization for future common stock purchases.

Believe we're positioned well in those key markets. This year alone we've opened up a new facility in Camp Hill, Pennsylvania, We expanded our San Antonio site, we moved into a new Phoenix facility. So we're doing a lot of things on the real estate front. So.

Speaker 8: This year alone we've opened up a new facility in Camp Helper, Pennsylvania. We expanded our San Antonio site. We moved into a new Phoenix facility.

Speaker 5: So we're doing a lot of things on the real estate front. So, uh, we feel good about where we are there as well. And we got more coming next year as well. And then the fourth really is, is productivity. So the more productive you are.

We feel good about where we are there as well and we got more coming next year as well and then the fourth really is productivity. So the more productive you are the more freight you can handle for the same cost. So in my opening comments I talked about the transformation.

Speaker 8: the more freight you can handle for the same cost. So in my opening comments, I talked about the transformation.

Speaker 8: at ABF and how we're really focused on technology and optimization to ensure that we're as efficient as possible. So we've completed a lot of initiatives, but we have a lot more still to do. So with all that said, the investments in network visibility and our optimization tool set, we have capacity for growth and we can flex that upper down based on what the market's doing, what opportunities we see in front.

ABF and how we're really focused on technology and optimization to ensure that we're as efficient as possible. So we've completed a lot of initiatives, but we have a lot more still to do so with all that said the investments in network visibility and our optimization tool set we have capacity for growth and we can flex that up or down based on what the market is doing what.

Matt Beasley: In conclusion, I'm excited about our future. We are helping guide our customers through the current market with the century of experience under our belt. Our proven ability to excel across different cycles is a testament to our resilience and our strategy and our robust balance sheet stands out, especially when customers are in search of stability in uncertain times.

<unk>, we see in front of us.

Speaker 1: Great. If I can squeeze in a follow up to that. Just the tech investors, real quick, the tech investments are still broken out as one-timers. Seems like those are, you know, continuous non-going should that just be, you know, part of ongoing business at some point?

Great if I could squeeze in a follow up to that.

Investors real quick the tech investments are still broken out as one timers. It seems like those are continuous and ongoing should should that just be part.

Seth Runser: Now I'll turn the call over to Seth to discuss our asset based business. Good morning. I am pleased to report ABF Group daily shipments during the quarter over 1% year-over-year while aggressively managing costs and focusing on efficiency without limiting growth. With a large amount of capacity leaving the market, customers came to us to keep their freight moving. This helped in achieving a more optimal mix of freight in our network, which improved profitability.

Part of ongoing business at some point.

Well.

Speaker 3: Well, Ken, I think we spoke to that in the AK with respect to ABF. And so, you know, what we're seeing there is, as we've moved the team back to conventional operation in Kansas City and in Salt Lake City. And we've previously done that in Indianapolis. You know, you will, as you go forward, it will be all in regular operations because we're no longer piloting.

Ken I think we spoke to that in the 8-K.

With respect to ABF and so what we're seeing there is as we've moved the team back to conventional operation in Kansas City, and in Salt Lake City, and we'd previously done that in Indianapolis.

As you go forward.

Seth Runser: In short, we've been able to reduce costs while improving service. As Matt said, we have reduced costs in purchase transportation, cartage, and rental equipment, and we continue to enhance dashboards for our leaders, which provides real-time visibility to business and productivity levels. This enables our team to quickly and effectively take action to ensure we're using our resources in the most effective manner.

It will be all in a regular operations because we're no longer piloting.

Speaker 3: you know, in those other areas. We do continue to have our innovations cost broken out and continue that same treatment where we're piloting for new customers with VOS.

In those other areas. We do continue to have our innovations costs are broken out.

And continue that same treatment.

Where we're piloting for new customers with Vox.

Speaker 3: We're doing some things there that are very new and innovative and with our customers just gaining some momentum in pilot-type environments. And so we're continuing that cost, but at the same time, we're really excited about the prospects for a new revenue stream from that business and look forward to telling you more about that as we enter into 2024. Thanks for the time.

We're doing some things there that are very new and innovative and you know with our customers just gaining some momentum in pilot type environments and so we're continuing that cost but at the same time, we're really excited about the prospects.

Seth Runser: As we enter our 101st year, we continue to transform ABF through innovation, investment, and then intense focus on quality. For the past two years, we've been working to improve some foundational systems and processes. We've completed over a dozen initiatives to improve our operation, and we have many more in progress. You can see the results of these efforts and the sequential improvement in our operating ratio, but our continuous improvement journey is ongoing. We are a high-quality carrier, and that means our product must be high-quality. I'm pleased with our progress, but we still have more work to do.

For a new revenue stream from that business and look forward to telling you more about that as we enter into 2024.

Thanks for the time appreciate it.

Thanks.

Speaker 1: Our next question comes from Scott Group with Wolf Research. Please proceed.

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

Speaker 9: Hey, thanks. Good morning. So I want to just ask on the morning, I just want to ask on the OR commentary on Q4. So...

Hey, Thanks, Good morning, So I wanted to just ask on the morning, I just wanted to ask on the or commentary around Q4. So.

Seth Runser: In closing, I want to highlight our approach to managing our ship and levels and optimizing our network, our long history of using data to make decisions in the sheer amount of data we have, enables us to optimize our business daily. In our levers of using dynamic pricing and UPAC to fill empty capacity, our key strategic differentiators, I'm grateful for the collaboration between our teams in the third quarter, where we quickly adapted to the market to increase our mix of core business.

Speaker 9: back to Ken's point. So you said modest improvement in Q3 ended up with 400 basis points of improvement. You're saying modest again. What is that? What's the right range to be thinking about when you talk about modest sequential improvement? I just want to see if you have a finer point around.

Back to Ken's point. So you said modest improvement in Q3 ended up with 400 basis points of improvement you are saying modest again, what is that what's the right range to be thinking about.

When you talk about modest sequential improvement I just wanted to see if you have a finer point around that.

Speaker 4: Yeah, so yeah, thanks Scott. You know, I would say, you know, we were very pleased with the performance in the third quarter, like I mentioned, we're carrying that momentum into the fourth. You know, we didn't really guide to a specific range, but you know, as I say, we think about modest now. We probably think of it in the context of maybe a 100 potentially up to 200 basis point improvement, you know, something.

Yeah. So thanks.

Scott.

I would say we were very pleased with the performance in the third quarter like I mentioned, we're carrying that momentum into the fourth we didn't really guide to a specific range, but you know as I say, we think about modest now we probably think of it in the context of maybe a 100 potentially up to 200 basis point improvement something.

Seth Runser: Business. Through our facility investments, we have added over 200 doors this year and planned to add more than 500 additional between now and the first quarter of 2025. Our focus remains on service, efficiency, and profitable growth, and we're not slowing down.

In that range.

Steven Leonard: Now I'll turn the call over to Steven. Thanks, Seth, and good morning, everyone. In the asset-like business, truckload margin to remain soft, but we grew shipments despite weak demand. In even achieved record shipment levels for our managed transportation businesses, we helped customers navigate market disruption, which is a testament to the strength of our solutions, deep customer relationships. As Matt mentioned, we've been aggressively managing costs and continue to look for ways to further align costs with business levels and improve efficiency.

Speaker 9: Very helpful. And then when I, the pricing renewal is improved from 3% to 4%, you know, I think we're all trying to figure out like how big of a deal is this yellow bankruptcy, how much is the market really changing? Is does 4% feel like that's the right number? Is that a number that you'd expect to accelerate further? Is you got into Q4 and 2024? What's the pricing? We changed 1% the stocks and we changed our outlook to a foreign market to SaaS actually but what I haven't said was even red Erik junk from ??? printing on futures.

Okay very helpful and then when I the pricing renewals improved from 3% to 4% and I think we're all trying to figure out like how big of a deal is this yellow bankruptcy. How much is the market really changing as does 4% feel like that's the right number or is that a number that you had.

Expect to accelerate further as you get into Q4 and 2024.

What's the pricing.

Strategy right now.

Sure.

Speaker 7: Hey Scott, this is Christopher. So, you know, really from the third quarter benefit from the disruption, it was really a mixed impact of handling improving the mix of getting more core business.

Hey, Scott This is Christopher so you know really from the.

Steven Leonard: While market disruptions continue, our breadth of integrated solutions positions us well to serve customers. Our managed transportation solutions, using our managed transportation solution, we were able to help shippers who were impacted by the reduction in LTO capacity. We partnered with them to understand their supply chain needs and helped them avoid the capacity constraints others may have experienced. We offered creative solutions using multiple modes to keep our customer supply chains moving, resulting in a better outcome for our customer. And as customers have seen significant disruptions in the market, our stability and financial strength are differentiators. Customers need a partner they can count on, and we are well positioned to meet their needs.

The third quarter benefit from the disruption was really a mix impact of handling improving the mix of getting more core business, which tends to be more profitable business for us and it's more profitable for many reasons prices one of those but also productivity and efficiency improvement or opportunity there for us to do to handle that efficiently.

Speaker 7: which tends to be more profitable business for us and it's more profitable for many reasons. Price is one of those but also productivity and efficiency, there's improvement or opportunities there for us to handle that.

Speaker 7: efficiently, you know, in the 4% really we think our core business is at a really good place and we want to maintain that long term and we want to be offering fair prices to our customers for the service that we're providing. So, you know, we're really trying to overcome inflation through pricing and for efficiency gain. So I don't know that you'll necessarily see acceleration there in our core business but we are always optimizing the mix to get the right mix to get the best off-income result.

4% really we think our core business is at a really good place and we want to maintain that long term and we want to be offering fair prices to our customers for the service that we're providing so.

We're really trying to overcome inflation through pricing and through efficiency gains. So I don't know that you'll necessarily see acceleration there in our core business, but we are always optimizing the mix to get the right mix to get the best Op income result.

