Q2 2024 ArcBest Corp Earnings Call

Thank you for standing by. My name is Danica and I will be your conference operator today. At this time, I would like to welcome everyone to the ArcBest second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Later today.

Operator: At this time, I would like to welcome everyone to the ArcBest second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the ArcBest second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. You would like to ask a question during this time. Simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Amy Mendenhall: I would now like to turn the call over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Amy Mendenhall: I would now like to turn the call over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Please go ahead.

Amy Mendenhall: Good morning. I'm pleased to be here today with Judy McReynolds, our Chairman and CEO, Seth Runser, our President, and Matt Beasley, Chief Financial Officer. We also have several other members of our executive leadership team available for the Q&A session.

Amy Mendenhall: Good morning. I'm pleased to be here today with Judy McReynolds, our Chairman and CEO, Seth Runser, our President, and Matt Beasley, our Chief Financial Officer. We also have several other members of our executive leadership team available for the Q&A session. Before we begin, please note that some of the comments we'll make today will be forward-looking statements that are subject to risks and uncertainties, which are described in the forward-looking section of our earnings press release and SEC filing.

Amy Mendenhall: Good morning. I'm pleased to be here today with Judy McReynolds, our Chairman and CEO , Seth Runser, our President, and Matt Beasley, Chief Financial Officer.

Speaker Change: We also have several other members of our executive leadership team available for the Q&A session.

Amy Mendenhall: Before we begin, please note that some of the comments we'll make today will be forward-looking statements that are subject to risks and uncertainties, which are described in the forward-looking section of our earnings press release and SEC filing. To provide meaningful comparisons, we will discuss certain non-GAAP financial measures that are outlined and described in our earnings release. Reconciliation of the gap to non-GAAP measures are also provided in the additional information section of the presentation slides. You can find the slides on our website at arcb.com in Exhibit 99.3 of the 8-K filed early, earliest morning, or you can follow along on the webcast.

Speaker Change: Before we begin, please note that some of the comments we'll make today will be forward-looking statements that are subject to risks and uncertainties, which are described in the forward-looking section of our earnings press release and SEC filings.

Amy Mendenhall: To provide meaningful comparisons, we will discuss certain non-GAAP financial measures that are outlined and described in our earnings release. Reconciliations of the GAAP to non-GAAP measures are also provided in the Additional Information section of the presentation slides. You can find the slides on our website at arcb.com, in Exhibit 99.3 of the 8K filed early this morning, or you can follow along on the website.

To provide meaningful comparisons, we will discuss certain non-GAAP financial measures that are outlined and described in our earnings release.

Reconciliations of the GAAP to non-GAAP measures are also provided in the Additional Information section of the presentation slides.

You can find the slides on our website at arcb.com in Exhibit 99.3 of the 8K filed early this morning, or you can follow along on the webcast.

Amy Mendenhall: Before I hand the call over to Judy, I would like to thank David Humphrey for his 41 years of dedicated service to ARC Best, including 26 years leading our Investor Relations team. His contributions have been invaluable, and I am personally grateful for his support in making my transition into this role seamless. David is in the room with us today, and we will continue to work together until he retires at the end of the month.

Amy Mendenhall: Before I hand the call over to Judy, I would like to thank David Humphrey for his 41 years of dedicated service to ArcBest, including 26 years leading our investor relations team. His contributions have been invaluable, and I am personally grateful for his support in making my transition into this role seamless. David is in the room with us today, and we will continue to work together until he retires at the end of the month. I will now turn the call over to Judy.

Speaker Change: Before I hand the call over to Judy, I would like to thank David Humphrey for his 41 years of dedicated service to ArcBest, including 26 years leading our investor relations team.

Speaker Change: His contributions have been invaluable, and I am personally grateful for his support in making my transition into this role seamless. David is in the room with us today, and we will continue to work together until he retires at the end of the month. I will now turn the call over to Judy.

Judy Mcreynolds: I will now turn the call over to Judy.

Judy Mcreynolds: Thank you Amy and congratulations again, David. And good morning, everyone.

Judy Mcreynolds: Thank you, Amy, and congratulations again, David, and good morning, everyone. I'd like to begin by thanking our employees. Your tireless efforts keep the global supply chain moving, and your unwavering commitment to our customers, relentless pursuit of excellence, and adaptability in the face of constant change are truly appreciated. Despite navigating a challenging freight cycle, our focus remains on delivering for our customers while advancing our strategic priorities of growth, efficiency, and innovation. Reflecting on past freight cycles, ARC Best is in a much stronger position today thanks to our long-term thinking and discipline to execution of our strategy.

Judy: Thank you, Amy, and congratulations again, David, and good morning, everyone.

Judy: I'd like to begin by thanking our employees. Your tireless efforts keep the global supply chain moving, and your unwavering commitment to our customers, relentless pursuit of excellence, and adaptability in the face of constant change are truly appreciated.