Judy Mcreynolds: Now back to Judy for some final thoughts. Thank you, Steven. Our success has been deeply tied to the ongoing pursuit of our mission to connect and positively impact the world to solving logistics challenges. We live this mission to the fullest this quarter as we navigated and successfully responded to industry disruptions. We are well positioned to understand and address customer needs with powerful capabilities and the deep expertise of a trusted team.

Okay. Thank you guys appreciate the time.

Thanks Scott.

Our next question comes from Jack Atkins with Stephens. Please proceed.

Speaker 1: Our next question comes from Jack Atkins with Stevens. Please proceed.

Speaker 10: Okay, great. Good morning, and thank you for taking my questions. So I guess I just would like to maybe...

Okay, great. Good morning, and thank you for taking my questions. Good.

Good morning, So I guess I guess I, just would like to baby.

Speaker 10: double click a little bit on some of the actions in the third quarter and it's very encouraging to see it flowing through to the bottom line but i guess when you think about the improvements that you saw specifically on the purchase transportation side duty with both expenses uh... just to be written rents and pt you know where we're improve pretty significantly sequentially you may be given the couple of specific examples of of actions you took their toothed to improved those costs

Double click a little bit on some of the actions in the third quarter, it and it's very encouraging to see it flowing through to the bottom line, but I guess when you think about the improvements that you saw specifically on that purchase transportation.

Judy Mcreynolds: As we look to the future, we are confident that this strong position and a keen focus on our three strategic pillars of growth, efficiency, and innovation will enable us to accelerate from here.

Hi, Judy both expenses does seem to be rents in PT.

Were improved pretty significantly sequentially could you maybe give us a couple of specific examples of actions you took there to improve those costs.

Operator: This concludes our prepared remarks and we'll now open the call-up for questions. Thank you. If you would like to register a question, please press the one four on your telephone. You will hear it three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one fall by the three. One moment please for the first question.

Sure I'm going to let Jeff answer that question, Yes, I would say on the on the on the city Cartage side, you know, that's where our drivers are going out and deliver and freight everyday pickup and delivery type drivers Christopher mentioned that shift in mix and that more consistent published core business gave us greater productivity.

Speaker 8: Sure, I'm gonna let that thing answer that question. Yeah, okay. I would say on the city card side, that's where our drivers are going out and delivering freight every day, pick up and delivery type drivers. Christopher mentioned that shift in mix.

Speaker 8: And that more consistent, published core business gave us greater productivity, but also point to some of the technology that we've used, which is city route optimization, which Judy mentioned, or opening comments.

But also point to some of the technology that we've used which is city route optimization, which Judy mentioned in her opening comments, we've seen a pretty material return from that using AI and machine learning a lot of our internal tech to optimize those drivers going out forward also coming back full we still have two more phases of that coming so.

Ravi Shanker: Our first question comes from Ravi Shankar with Morgan Stanley. Please proceed. Thanks very much.

Speaker 8: We've seen a pretty material return from that using AI machine learning, a lot of our internal tech to optimize those drivers going out full and also coming back full. We still have two more phases of that coming. So really when you think about cartage, the more productive you are, the more you can reduce that external cost, and that's going to provide a better service to our customers by getting an ABF driver delivered and picking up their freight. So.

Matt Beasley: Morning everybody. So when everybody in the space is looking at the volume and revenue opportunities, you guys crushed on costs which was truly remarkable to see. Can you just unpack that a little bit more? Was this just operating leverage from getting more density with more volumes coming to the network? Were these explicit cost actions that were in the pipeline for a while? Are there more to come? I'm the number one question.

Really when you think about cartage the more productive you are the more you can reduce that external cost and that's going to provide a better service to our customers by getting an ABF driver delivering and picking up their freight so.

Speaker 8: We expect that to continue as we move through the fourth quarter and into the future because we know it's a better option on cost.

We expect that to continue as we move through the fourth quarter and into the future because we know it's a better option on cost as.

Matt Beasley: People's minds this morning. How sustainable is this? So I would love to get to the other day, please. Well, yeah, thanks for the question, Robbie, and it's a good one. We saw the opportunity to better address our costs as we were adding people over the years of 2022 and 2021 and making sure that we had them to have proficient productivity levels and a good experience in that sort of thing. And we've always in the past used variable costs such as purchase transportation, cartage, and rent equipment to help facilitate our growth needs.

Speaker 8: As far as you know just PT over the road, we have a lot of our own drivers where we were able to swap that but when we look at the mix of business that we were handling and that shift in core, that really changed some of the lanes it was moving so we were able to optimize the way our road drivers move as well with some of those network visibility tools that I mentioned so we expect those cost actions to continue throughout the fourth quarter just how we continue to transform you know the way we are.

As far as just PT over the road, we have a lot of our own drivers, where we were able to swap that but when we look at the mix of business that we're handling than that shift in core that really changed some of the lanes. It was moving so we were able to optimize the way our road drivers move as well with some of those network visibility tools that I mentioned, so we expect those cost actions.

Matt Beasley: But as we were finalizing our labor deal, looking at the proficiency level of our people and just the backdrop of the economy and the opportunity set, we saw a better answer. And really got focused on reducing some of those variable costs and making sure that we had the right business mix as we were going into the third quarter. Great. And so is this considered to be like a one time reset or do you think there's kind of more to come in the pipeline?

<unk> to continue throughout the fourth quarter just as we.

Yes.

Continued to transform the way we operate.

Speaker 10: okay that's that's that's really encouraging to see and i guess maybe shipping gears and asking about the asset life segment from woman you know i know there have been a lot of changes there over the last couple years through the acquisition of molo but you know what i think that

Okay. That's that's what's really encouraging to see that and I guess, maybe shifting gears and ask you about the asset light segment for a moment I know there've been a lot of changes there over the last couple of years through the acquisition of <unk>, but you know.

But I think the.

Speaker 10: The fact that you guys are generating an operating loss there, and I would imagine that's probably continues into the fourth quarter. I mean, at what point do we start seeing some more cost out taking place there in an effort to flex down the cost structure? Typically, you think about these asset-like businesses as having a pretty variable cost structure. I'm just sort of curious, you know, should we see, are there options to maybe take some additional cost just giving how challenging the business backdrop is?

The fact that you guys are generating an operating loss there.

I would imagine that's probably continues into the fourth quarter. I mean, you know at what point do we start seeing some more.

Cost out taking place there in an effort to flex down the cost structure. You know typically you think about these.

These asset light businesses is having a pretty variable cost structure and I'm just sort of curious should we see.

Or are there options to maybe take some additional costs out there just given how challenging the business backdrop is.

Speaker 5: Yeah, you know, for us on asset light, I mean, you know, what we're seeing right now is, you know, customers are really, you know, seeing what we do in the asset light space is bringing a lot of value to their supply chain. And, you know, the market is such that, you know, prices are...

Yes for us on asset light I mean, what we're seeing right now is customers are really.

Matt Beasley: Well, you know what I think is we're always adjusting and we're wanting to make sure that we have the right resources serving the best business mix. And you know, I think that the asset base team does a great job of that along with working with our sales opportunities and our yield managers. We really see this as an ongoing effort to make sure, you know, that our resources that we're deploying are the most efficient and effective while also just having a keen focus on serving our customers well. Great.

<unk> seen what we what we do in the asset light space is bringing a lot of value to their supply chain and the market is such that prices are down.

Speaker 5: down obviously and so we're not immune to that. But at the same time, we want to keep a structure in place that allows us to capitalize when the market turns. So.

Down obviously and so.

We're not immune to that but at the same time, we want to we want to keep a structure in place that allows us to capitalize when the market turns so.

Speaker 5: You know, our view on that is we're just trying to strike the right balance. We obviously look for ways to improve efficiency and at times

Our view on that is we're just trying to strike the right balance, we obviously look for ways to improve efficiency and at times.

Speaker 5: you know, reduce cost, but at the same time, we want to be balanced in what we do there so that we can be responsive.

Reduce cost, but at the same time, we want to be balanced in what we do there so that we can be responsive.

Speaker 5: you know, when the market improves. And so that's how we think about it. And we'll continue to manage it that way as we go into the, you know, the rest of the quarter and then into next year.

When the market improves and so that's how we think about it and we will continue to manage it that way as we as we go into the rest of the quarter and then into next year.

Operator: Thank you.

Jason Seidl: Good evening. Our next question comes from my Jason title with TD Cowan. Please proceed. Thank you, operator. Judy and team. Good morning. Appreciate the time. Morning.

Okay. Thank you for that back I mean, I think I think the custody upside of that is just.

Speaker 3: Okay, thank you for that. I mean, I think the customer side of that is just that there's a truck load is a very sought after solution, you know, by our customers and it just works well within our integrated solutions set. And so, you know, we want to stay well positioned as Steven said.

Christopher Adkins: Wanted to ask a quick question on some of the October trends. Did you guys see any benefit from the cyber attack at SDs? And then if I look at costs real quickly, if you exclude labor, are you guys starting to see a little bit of a deterioration and sort of the inflationary cost environment? Hey Jason, this is Christopher Atkins. I'll kind of report on the cyber event as it relates to our business.

Truckload is a very.

Sought after solution by our customers and it just works well within our integrated solution set and so we want to stay well positioned as Stephen said.

Thank you.

Thanks, Jeff.

Speaker 1: Our next question comes from Chris Weatherby with CD Group. Please proceed.

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

Christopher Adkins: We did see an influx of some of that business the first couple weeks of October and largely that was from customers existing customers of ADF that were able to help them during that time of disruption since then that has largely gone back to the carrier that was handling that previously, but we're still even apart from that seeing substantial growth in our core business. You know, we've as we've talked about that business is still up 20% in October and compared to June of 23. Okay, that's good color.

Hey, Thanks, good morning, guys.

Speaker 11: One point has quickly on sort of the approach to pricing. So I guess prior to the yellow bankruptcy, there was a little bit more work.

Wanted to ask quickly on sort of the approach to pricing. So I guess prior to the yellow bankruptcy, there was a little bit more work being done in the transactional part of the business and I guess I'm curious as you think about the path forward how much transactional activity is going to occur relative to your sort of core book of contractual business.

Speaker 11: being done in the transactional part of the business. And I guess I'm curious is you think about the path forward, how much transactional activity is going to occur relative to your sort of core book of contract rule business. So, it seems to come down. It seems like there's a mixed profile change that's occurring, but at the same time, the transactional market probably has improved quite a bit sequentially. So, just want to get a sense of how you think about that approach going forward.

So we've seen shipments come down it seems like Theres, a mixed profile change thats occurring but at the same time, the transactional market probably has improved quite a bit sequentially. So just wanted to get a sense of how you think about that approach going forward.

Seth Runser: And on the cost side. I would say on the cut. This is Seth. I would say on the cost side, we're starting to see some things normalize, you know, but there's other areas, you know, like trailer, for example, or the cost is still inflated versus historical averages, but we are seeing some things start to normalize quite a bit.

Speaker 7: Chris, this is Christopher. I would say it largely depends. So it depends on our network, where our capacity is, where our investment has been made. It depends on the market prices. It depends on the competitive landscape.

Sure Chris This is Christopher.

I would say largely dependent so it depends on our network, where our capacity is where investments have been made it depends on the market prices. It depends on the competitive landscape. All those factors play into that decision, making process and the good thing is we're making a decision on a on a daily basis and so our operations sales and yield teams are coordinating.

Speaker 7: All those factors play into that decision-making process. And the good thing is we're making a decision on a daily basis. And so our operation, sales and yield teams are coordinating daily, regularly communicating to figure out what is the optimal mix in our network. And that changes day to day and we're prepared and agile to respond to the needs of the customer.

Seth Runser: Callswood. Yeah, I would want one, you know, just recent conversation that I've been in. I think the insurance market, they're pretty hardened right now. And so, you know, we're working through the answer there, but, but, you know, that's going to be one that we're watching just to highlight it. Sounds good. Appreciate it. Time's always guys. Yes. All right.

And daily regularly communicating to figure out what is the optimal mix in our network and that changes day to day, and we're prepared and agile to respond to the needs.

Of the customer.

Okay.

Speaker 11: So I guess it's fair to suggest that if we see, you know, if there were softness in the market, that last, you know, we saw in the first half of the year, that maybe you'd have a slightly different approach to the way that you try to manage it, I think there was a desire to sort of add some volume in a pre-challenging market. Would that still be the approach that you think about or would be more price dependent this time around?

So I guess, it's fair to suggest that if we see if there were softness in the market last we saw in the first half of the year that maybe you would have a slightly different approach to the way that you try to manage it I think there was a desire to sort of add some volume in a pretty challenging market would that still be the approach that you think about or it would be more more price dependent this time around.

Ken Hector: Our next question comes from Ken Hector, would be of A, please proceed. Hey, great. Good morning.

Matt Beasley: Um, so just two questions. Shipments were up 4% year over year in October. So it's on your capacity availability. Now, you know, how much can you handle the growth? You talked about adding 500 doors, but between now and 25. And then I guess on the financial side to Ravi's question, what change from targeting flat? Oh, yeah, I mean, you are up 400 basis points. I mean, you gave mid quarter updates. I'm just wondering, you know, on that cost side to the permanency question, you're asking, you know, what, what change from your point of view, aside from yellow bankruptcy, which you knew by that point, just to see the sustainability of those costs.

Speaker 7: Yeah, so I think all the things, you know, like set on the marketplace, I say, uh, friend the third quarter like set has already talked about we did reduce a lot of those variable costs with cartage rental, and very different variable costs that we've done. So we will continuously monitor that and make sure that that transactional business is covering any additional variable costs that we're bringing.

Yes, so I think I think it all depends you know like I said on the marketplace.

During the third quarter like Seth has already talked about we did reduce a lot of those variable costs with cartage rental.

Different variable costs that we've done and so we will continuously monitor that and make sure that that transactional business is covering any additional variable costs that were bringing on.

Speaker 11: That's helpful. I'm just one quick follow up on the cost side. Just how do you think about headcount going forward? Do you guys have sort of what you need? Do you think that there's potential efficiencies here or just general comment about headcount going forward?

That's helpful and just one quick follow up on the cost side, just how do you think about head count going forward you guys have sort of what you need do you think that theres potential efficiencies here or just your general comments about head count going forward would be great.

Seth Runser: Thanks. Yeah. Hey, morning, Kim. This is Matt. So maybe I'll start with your last party question that I'll turn it over to Seth to cover the first part. You know, certainly, we saw continue momentum through the quarter. And so you could see that and how we talked about it. So when we were talking on the call in July, you know, we were talking about being able to target a flat or even after the impacts of the new contract.

Speaker 8: Yeah, I would say we continue to hire in strategic markets where we see growth opportunities as we want to provide great service to our customers.

Yeah, I would say, we continue to hire in strategic markets, where we see growth opportunities as we want to provide great service to our customers. When you look at our turnover in attrition stats there are some of the lowest in the industry.

Speaker 8: When you look at our turnover and attrition staff, there's some of the lowest in the industry. So that's a great thing. Our people stay around for a long time, which is great for our customers and our people, but this is really a location by location decision that we make.

So that's a great thing our people stay around for a long time, which is great for our customers and our people, but this is really a location by location decision that we make based on the opportunities that we see in front of us so throughout the pandemic. The last two and a half years. It was more challenging to bring in labor, but we've seen that soften quite a bit. So we have a good pipe.

Seth Runser: Then we roll forward to the update that we provided in August. And, you know, that's when we're really starting to see the impact of the cost and efficiency measures that we have put in place, certainly the market impacts are really starting to be felt. And so, you know, at that point time, we were saying that we thought we could not only overcome those increased costs, but actually should be able to show some modest improvement in the OR.

Speaker 8: uh, based on the opportunities that we see in front of us. So throughout the pandemic, the last 2.5 years, it was more challenging to bring in labor. Um, but we've seen that softened quite a bit. So we have a good pipeline of labor that we kind of have sitting on the sidelines. So we're positioned and ready to go. Um, but we're constantly looking at daily, almost like Christopher talked about with our mixed decisions and business that we bring in.

The labor that we kind of have sitting on the sidelines. So we're positioned and ready to go but we're constantly looking at daily almost like Christopher talked about with our mix decisions and business that we bring in so with those network visibility visibility tools I talked about earlier, we know where we need labor and we know six months in advance where we need labor so that gives us a lot.

Seth Runser: And certainly that momentum just continue to carry into September. And so, you know, that's ultimately, you know, what resulted in the ability to be able to improve it by 400 basis points sequentially. And then I'd say, you know, that kind of progression really spells out and plus in conjunction with the the GRI that was put in early in October for us to continue that momentum into the fourth quarter, which is why we said that we think we can see potentially decrease sequentially into the fourth quarter. And then I'll turn it over to that cover the first part. Yes.

Speaker 8: With those network visibility tools I talked about earlier, we know where we need labor and we know six months in advance where we need labor. So that gives us a lot of tools to say, let's make a decision now for what we see coming in the future. And that's different from what we've had in the past.

The tools to say, let's make a decision now for what we see coming in the future and that's that's different from what we've had in the past.

Great. Thanks, very much appreciate it.

Speaker 1: Our next question comes from Tom Waidboats with UBS. Please proceed.

Our next question comes from Tom <unk> with UBS. Please proceed.

Speaker 5: Yeah, good morning. Wanted to see if you could offer some thoughts on just kind of underlying free trends.

Yeah good morning.

Seth Runser: So, when I think about excess capacity in the market, it really comes down to four different things. The first is people and we feel pretty good that we're properly staffed for our current business levels. And we continue to replace attrition and strategic locations. We have a good line of sight on our growth pipelines. So, and we feel like we can bring on labor much easier and quicker than we did throughout the pandemic, which is a good thing.

Wanted to I wanted to see if you could offer some thoughts on just kind of underlying freight trends.

Speaker 5: I think both on the LPL side and then also, it seems like in the asset light business, you're seeing a bit of further deterioration in volume in October . And so I don't know if you think that's just market getting weaker or if that's a function of any change in approach. So yes, it's on the market trend.

I think both on the <unk> side and then also.

It seems like an asset light business youre seeing a bit of further deterioration in volume in October and so I don't know if you think that's just.

Market getting weaker or if that's a function of any change in approach. So.

Seth Runser: So, feel pretty good about people on the equipment front. We continue to invest in the fleet like we have for many years. We have one of the newest fleets on the road, our fleets slightly bigger. And we're working on getting some of those higher cost units out now, but we could pivot for growth. But I really don't see any concerns on equipment capacity for growth.

Some thoughts on the market trends. Thank you.

Yeah, Hey, Tom Good morning, So I mean I'd.

Speaker 4: Yeah, hey Tom, good morning. So, I mean, I'd say that the overall...

I'd say that the overall.

Speaker 4: backdrop is one that we've seen the manufacturing sector. It's been in the client. We've seen that decline. I guess less than a little bit in the latest report. We feel like the destocking cycle is coming to an end. So you still see a little bit of that softness. So I'd say we see the potential for that to become a catalyst. how

Backdrop.

One that we've seen the manufacturing sector. It's been in decline we've seen that decline I guess lessen a little bit in the latest report we feel like that the destocking cycle.

Seth Runser: The third is real estate. We've been working on our long-term real estate plan for the past two or three years. You need to be positioned well ahead of the cycle from a real estate perspective. And we have a mature network. And we believe we're positioned well in those key markets. This year alone, we've opened up a new facility in Camp Hill, Pennsylvania. We expanded our San Antonio site. We moved into a new Phoenix facility.

<unk> is coming to an end and so you know.

You still see a little bit of that softness.

So I'd say, we see the potential for that to become a catalyst certainly we've had.