Judy Mcreynolds: I'd like to begin by thanking our employees. Your tireless efforts keep the global supply chain moving, and your unwavering commitment to our customers, relentless pursuit of excellence, and adaptability in the face of constant change are truly appreciated. Despite navigating a challenging freight cycle, our focus remains on delivering for our customers while advancing our strategic priorities of growth, efficiency, and innovation. Reflecting on past freight cycles, ArcBest is in a much stronger position today thanks to our long-term thinking and disciplined execution of our strategy.

Speaker Change: Despite navigating a challenging freight cycle, our focus remains on delivering for our customers while advancing our strategic priorities of growth, efficiency, and innovation.

Speaker Change: Reflecting on past freight cycles, ArcBest is in a much stronger position today thanks to our long-term thinking and disciplined execution of our strategy.

Judy Mcreynolds: Seth and Matt will provide more insights into how we're investing in our people, solutions, and technology to drive results, and I'm pleased with the progress we are making. The strength of our strategy has been reaffirmed as I've spent time with our customers and listened to their needs. They seek efficiencies by leveraging trusted relationships and using multiple modes of transportation. ARC's best strategy is perfectly aligned to meet their needs, and demand for our services continues to grow. Our sales pipeline is up nearly 40% since January and continues to expand and progress into later stages. Our managed transportation solution, which helps customers optimize their supply chains, had double-digit growth in both demand and revenue.

Judy Mcreynolds: Seth and Matt will provide more insights into how we're investing in our people, solutions, and technology to drive results. And I'm pleased with the progress we are making. The strength of our strategy has been reaffirmed as I've spent time with our customers and listened to their needs. They seek efficiencies by leveraging trusted relationships and using multiple modes of transportation.

Speaker Change: Seth and Matt will provide more insights into how we're investing in our people, solutions, and technology to drive results. And I'm pleased with the progress we are making.

Speaker Change: The strength of our strategy has been reaffirmed as I've spent time with our customers and listened to their needs.

Judy: They seek efficiencies by leveraging trusted relationships and using multiple modes of transportation. ArcBest's strategy is perfectly aligned to meet their needs, and demand for our services continues to grow.

Judy Mcreynolds: ArcBest's strategy is perfectly aligned to meet their needs, and demand for our services continues to grow. Our sales pipeline is up nearly 40% since January and continues to expand and progress into later stages. Our managed transportation solution, which helps customers optimize their supply chains, had double-digit growth in both demand and revenue. Customer retention is solid. Over 80% of our revenues are from customers we've had relationships with for over 10 years.

Speaker Change: Our sales pipeline is up nearly 40% since January and continues to expand and progress into later stages.

Judy: Our Managed Transportation Solution, which helps customers optimize their supply chains, has double-digit growth in both demand and revenue.

Judy Mcreynolds: Customer retention is solid. Over 80% of our revenues are from customers we've had relationships with for over 10 years. We are trusted advisors to our customers who value our solutions and utilize our offerings to enhance their supply chains. Additionally, we are implementing programs that benefit our bottom line. In the second quarter, we saw significant efficiency improvements in our asset-based business while delivering the best on-time performance in five years. In a moment, Seth will take you through the initiatives driving these results and that will detail how they've improved our financial performance. All of this work positions ARKBest well for the eventual recovery in freight volumes.

Speaker Change: Customer retention is solid. Over 80% of our revenues are from customers we've had relationships with for over 10 years.

Judy Mcreynolds: We are trusted advisors to our customers who value our solutions and utilize our offerings to enhance their supply chain. Additionally, we are implementing programs that benefit our bottom line. In the second quarter, we saw significant efficiency improvements in our asset-based business while delivering the best on-time performance in five years.

Judy: We are trusted advisors to our customers who value our solutions and utilize our offerings to enhance their supply chains.

Judy: Additionally, we are implementing programs that benefit our bottom line. In the second quarter, we saw significant efficiency improvements in our asset-based business while delivering the best on-time performance in five years.

Judy Mcreynolds: In a moment, Seth will take you through the initiatives driving these results, and Matt will detail how they've improved our financial... All of this work positions ArcBest well for the eventual recovery in freight volume. Before I hand it over to Seth, I want to highlight our recent announcement that Seth Runser has been promoted to President of ArcBest, and Matt Godfrey will succeed him as ADF President. These promotions underscore ArcBest's deliberate focus on talent development and succession planning across our organization. Our results this quarter and the successful initiatives Seth and Matt Godfrey have led demonstrate why I'm so confident these appointments are the right steps for ArcBest. Many of you know Seth.

Judy: In a moment, Seth will take you through the initiatives driving these results, and Matt will detail how they've improved our financial performance.

Matt: All of this work positions ArcBest well for the eventual recovery in freight volumes.

Judy Mcreynolds: Before I hand it over to Seth, I want to highlight our recent announcement that Seth Runser has been promoted to President of ARKBest, and Matt Gottfried will succeed him as ADF President. These promotions underscore ARKBest's deliberate focus on talent development and succession planning across our organization. Our results this quarter and the successful initiatives Seth and Matt Gottfried have led demonstrate why I'm so confident these appointments are the right steps for ARKBest. Many of you know Seth. He has been a key leader at ADF for years, delivering eight quarters of record results and overseeing the successful renewal of our five-year Union Labor Agreement.