Seth Runser: So, we're doing a lot of things on the real estate front. So, we feel good about where we are there as well. And we got more coming next year as well. And then the fourth really is productivity. So, the more productive you are, the more freight you can handle for the same cost. So, in my opening comments, I talked about the transformation at ABF and how we're really focused on technology and optimization to ensure that we're as efficient as possible.

Speaker 4: very specific market catalyst in the LTL space as it relates to capacity that have been a tailwind there. But, you know, I...

Very specific market catalyst in the L. T L space as it relates to capacity than it had been a tailwind there, but I think if we move forward, we see some recovery in the manufacturing sector. We see a move towards restocking then those could be additional tailwind is just more broadly across the business.

Speaker 4: Move forward, we see some recovery in the manufacturing sector. We see it move towards restocking. Then those could be additional tailwinds just more broadly across.

Okay.

Speaker 12: What about on the acid light side and in truckloaded seems like that's the trend and that's been Seems to be getting a little bit worse looking at the October ship

What about on the asset light side and in truckload. It seems like that's the trend and that's been seems to be getting a little bit worse looking at the October shipments.

Seth Runser: So, we've completed a lot of initiatives, but we have a lot more still to do. So, with all that said, the investments in network visibility and our optimization tool set, we have capacity for growth. And we can flex that up or down based on what the market's doing and what opportunities we see in front. Carlos.

Speaker 5: Yeah, I mean, Steven can talk to it a little bit more. I'd say overall we've been seeing increases in market share and increases in shipments, but we certainly remain focused on profitability. Maybe Steven can talk about what that's looking like in October . Yeah, some of that is just a function of us making sure that we're disciplined around price and...

Yeah, I mean, Steven can talk to it a little bit more I'd say overall, we've been seeing increases in market share and increases in shipments, but we certainly remain focused on profitability and maybe Steven can talk about what that's looking like in October yes. Some of that is just a function of us making sure that we're disk.

Matt Beasley: Great, if I can squeeze in a follow up to that. The tech investors are real quick. The tech investments are still broken out as one timers. Seems like those are, you know, continuous, non-going should that just be part of ongoing business at some point? Well, I think we spoke to that in the AK with respect to ABF. And so, you know, what we're seeing there is as we've moved the team back to conventional operation in Kansas City and in Salt Lake City.

One around price and.

Speaker 5: that we're getting value for the services we provide. But there's still tremendous opportunity there. We're seeing lots of opportunities. We're just being careful about, you know, how we think about bringing on new business. And, you know, so that's reflected a little bit in what we're seeing in October . But still, see lots of opportunity for growth. And that's what we're focused.

That we're getting value for the services, we provide but there's still tremendous opportunity. There we're seeing lots of opportunities. We're just being careful about how we think about bringing on new business.

And so that's reflected a little bit and what we're seeing in October but still.

See lots of opportunity for growth and that's what we're focused on.

Matt Beasley: And we've previously done that in Indianapolis. You know, you will, as you go forward, it will be all in regular operations because we're no longer piloting, you know, in those other areas. We do continue to have our innovations cost broken out and continue that same treatment where we're piloting for new customers with Vox. You know, we're doing some things there that are very new and innovative and, you know, with our customers just gaining some momentum in pilot-type environments.

Speaker 12: Right, okay, and just one quick follow up on price, I think.

Right right, Okay, and just one quick follow up on price I think.

We know how long does it take you to kind of get through the book such that the stronger pricing environment would be fully reflected it seems like you're showing a little bit of further momentum on pricing in October I know you've got the G. IRI, but how do you think about kind of the timing where that we might see further acceleration in price and in the asset.

Speaker 12: you know how long would it take you to kind of get through the book such that the stronger pricing environment would be fully reflected it seems like you're showing a little bit of further momentum on price in October and we got the gri but how do you think about kind of the timing where that you know we might see further acceleration in price in in the asset uh... you know in the old tale that

And the Alltel business.

Speaker 7: So the way I think about it, Tom, this Christopher is that, you know, a large portion of our business that is in the core business is subject to our annual contract negotiations. So as you think about that, those agreements are typically good for one year for 12 months. So we'll work through around a quarter of that business each quarter, if that makes sense.

Sure. So the way I'd think about it Tom This is Christopher is that you know.

Matt Beasley: And so, we're continuing that cost. But at the same time, we're really excited about the prospects, you know, for a new revenue stream, you know, from that business and look forward to telling you more about that, you know, as we enter into 2024.

Large portion of our business is in the core business is subject to our annual contract negotiations. So as you think about that those those agreements are typically good for one year for 12 months. So we'll work through around a quarter of that business each quarter, if that makes sense.

Operator: Thanks for the time. Appreciate that.

Speaker 12: So you potentially could put in TVC accelerating price for a couple more quarters.

So you potentially could see accelerating price for a couple more quarters.

Scott Group: Thanks. Our next question comes from Scott Group with Wolf Research. Please proceed. Hey, thanks. Good morning. So I want to just ask on the morning. I just want to ask on the OR commentary on Q4. So back to Ken's point. So you said modest improvement in Q3 ended up with 400 basis points of improvement. You're saying modest again. What is that? What's the right range to be thinking about when you talk about modest, sequential improvement?

Speaker 7: Sure, yeah, I think that's fair. That prices will always be increasing as our costs go up. The cost of doing business goes up. So yeah, I would expect that to continue.

Sure Yeah, I think that's fair prices will always be increasing as our costs go up the cost of doing business goes up so I would expect that to continue.

Okay. Thanks for the time.

Thank you.

Speaker 1: Our next question comes from Jordan Alliger with Goldman Sachs. Please proceed.

Our next question comes from Jordan <unk> with Goldman Sachs. Please proceed.

Speaker 13: Hi, Morning. So, I wanted to get discussed morning the sort of freight redistribution. And what I mean is, do you think you could see some additional share opportunities in the quarters ahead, perhaps?

Hi morning.

I was wondering if you could discuss morning that sort of freight redistribution and what I mean is do you think you could see some additional share opportunities in the quarters ahead, perhaps.

Scott Group: I just want to see if you have a finer point around that. Yeah, so yeah, thanks. Scott, you know, I would say, you know, we were very pleased with the performance in the third quarter. Like I mentioned, we're carrying that momentum into the fourth. You know, we didn't really guide to a specific range. But, you know, as I say, we think about modest now. We probably think of it in the context of maybe a 100 potentially up to 200 basis point improvement, you know, something in that range.

Speaker 13: Some of your peers or competitors out there maybe took on too much, perhaps struggling with service. I mean, does that pose opportunity for you? Thank you.

Some of your peers or competitors out there maybe took on too much perhaps struggling with service I mean does that pose opportunity for you. Thanks.

Speaker 7: Sure, yeah, I think that definitely does pose an opportunity. I don't know that I'm seeing a big issue with service in the marketplace necessarily. I think the fray has landed with the carriers that it will immediately following the disruption. Now shippers and carriers are working through each of those deals to make sure.

Sure Yeah, I think that definitely does pose an opportunity I don't know that I'm seeing.

Big issue with service in the marketplace necessarily I think the phrase has landed with the cures that it will.

Mediately following the disruption now shippers and carriers are working through each of those deals to make sure. The carriers were making sure that that business fits in their network, well and it's priced appropriately and the shippers are making sure that they're getting the service and the price that makes sense for their business, but I think that's the case by case basis.

Scott Group: Okay, very helpful. And then when I, the pricing renewals improve from 3% to 4%. You know, I think we're all trying to figure out like how big of a deal is this yellow bankruptcy? How much is the market really changing is does 4% feel like that's the right number? Or is that a number that you'd expect to accelerate further as you get into Q4 in 2024? What's the pricing strategy right now? Sure.

Speaker 7: of the cares are making sure that that business fits in their network well and it's priced appropriately and the shippers are making sure that they're getting the service and the price that makes sense for their business. But I think that's the case by case basis.

Speaker 7: uh... that that shippers and carriers will continue to work through make sure that they have the right relationships now we are we're also seeing there's an interest in diversifying the carrier portfolio of shippers which i think positions that's really well with our manage solutions that were not just an asset based player if they have issues with you know soul sourcing with one carrier that leads really well into our

Shippers and carriers will continue to work through to make sure that they have the right relationships, where we are.

We're also seeing there is an interest in diversifying the carrier portfolio of shippers, which I think positions us really well with our managed solutions that we're not just an asset based player. If they have issues with sole sourcing with one carrier that leaves really well into our managed solutions hands.

Christopher Adkins: Hey, Scott, this is Christopher. So, you know, really from the third quarter benefit from the disruption was really a mixed impact of handling improving the mix of getting more core business, which tends to be more profitable business for us. And it's more profitable for many reasons. Price is one of those, but also productivity and efficiency, either improvement or opportunities there for us to do to handle that efficiently. You know, in the 4% really, we think our core business is at a really good place.

Okay, and then just a follow up just on like freight characteristics mix, obviously weight per shipment right now is impacted by.

Speaker 13: and then just follow up to some like freight characteristics mix. Obviously weight per shipment right now is impacted by certain factors as you transition your business to the square LPL. Can you maybe talk a little about weight per shipment trends as you look ahead into next year? Does that start to normalize or rebalance? Thanks.

Certain factors as you transition your business to the square L. T. Al can you maybe talk a little bit about weight per shipment trends. As you look ahead into next year does that start to normalize or rebalance. Thanks.

Christopher Adkins: And we want to maintain that long term. And we want to be offering fair prices to our customers for the service that we're providing. So, you know, we're really trying to overcome inflation through pricing and for efficiency gains. So, I don't know that you'll necessarily see acceleration there in our core business, but we are always optimizing the mix to get the right mix to get the best off-income results. Thank you, guys. Appreciate the time. Thanks, Scott.

Speaker 4: Yeah, so that's a good question. I do think that there are just some dynamics, like Christopher said, on the dynamic side, we definitely target freight based on certain characteristics and how it works best from a profitability standpoint. So there has been a little bit of an impact on the way just as we transition a little bit in our mix, and then there's probably...

Yes. So that's a good question you know I do think that there are.

Just some dynamics like Christopher said on the dynamic side, you know we definitely target.

Freight based on certain characteristics and how it works best from a profitability standpoint. So there has been a little bit of an impact on the way just as we transition a little bit in our mix and then there is probably <unk>.

Speaker 4: Just a little bit of a broader macro backdrop, as again, there's been a little bit of wheatening and manufacturing.

A little bit of a broader.

The macro backdrop again, theres been a little bit of weakening in manufacturing and we've been going through the destocking that probably contributes just broadly to some overall declines on weight Christopher I don't know if there'd be anything else that you would add.

Jack Atkins: Our next question comes from Jack Atkins with Stevens. Please proceed. Okay, great.

Speaker 7: talking that probably contributes just broadly to some overall declines on way. You know, Chris, I don't know if there'd be anything else that you'd have on all those drivers. Yeah, and that dynamic business, but we talked about tends to be larger, heavier, afraid, and such your mix changes that transition from the heavier stuff to the lighter core stuff, we'll have an impact on our weight percent that pulling it down.

Jack Atkins: Good morning. Thank you for taking my questions. So I guess I just would like to maybe double click a little bit on some of the actions in the third quarter. And it's very encouraging to see. It's going through to the bottom line. But I guess when you think about the improvements that you saw, specifically on the purchase transportation side, Judy, both expenses, excuse me, rents and PT, you know, we're improve pretty significantly sequentially.

On those drivers that dynamic business that we've talked about tends to be larger heavier freight and so as your mix changes that transition from the heavier stuff to the lighter core stuff will have an impact on our weight per shipment pulling it down.

Thank you.

Thanks, John.

Jack Atkins: Can you maybe give us a couple of specific examples of actions you took there to improve those costs? Sure, I'm going to let that answer that question. Yeah, I would say on the on the city card side, you know, that's where our drive drivers are going out and deliver and freight every day, pick up and delivery type drivers. Christopher mentioned that shift and mix and that more consistent, published core business gave us greater productivity.

Speaker 1: Our next question comes from Jeff Kaufman with vertical research partners. Please proceed.

Our next question comes from Jeff Kauffman with vertical research partners. Please proceed.

Speaker 1: Thank you very much and congratulations on a very solid quarter.

Thank you very much and congratulations on a very solid quarter.

Speaker 8: A couple of questions. Just one clarification on the Tom Wattah which question. I think what Tom was going after was, the trend in July August of September in the asset light business was shipments per day up about three to four percent. And suddenly in October that drops to down six.

A couple questions just one clarification on the Tom Water-witch question.

Think what Tom was going after was.

The trend in July August September in the asset light business was shipments per day up about 3% to 4% and then suddenly in October that drops to down six.

Jack Atkins: But I'll also point to some of the technology that we've used which a city route optimization, which Judy mentioned are opening comments. We've seen a pretty material return from that using AI machine learning. A lot of our internal tech to optimize those drivers going out full and also coming back full and we still have two more. More phases of that coming. So really, when you think about cardage, the more productive you are, the more you can reduce that external cost and that's going to provide a better service to our customers by getting an ABF driver delivered and picking up their freight.

Speaker 14: And the answer was, oh, we'll be stocking, sending some things are getting better, but it doesn't seem to explain that big drop from September to October .

And the answer was well destocking, sending so things are getting better but it doesn't seem to explain that big drop from September to October. So I guess I was just wondering because that surprised me a little bit is this a function of the restructuring that you were doing on the asset light side. So this is really our go forward rate is.

Speaker 14: So I guess I was just wondering because that surprised me a little bit.

Speaker 14: Is this a function of the restructuring that you were doing on the asset light side? So this is really our go forward rate is October a bit of an anomaly. And we probably shouldn't read that way on on fourth quarter or was there a material that stepped down in the asset light market that caused October to be what it was.

Tober a bit of an anomaly.

We probably shouldnt read that weigh on fourth quarter or was there a material step down in the asset light market that caused October to be what it was.

Jack Atkins: So we expect that to continue as we move. There's a fourth quarter and into the future because we know it's a better option on cost as far as, you know, just PT over the road. We have a lot of our own drivers where we were able to swap that, but when we look at the mix of business that we were handling and that shift in core, that really changed some of the lanes it was moving.

Well I mean again.

Speaker 5: Well, I mean, again, you know, for us, I don't know that I would read too much into it in terms of, you know, maybe where we're headed in future quarters, we...

For us I don't know that I would I would read too much into it in terms of maybe where were headed in future quarters.

Speaker 5: You know, we still see a tremendous opportunity. We're connecting well with customers, the service resonates well. And so we see opportunities to continue to grow. But at the same time, you know, we feel like we're at...

We still see a tremendous opportunity, where we're connecting well with customers the service resonates well and so where we are.

Jack Atkins: So we were able to optimize the way our road drivers move as well with some of those network visibility tools that I mentioned. So we expect those cost actions to continue throughout the fourth quarter, just as how we continue to transform, you know, the way we operate. Okay, that's really encouraging to see.

We see opportunities to continue to grow but at the same time.

We feel like we're at or near the bottom or at the bottom of the kind of pricing market and so we're being careful about.

Speaker 5: Near the bottom or at the bottom of the kind of pricing market and so

Speaker 5: You know, we're being careful about, you know, what we're doing in BIDs and that type of thing. And I think...

Steven Leonard: And I guess maybe shifting gears and asking about the asset light segment for a moment. You know, I know there have been a lot of changes there over the last couple of years through the acquisition of MOLO, but, you know, I think the fact that you guys are generating an operating loss there. And I would imagine that's probably continues into the fourth quarter. I mean, you know, at what point do we start seeing some more cost out taking place there in an effort to flex down the cost structure.

What we're doing in bids and that type of thing and I think you could see that kind of show up in October but.

Speaker 5: You know, you could see that kind of show up in October , but

Speaker 5: You know, we feel like that's going to turn. It's going to come back and we'll be in a better, you know, in a better opportunity to grow and add volume. So...

We feel like that's going to turn it is going to come back and we'll be in a better and a better opportunity to grow and add volume. So.

Speaker 5: I don't see that as a trend that will continue, but...

I don't see that as a trend that will continue but.

Speaker 5: You know, we've got to work, you know, within the given market. And so that's kind of how we're thinking about it goal.

We've got we've got to work within a given market and so that's.

Thats kind of how we're thinking about it going forward. We've also continued to see growth in the other areas in asset what we're seeing.

Speaker 5: We've also continued to see growth in the other areas and asset life. We're seeing managed in some of our other services.

Steven Leonard: Typically, you think about these these asset light businesses is having a pretty variable cost structure and I'm just sort of curious, you know, should we see. Are there options to maybe take some additional cost out there just just given how challenging the business backdrop is. Yeah, you know, for us on asset light, I mean, you know, what we're seeing right now is, you know, customers are really, you know, seeing what we do in the asset light space is bringing a lot of value to their supply chain.

Manage it in some of our other services.

Speaker 3: You know, we're starting to add, you know, more volume at a higher rate. So there's some good things going on across that life. But again, for me, I want to make sure that we, we're just making good decisions about price and how we think about the business that we're bringing on and that you can see a little bit of that in October . One thing to take note of is the managed part of that that you're talking about. We don't reflect that in the ship.

We're starting to add more volume at a higher rate. So there's some good things going on across asset light, but.

Again for me I want to make sure that we were just making good decisions about price and how we think about the business that we're bringing on and you can see a little bit of that in October one thing to take note of is the managed part of that that you're talking about we don't reflect that in the shipment count that's disclosed and there is momentum.

Steven Leonard: And you know, the market is such that, you know, prices are down, obviously. And so we're we're not immune to that. But at the same time, we want to we want to keep a structure in place that allows us to capitalize when the market turns. So, you know, our view on that is we're just trying to strike the right balance. We obviously look for ways to improve efficiency and at times, you know, reduce cost.

Speaker 3: that's disclosed and there is momentum, there is momentum there and we reference it. We do that just for clarity around the shipment level, so primarily what you're seeing when you see that statistic is truckload and to some extent the expedite.

And there is momentum there and we referenced that we do that just for clarity around that the shipment levels, So primarily what youre seeing when.

When you see that statistic is truckload and to some extent the expedite trends, which you know right now.

Steven Leonard: But at the same time, we want to be balanced in what we do there so that we can be responsive, you know, when the market improves. And so that's how we think about it. And we'll continue to manage it that way as we as we go into the, you know, the rest of the quarter and then in the next year. Okay, thank you for that. I mean, I think I think the customer side of that is just that there's a truckload is a very sought after solution, you know, by our customers, and it just works well within our integrated solution set. And so, you know, we want to stay well positioned as Steven said. Thank you. Thanks.

Speaker 3: which you know right now are very challenging and you know the the point that I think Stephen's making is that we're a little bit more focused on making sure that these customers that we're doing business with over the little bit longer term here are right for us, we're right for them, and you know there's value in the relation.

Very challenging and the the point that I think Stephen's making is that we're.

Little bit more focused on making sure that these customers that we're doing business with over the little bit longer term here are ripe for us were right for them and you know theres value in the relationship and you know that it doesn't speak to the opportunity being less at all because we have.

Speaker 3: And that doesn't speak to the opportunity being less at all, because we have robust opportunities across all of our solutions, and we're excited about that.

Robust opportunities across all of our solutions and we're excited about that.

Speaker 14: Judy, thank you, and that gives me a lot more clarity, so I appreciate that. Just one follow-up on asset light and then one quick question on asset-based. So the OR, as we measure it, and I know we can argue whether that's the best way to look at this or not, is down about 450-ish basis points year on year, and about 300 of that is explained with the purchase transportation going from 84 to 87 percent of revenue.

Judy Thank you and that gives me a lot more clarity. So I appreciate that just one follow up on asset light and then one quick question on asset base. So.

Christian Wetherbee: Thanks, yeah. Our next question comes from Chris. Wetherbee with CD Group, please proceed. Yeah, thanks. Good morning, guys. One last quickly on sort of the approach to pricing. So I guess prior to the yellow bankruptcy, there was a little bit more work being done in the transactional part of the business. And I guess I'm curious as you think about the path forward, how much transactional activity is going to occur relative to your sort of core book of contractual business.

Or as we measure it and I know, we can argue whether that's the best way to look at this or not is down about 450 ish basis points year on year and about 300 of that is explained with the purchase transportation going from 84% to 87% of revenue.

Speaker 14: you know, what's causing that other 150 basis points? Because as much as asset-based was a great positive surprise in the quarter, I think asset-like was a bit of a disappointment, is it because expedited's down and you do have overhead costs associated with that? What would explain that 150-ish basis point decline not related to purchase transportation?

Whats, causing that other 150 basis points, because as much as our asset base was a great positive surprise in the quarter I think asset life was a bit of a disappointment.

Christian Wetherbee: So it seems shipment to come down. It seems like there's a mixed profile change. That's occurring, but at the same time, the transactional market probably has improved quite a bit sequentially. So just want to get a sense of how you think about that approach going forward.

Is it because expedite its down and you do have overhead costs associated with that what would explain that 150 ish basis point decline not related to purchase transportation.

Christian Wetherbee: Sure, Chris, this is Christopher. I would say it largely depends. So it depends on our network, where our capacity is, where investments have been made. It depends on the market prices. It depends on the competitive landscape. All those factors play into all that decision making process. And the good thing is we're making a decision on a daily basis. And so our operations sales and yield teams are coordinating daily, regularly communicating to figure out what is the optimal mix in our network.

Speaker 3: Well, I mean, I think that what we're doing is, as Steven said, just continuing to have investments in people and resources to serve that growth.

Well, yes.

I mean, I think that what we're doing is as Stephen said just continuing to have.

In people and resources to serve that growth opportunity and I think just you know as you look at the overall result, you see that now I'll say this we've addressed that some extent with some of the facility decisions that we've made and you see the impact of those and we're continuing to look for other ways to.

Speaker 3: And I think just, you know, as you look at the overall result, you see that. Now, I'll say this, we've addressed that some extent with some of the facility decisions that we've made and you see the impact of those.

Christian Wetherbee: And that changes day-to-day and we're prepared and agile to respond to the needs of the customer. So I guess it's fair to suggest that if we see if there were softness in the market that last we saw in the first half of the year that maybe you'd have a slightly different approach to the way that you try to manage it, I think there was a desire to add some volume in a pre-challenging market.

Speaker 15: And we're continuing to look for other ways, you know, to be more efficient. One thing we haven't talked about yet on this call is just a focus on the small and medium-sized business segment. We see a real opportunity there for both growth and improved margins.

Be more efficient one thing we haven't talked about yet on this call is just a focus on.

The small and medium sized business segment.

We see a real opportunity there for both growth and improved margins.

Speaker 15: in asset light and we're working on that. That'll be an impact in 2024, perhaps in the second half of it, but you know, something that's in our line of sight.

Asset light and we're working on that that'll be an impact in 2020 for perhaps in the second half of it.

Christian Wetherbee: Would that still be the approach that you think about or would be more price dependent this time around? Yeah, so I think all of the things, you know, like said on the marketplace, I say, a friend of the third quarter, like Seth has already talked about, we did reduce a lot of those variable costs with cartage rental and different variable costs that we've done. So we will continuously monitor that and make sure that that transactional business is covering any additional variable costs that we're bringing on.

That's in our line of sight.

Speaker 14: Okay, thank you. And then last follow up. I know you were talking about the 500 doors by 2025 and there's a big real estate opportunity with some of these yellow properties that are coming to market as we're thinking about capital spending.

Okay. Thank you and then last follow up.

You were talking about the 500 doors by 2025, and there's a big real estate opportunity with some of these yellow properties are coming to market as we're thinking about capital spending for.

Speaker 14: for 2024. I know you mentioned that there was, I think it was 60 million to catch up.

For 2024, I know you mentioned that there was I think it was $60 million of catch up from 22 that was in this year's number.

Speaker 14: from 22 that was in this year's number. Could we probably see a little more spent on real estate as opposed to operating equipment in?

Christian Wetherbee: That's helpful and just one quick follow-up on the cost side. How do you think about headcount going forward? You guys have sort of what you need. Do you think that there's potential efficiencies here or just your general comment about headcount going forward would be great? Yeah, I would say we continue to hire in strategic markets where we see growth opportunities as we want to provide great service to our customers. When you look at our turnover and attrition stats, there's some of the lowest in the industry.

Could we probably see a little more spend on real estate as opposed to operating equipment.

Speaker 14: 24 and I know you haven't come out with the 24 cat-backs, but as we're thinking about modeling, could we see kind of a pullback to the mid 200s?

24, and I know you haven't come out with the 2000 and for Capex, but as we're thinking about modeling.

Could we see kind of a pull back to the mid two hundreds.

Speaker 14: normally, but maybe something closer to this year if we add and real estate potential for next year.

Normally but maybe something closer to this year, if we add in real estate potential for next year.

Christian Wetherbee: So that's a great thing. Our people stay around for a long time, which is great for our customers and our people. But this is really a location by location decision that we make based on the opportunities that we see in front of us. So throughout the pandemic, the last two and a half years, it was more challenging to bring in labor, but we've seen that soften quite a bit. So we have a good pipeline of labor that we kind of have sitting on the sidelines, so we're positioned and ready to go.

Speaker 14: Yeah, so Jeff, certainly, I think there will be over the coming months opportunities on the real estate side in the LPL space. I say just generally our 2024 plan and thoughts on capital are still coming together and probably too early to give an overall picture of that at this point. Okay, thank you very much and congrats.

Yeah. So Jeff certainly you know I think there will be over the coming months opportunities on the real estate side and the L. T. All space you know I'd say, just generally our 2024 plan and thoughts on capital are still coming together and probably too early to give an overall picture of that at this point.

Okay. Thank you very much and congratulations thank.

Christian Wetherbee: But we're constantly looking at daily almost like Christopher talked about with our mixed decisions and business that we bring in. So with those network visibility tools I talked about earlier, we know where we need labor and we know six months in advance where we need labor. So that gives us a lot of tools to say, let's make a decision now for what we see coming in the future. And that's different from what we've had in the... Thanks very much, appreciate it.

Thanks, Yeah I appreciate that.

Speaker 1: Our next question comes from Stephanie Moore with Jeffries. Please proceed. Hi, good morning.

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

Hi, good morning, and congrats on the good quarter good morning.

Speaker 16: Thank you. You're welcome. So I think you guys do a really good job of managing your shipments throughout the cycle. You obviously talk a lot about the usage of dynamic, LTL freight. Can you talk maybe about what you're thinking regarding a normalized shipments per day? And then do you think three key represents kind of an optimal mix for you guys or do you think there's more to do here given the disruption in the market?

Thank you.

Yeah. So I think you know I think you guys did a really good job of kind of managing your shipments throughout the cycle.

Obviously, you talked a lot about the usage of dynamic LCL freight can you talk maybe about what your thinking regarding our normalized shipments per day, and then do you think.

Operator: Our next question comes from Tom Wadewitz with UBS, please proceed. Yeah, good morning. I wanted to see if you could offer some thoughts on just kind of underlying free trends. I think both on the LPL side and then also it seems like an asset light business, you're seeing a bit of further deterioration in volume in October. And so I don't know if you think that's just market getting weaker or if that's a function of any change in approach.

Do you think three key represents kind of an optimal mix for you guys or do you think there's more to do here given the disruption in the market.

Speaker 7: Yes, Stephanie, this is Chris Rolk. I'll start. I think I'll reference the maybe near term. I think that has some longer term plans you could speak to. But on the near term right now, we're targeting around 20,500 chipmins per day on a daily basis. But that varies again day to day, week to week based on the opportunities that are in our pipeline and what the current capacity situation is.

Yes, Duffy this is Christopher I'll start I think al referenced maybe near term I think Seth at some longer term plans that you can speak to but on the on the near term right now we're targeting around 20500 shipments per day on a daily basis, but that Barry like against day to day week to week based on the opportunities that are in our pipeline and what the current.

The situation is that the do you want to speak to the long term, yes, I would just say we're constantly trying to optimize our mix, but also the potential for growth. So we're open to that growth.

Speaker 8: Seth, did you want to speak to the long term? Yeah, I would just say we're constantly trying to optimize our mix, but also leave potential for growth. So we're open to that growth.

Operator: So yes, and thoughts on the market trends. Thank you. Yeah, hey Tom, good morning. So I mean, I'd say that the overall backdrop is one that we've seen the manufacturing sector. It's been in the client. We've seen that decline. I guess less than a little bit in the latest report. We feel like the destocking cycle is coming to an end. And so you still see a little bit of that softness. And so I'd say we see the potential for that to become a catalyst.

Operator: Certainly we've had very specific market catalyst in the LPL space as it relates to capacity that have been a tailwind there. But you know, I think if we move forward, we see some recovery, you know, in the manufacturing sector, we see it move towards restocking. Then, you know, those could be additional tailwinds just more broadly across the business. What about on the asset light side and in truckloaded seems like that's the trend and that's been seems to be getting a little bit worse looking at the October shipments.

Speaker 8: And we're investing in that growth when you think about the people, the facilities. We talked about the efficiency measures that we've taken. That's really all the position us for long-term growth. So we feel like we'll continue to do that as long as the opportunities are there and possible.

We're investing in that growth when you think about the people the facilities, we talked about the efficiency measures that we've taken that's really all to position us for long term growth. So we feel like we will continue to do that as long as the opportunities are there and profitable for us.

Speaker 16: Got it. And maybe just as a follow up and I'm kind of taking a step back here, it does seem that this quarter, you know, demonstrates you guys really kind of on firing it all cylinders whether it's the mix, you know, you have, you know, good price and coming in you noted, obviously you already have this mature terminal network and then kind of the last point. We clearly can see that a lot of these productivity actions are kind of.

Got it and maybe just as a follow up and kind of taking a step back here. It does seem that this quarter demonstrates you guys really kind of.

Fearing on all cylinders. So that's the mix you have.

The pricing coming in.

Obviously, you've already had this mature terminal network and then kind of the last point, we clearly can see that a lot of these productivity actions are kind of.

Speaker 16: coming through very nicely. While, I think we all kind of graced still a pretty weak freight environment. So all those things considered, do you think you can deliver kind of a sustainable eight-handle OR going forward just based on all these factors?

Coming through very nicely well you know I think we all can agree it's still a pretty weak freight environment. So all those things considered do you think you can deliver kind of a sustainable eight handle O R and going forward just based on all of these factors.

Speaker 15: Yeah, I mean, Stephanie, I think that's certainly what we're targeting. I think one of the things that's interesting about this environment is that if you look at the underlying macro weakness, you can compare it back to some pretty rough periods. You know, we hear comparisons back to 09, maybe even in the spring of 2020. And you know, we can see that through some of the other solutions as well as the asset base solution.

Yeah, I mean, Stephanie I think that's certainly what we're targeting and I think one of the things. That's interesting about this environment is that if you look at the underlying macro weakness you can compare it back to some pretty rough payer hits.

Operator: Yeah, I mean, Steven can talk to it a little bit more. I'd say overall we've been seeing increases in market share and increases in shipments. But we certainly remain focused on profitability. Maybe Steven can talk about, you know, what that's looking like in October. Yeah, some of that is just a, you know, a function of us making sure that we're discipline around price and that we're getting value for the services we provide.

Here comparisons back to O nine maybe even in the spring of 2020, and we can see that through some of the other solutions as well as the asset based solution, but they are unique and really helpful opportunity that we have is to address this disruption.

Operator: But they're still tremendous opportunity there. We're seeing lots of opportunities. We're just being careful about, you know, how we think about bringing on new business and, you know, so that's reflected a little bit in what we're seeing in October. But still see lots of opportunity for growth and that's what we're focused on. Right. Okay. And just one quick follow up on price. I think, you know, how long does it take you to kind of get through the book such that the stronger pricing environment would be fully reflected.

Speaker 15: But the unique and really helpful opportunity that we have is to address this disruption with our customers.

Speaker 15: that resulted from the yellow bankruptcy and other things that have gone on in the marketplace and

Our customers that resulted from the yellow bankruptcy and other things that have gone on in the market place and.

Speaker 15: So I feel like that it's not only dealing with the macro weakness, but seizing on an opportunity to help our customers navigate this disruption.

I feel like that it's it's not only dealing with the you know the macro weakness that seasoning.

On an opportunity to help our customers navigate this disruption and we've highlighted in some of our prepared comments, but I really want to highlight this for you is just the ability to say, yes to a customer and it might be business that runs through the asset base network, but it could also be up.

Speaker 15: And we've highlighted some of our prepared comments, but I really want to highlight this for you. It's just the ability to say yes to a customer.

Operator: It seems like you're showing a little bit of further momentum on price in October. I know you got the GRI, but how do you think about kind of the timing where that, you know, we might see further acceleration in price in the asset. That, you know, in the L tale business. Sure. So the way I think about it, Tom, this Christopher is that, you know, a large portion of our business days in the core business is subject to our annual contract negotiations.

Speaker 15: And it might be business that runs through the asset-based network, but it could also be a better fit for managed that runs with other LTL carrier partners or truck load optimization work that we're doing. And it's just a good model in a period of disruption, which seems to be happening a lot more often. So if we navigate all of that well, we're in the 80s.

A better fit for managed that runs with you know other L. T O carrier partners, our truckload optimization work that we're doing and it's just a good model in a period of disruption, which seems to be happening a lot more often so if we navigate all of that well we're in the eighties you know in an.

Operator: So as you think about that, those agreements are typically good for one year for 12 months. And so we'll work through around a quarter of that business each quarter, if that makes sense. C. You potentially could continue to see accelerating price for a couple more quarters. Yeah, I think that's fair that prices will always be increasing as our costs go up. The cost of doing business goes up, so yeah, I would expect that to continue. Okay, thanks for the time. Thank you.

Speaker 15: you know, in an environment like that, we know we have a lot of

<unk> like that we know we have a lot of other innovations in tech opportunities for improvement you know I'm I'm excited about our future and we're very focused on on getting even better and.

Speaker 15: other innovations and tech opportunities for improvement. You know, I'm excited about our future and we're very focused on getting even better.

Speaker 16: And, you know, I just want you to hopefully see that with the execution of our team in this quarter. Got it. Yep, absolutely. Crystal here. Thank you.

I just want you to to hopefully see that with the execution of our team in this quarter.

Yeah.

Got it yep, absolutely crystal clear thank you.

Brian I think we've got time for one more question.

Tom Wadewitz: Our next question comes from Jordan Alliger, with Goldman Sachs. Please proceed. Hi, morning. So I wanted to discuss morning that sort of freight redistribution. What I mean is, do you think you could see some additional share opportunities in the quarters ahead, perhaps, you know, some of your peers or competitors out there, maybe took on too much, perhaps struggling with service. I mean, does that pose opportunity for you? Thanks. Sure, yeah, I think that definitely does pose an opportunity.

Speaker 11: Our next question comes from Bruce Chan with Diffle. Please proceed. Hey, good morning team. This is Andrew Cox on for Bruce. Thanks for taking my questions. We just want to tell you one.

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

Hey, Good morning team. This is Andrew <unk> on for Bruce Thanks for taking my questions. Andrew We just wanted to.

One.

Speaker 17: Hey, guys. I wanted to ask about how you guys are thinking about the portfolio of businesses and services. What still might be missing from the portfolio and where do you guys see opportunities to add services or breadth? And should we expect the current revenue mix between asset and asset light to hold for the next few years, or are you expecting some sort of change? Thank you.

Hey, guys wanted to ask about how you guys are thinking about the portfolio of businesses and services, what what's still might be missing from the from the portfolio and where do you guys see opportunities to to add services or breadth and should we expect the current revenue mix between asset and asset light to hold for the next few years or are you expecting some sort of change. Thank you.

Tom Wadewitz: I don't know that I'm seeing a big issue with service in the marketplace, necessarily. I think the freight has landed with the carriers that it will immediately following the disruption. Now shippers and carriers are working through each of those deals to make sure the carriers are making sure that that business fits in their network well and it's priced appropriately in the shippers are making sure that they're getting the service and the price that makes sense for their business.

Andrew This is Dennis.

Speaker 11: Andrew, this is this. Yeah, great question. We really like the mix of capabilities that we have right now.

Good question.

We really like the mix of capabilities that we have right now I mean, I think we've talked in previous quarters about.

Speaker 11: I think we've talked in previous quarters about, and talked on this call about our managed business and really leaning into that, we expect growth out of truck load and certainly growth out of asset based as well.

And talked on this call about our managed business and really leaning into that.

Expect growth out of truckload and certainly growth out of asset base as well.

Tom Wadewitz: But I think that's the case by case basis that that shippers and carriers will continue to work through, make sure that they have the right relationships. Yeah, we're also seeing there's an interest in diversifying the carrier portfolio of shippers, which I think positions that's really well with our managed solutions that we're not just an asset based player. If they have issues with, you know, full sourcing with one carrier that leads really well into our managed solutions hands.

Speaker 11: So we like the mix that we bring to customers today, and certainly investments in those areas are where we're focused. And then your other question about how we should expect the mix to evolve over time.

So we like the mix that we bring to customers today.

And certainly.

<unk> in those areas are where we're focused.

And then your other question about how we should expect the mix to evolve over time.

Speaker 11: We expect that mix really over a long period of time to look more like our customers spend. And so when you think about the size of these markets and how customers spend on freight.

We expect that mix really over a long period of time to look more like our customers spend.

Tom Wadewitz: Okay, and then just follow up to some like freight characteristics mix. Obviously, weight per shipment right now is impacted by, you know, certain factors as you transition your business to the square LPL. Can you maybe talk a little about weight per shipment trends as you look ahead into next year? Does that start to normalize or rebalance? Thanks. Yeah, so, you know, that's a good question. You know, I do think that there are, you know, just some dynamics like Christopher said, you know, on the dynamic side, you know, we definitely target, you know, freight based on certain characteristics and how it works best from a profitability standpoint.

When you think about the size of these markets and how how customers spend on freight and transportation.

Speaker 11: transportation, we expect that, you know, we're going to continue to grow the mix toward that asset light business, even as asset based growth.

We expect that we're going to continue to grow the mix towards that asset light business, even as asset base grows so.

Speaker 11: So that's what I would say about, happy about the capability set we have. And then we expect on a long trajectory, really, to start looking more, more like the market spend.

That's that's what I would say about you happy about the capability set we have and then we expect on a long trajectory really start looking more and more like the market spend.

Alright, Thank you guys congrats again.

Speaker 2: Thank you. Okay. Well, thank you. I think this concludes our call. We appreciate you joining us. Thank you very much.

Thank you thanks, Craig well. Thank you I think this concludes our call. We appreciate you joining us thank you very much.

Tom Wadewitz: So, you know, there has been a little bit of an impact on the way, just as we transition a little bit in our mix. And then there's probably just a little bit of a, you know, broader, you know, macro backdrop, you know, as again, there's been a little bit of wheat mean and manufacturing. And we've been going through these talking that probably contributes just broadly to some overall declines on weight. You know, Christopher, I don't know if there'd be anything else that you'd add on those drivers.

Speaker 1: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day everyone.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.

Have a great day everyone.

Uh huh.

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Yes.

Tom Wadewitz: Yeah, and that dynamic business, but we talked about tends to be larger heavier freight and such your mix changes that transition from the heavier stuff to the wider core stuff will have an impact on our weight per shipment pulling it down. Thank you. Thanks.

Right.

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Okay.

Okay.

Okay.

Uh huh.

Jeff Kaufman: Our next question comes from Jeff Kaufman with vertical research partners. Please proceed. Thank you very much. And congratulations on a very solid quarter. A couple of questions. Just one clarification on the Tom water, which question. I think what Tom was going after was, you know, the trend in July, August, September and the asset light business was shipments per day up about three to four percent and suddenly in October, that drops the down six. And the answer was, oh, we'll be stocking funding. So things are getting better, but it doesn't seem to explain that big drop from September to October.

Okay.

Yes.

So.

Uh huh.

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Okay.

[music].

Okay.

Okay.

[music].

Uh huh.

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Okay.

Okay.

Jeff Kaufman: So I guess I was just wondering, because that surprised me a little bit, is this a function of the restructuring that you were doing on the asset light side. So this is really our go forward rate is October a bit of an anomaly. And we probably shouldn't read that way on on fourth quarter or was there a material is step down in the asset light market that caused October to be what it was.

Jeff Kaufman: Well, I mean, again, you know, for us, I don't know that I would read too much into it in terms of, you know, maybe where we're headed in future quarters, we, you know, we still see a tremendous opportunity where we're connecting well with customers, the service resonates well. And so we're, we see opportunities to continue to grow, but at the same time, you know, we feel like we're at the near the bottom or at the bottom of the kind of pricing market.

Jeff Kaufman: And so, you know, we're being careful about, you know, what we're doing in bids and that type of thing. And I think, you know, you could see that kind of show up in October. But, you know, we, we feel like that's going to turn. It's going to come back and we'll be in a better, you know, in a better opportunity to grow and add volume. So, I don't see that as a trend that that will continue.

Jeff Kaufman: But, you know, we've got to, we've got to work, you know, within the given market. And so that's, that's kind of how we're thinking about it going forward. We've also, you know, continue to see growth in the other areas and asset life. You know, we're seeing, you know, manage it in some of our other services. You know, we're starting to add, you know, more volume at a higher rate. So there's some good things going on across asset life.

Jeff Kaufman: But, again, for me, I want to make sure that we, we're just making good decisions about price and how we think about the business that we're bringing on. And you can see a little bit of that in October. One thing to take note of is the managed part of that that you're talking about. We don't reflect that in the shipment count that disclosed. And there is momentum. There is momentum there. And we reference that we do that just for clarity around the shipment level.

Jeff Kaufman: So primarily what you're seeing when you see that statistic is truckload and to some extent the expedite trends, which, you know, right now are very challenging. And you know, the point that I think Stevens making is that we're a little bit more focused on making sure that these customers that we're doing business with over the little bit longer term here are right for us, we're right for them. And, you know, there's value in the relationship. And, you know, that doesn't speak to the opportunity being less at all because we have robust opportunities across all of our solutions. And we're excited about that.

Judy Mcreynolds: Judy, thank you. And that gives me a lot more clarity. So appreciate that.

Jeff Kaufman: Just one follow up on ask that light and one quick question on asset based. So the OR as we measure it. And I know we can argue whether that's the best way to look at this or not is is down about 450 ish basis points year on year. And about 300 of that is explained with the purchase transportation going from 84 to 87% of revenue.

Judy Mcreynolds: So, you know, what's causing that other 150 basis points because as much as asset base was a great positive surprise in the quarter, I think asset life was a bit of a disappointment. Is it because expedited down and you do have overhead costs associated with that, what would explain that 150 ish basis point decline, not related to purchase transportation? Well, you know, I mean, I think that what we're doing is, as Steven said, just continuing to have investments in people and resources to serve that growth opportunity.

Judy Mcreynolds: And I think just, you know, as you look at the overall result, you see that now I'll say this we've addressed that some extent with some of the facility decisions that we've made and you see the impact of those. And we're continuing to look for other ways, you know, to be more efficient.

Judy Mcreynolds: One thing we haven't talked about yet on this call is just a focus on the small and medium sized business segment. We see a real opportunity there for both growth and improved margins in asset light. And we're working on that. That'll be an impact in 2024 perhaps in the second half of it. But, you know, something that's in our line of sight.

Jeff Kaufman: Okay, thank you.

Matt Beasley: And then last follow up. I know you were talking about the 500 doors by 2025 and there's a big real estate opportunity with some of these yellow properties are coming to market as we're thinking about capital spending for 2024. I know you mentioned that there was, I think it was 60 million a catch up from 22 that was in this year's number. Could we probably see a little more spend on real estate as opposed to operating equipment in 24 and I know you haven't come out with the 24 cat X, but as we're thinking about modeling.

Matt Beasley: Could we see kind of a pull back to the mid 200s normally, but maybe something closer to this year, if we add in real estate potential for next year. Yeah, so you know Jeff, certainly, you know, I think there will be over the coming months, you know, opportunities on the real estate side in the LPL space. You know, I say just generally our 2024 plan and thoughts on capital are still coming together and probably too early to give an overall picture of that at this point.

Stephanie Moore: Okay, thank you very much and congratulations. Thanks Jeff, appreciate that.

Stephanie Moore: Our next question comes from Stephanie Moore with Jeffries, please proceed. Hi, good morning and congrats on the good quarter. Good morning. Thank you. You're welcome. So I think, you know, I think you guys do a really good job of kind of managing your shipments throughout the cycle, you know, you obviously talk a lot about the usage of dynamic LTL freight. Can you talk maybe about what you're thinking regarding a normalized shipments per day and then do you think it's, do you think three key represent kind of an optimal mix for you guys or do you think there's more to do here, given the disruption in the market.

Stephanie Moore: Yes, Stephanie, this is Chris from off start. I think I'll reference the maybe near term. I think that that's some longer term plans you could speak to, but on the on the near term right now, we're targeting around 20,500 shipments per day on a daily basis. But that varies like again day to day week to week based on the opportunities that are in our pipeline and what the current past situation is.

Stephanie Moore: Beth, did you want to speak to the long term? Yeah, I would just say we're constantly trying to optimize our mix, but also leave potential for growth. So we're open to that growth and we're investing in that growth. When you think about the people, the facilities, we talked about the efficiency measures that we've taken. That's really all the position us for long term growth. So we feel like we'll continue to do that as long as the opportunities are there and profitable for us.

Stephanie Moore: Got it. And maybe just as a follow up and I'm kind of taking a step back here, it does seem that this quarter, you know, demonstrates you guys really kind of on firing and all cylinders, whether it's the mix, you know, you have. Good price and coming in you noted, obviously you already have this mature terminal network and then kind of the last point we clearly can see the lot of these productivity actions are kind of.

Stephanie Moore: Coming through very nicely while all, you know, I think we all can agree to still a pretty weak freight environment. So all those things considered do you think you can deliver kind of a sustainable eight handle or going forward just based on all these factors. Yeah, I mean, Stephanie, I think that's certainly what we're targeting. I think one of the things that's interesting about this environment is that if you look at the underlying macro weakness, you can compare it back to some pretty rough periods.

Stephanie Moore: You know, we hear comparisons back to 09, maybe even in the spring of 2020. And you know, we can see that through some of the other solutions as well as the asset base. But the unique and really helpful opportunity that we have is to address this disruption with our customers that resulted from the yellow bankruptcy and other things that have gone on in the marketplace. And, you know, so I feel like that it's, it's not only dealing with the, you know, the macro weakness, but seizing, you know, on an opportunity to help our customers navigate this disruption.

Stephanie Moore: And we've highlighted this. Some of our prepared comments, but I really want to highlight this for you is just the ability to say yes to a customer. And it might be business that runs through the asset base network, but it could also be, you know, a better fit for managed that runs with, you know, other LTO carrier partners or truck load optimization work that we're doing. And it's just a good model in a period of disruption, which seems to be happening a lot more often.

Stephanie Moore: So if we navigate all of that well, we're in the 80s, you know, in an environment like that, we know we have a lot of other innovations and tech opportunities for improvement. You know, I'm excited about our future and we're very focused on getting even better. And, you know, I just want you to hopefully see that with the execution of our team in this quarter. Got it. Yep. Absolutely.

Operator: Crystal here. Thank you.

Bruce Chan: Frank, I think we've got time for one more question. Our next question comes from Bruce Chan with Diffle. Please proceed.

Andrew Cox: Hey, good morning, team. This is Andrew Cox on for Bruce. Thanks for taking my questions. We just want to ask about how you guys are thinking about the portfolio of businesses and services. What's still might be missing from the portfolio? And where do you guys see opportunities to add services or press and should we expect the current revenue mix between asset and asset light to hold for the next few years? Are you expecting some sort of change? Thank you.

Christopher Adkins: Andrew, this is this. Yeah, good question. We really like the mix of capabilities that we have right now. I mean, I think we've talked in in previous quarters about. And talked on this call about our managed business and really leaning into that we expect growth out of truck load and certainly growth out of asset base as well. So we like the mix that we bring to customers today. And certainly, you know, investments in those areas are where we're focused.

Christopher Adkins: And then, you know, your other question about how we should expect the mix to evolve over time. You know, we expect that mix really over a long period of time to look more like our customers spend. And so when you think about the size of these markets and how how customers spend on freight and transportation. We expect that, you know, we're going to continue to grow the mix toward that asset light business, even as asset based grows. So that's what I would say about, you know, happy about the capability set we have. And then, you know, we expect on a long trajectory. We really start looking more and more like the markets.

Andrew Cox: Thank you guys, congrats again. Thank you. Well, thank you.

Operator: I think this concludes our call. We appreciate you joining us. Thank you very much.