Judy Mcreynolds: He has been a key leader at ABF for years, delivering eight quarters of record results and overseeing the successful renewal of our five-year union labor agreement. As president, Seth has assumed responsibility for our day-to-day operations and execution of our integrated logistics solution. Our operational leaders will now report directly to him. After the impressive transformation at ABF under his leadership, we are excited for him to take on this role, where I'm confident his deep knowledge of the business and innovative spirit will help us continue improving performance for the benefit of our employees, customers, and shareholders.

Speaker Change: Before I hand it over to Seth, I want to highlight our recent announcement that Seth Runser has been promoted to president of ArcBest, and Matt Godfrey will succeed him as ADF president.

Judy: These promotions underscore ArcBest's deliberate focus on talent development and succession planning across our organization.

Judy: Our results this quarter and the successful initiatives Seth and Matt Godfrey have led demonstrate why I'm so confident these appointments are the right steps for ArcBest.

Judy: Many of you know Seth. He has been a key leader at ADF for years, delivering eight quarters of record results and overseeing the successful renewal of our five-year union labor agreement.

Judy Mcreynolds: As President, Seth has assumed responsibility for our day-to-day operations and execution of our integrated logistics solutions. Our operational leaders will now report directly to him. After the impressive transformation at ADF under his leadership, we are excited for him to take on this role where I'm confident his deep knowledge of the business and innovative spirit will help us continue improving performance for the benefits of our employees, including these customers and shareholders. I will remain CEO and chairman of the board, focused on advancing our long-term strategy, driving innovation, and further developing relationships with customers, shareholders, and employees.

Judy: As President, Seth has assumed responsibility for our day-to-day operations and execution of our integrated logistic solutions.

Judy: Our operational leaders will now report directly to him.

Speaker Change: After the impressive transformation at ABF under his leadership, we are excited for him to take on this role where I'm confident his deep knowledge of the business

Speaker Change: and Innovative Spirit will help us continue improving performance for the benefits of our employees, customers, and shareholders.

Judy Mcreynolds: I will remain CEO and Chairman of the Board, focused on advancing our long-term strategy, driving innovation, and further developing relationships with customers, shareholders, and employees. Matt Godfrey's promotion is also special. In 2015, ArcBest started a leadership academy, and Matt was one of the first to graduate from it. His success is a clear example of our commitment to investing in our people, and his achievements underscore the power and effectiveness of our development program.

Speaker Change: I will remain CEO and Chairman of the Board, focused on advancing our long-term strategy, driving innovation, and further developing relationships with customers, shareholders, and employees.

Judy Mcreynolds: Matt Gottfried's promotion is all subspecial to me. In 2015, ARKBest started a leadership academy, and Matt was one of the first to graduate from it. His success is a clear example of our commitment to investing in our people, and his achievements underscore the power and effectiveness of our development program. He has been working closely with Seth for many years at ADF, and his spearheaded ADF's real estate plans, including long-term facility growth and enhancement plans and transformational projects that enhance operations and drive efficiencies. I have no doubt he will continue building on Seth's progress, and he is the right person to lead ADF going forward.

Judy: Matt Godfrey's promotion is also special to me.

Speaker Change: In 2015, ArcBest started a leadership academy, and Matt was one of the first to graduate from it.

Judy: His success is a clear example of our commitment to investing in our people, and his achievements underscore the power and effectiveness of our development program.

Judy Mcreynolds: He has been working closely with Seth for many years at ABF and has spearheaded ABF's real estate plans, including long-term facility growth and enhancement plans and transformational projects that enhance operations and drive efficiency. I have no doubt he will continue building on Seth's progress, and he is the right person to lead ABS going forward. Now, I'll turn it over to our new president of ArcBest, Seth Runser.

Speaker Change: He has been working closely with Seth for many years at ABF, and has spearheaded ABF's real estate plans, including long-term facility growth and enhancement plans, and transformational projects that enhance operations and drive efficiencies.

Speaker Change: I have no doubt he will continue building on Seth's progress, and he is the right person to lead ABS going forward. And now, I'll turn it over to our new president of ArcBest, Seth Runser.

Seth Runser: And now I'll turn it over to our new president of ARKBest, Seth Run.

Seth Runser: Thank you, Judy, and good morning. I want to start by expressing my gratitude for Judy's vision and leadership. I'm excited to serve our customers and employees in this new role, and I'm fully committed to ArcBest's strategy of accelerating growth, increasing efficiency, and driving innovation. ArcBest's innovative mindset and integrated solutions uniquely position us to help customers solve their most complex logistics challenges. And as Judy mentioned, our value proposition continues to resonate with customers.

Seth Runser: Thank you, Judy, and good morning. I want to start by expressing my gratitude for Judy's vision and leadership. I'm excited to serve our customers and employees in this new role and am fully committed to ArcBest's strategy of accelerating growth, increasing efficiency, and driving innovation. ArcBest's innovative mindset and integrated solutions uniquely position us to help customers solve their most complex logistics challenges. And as Judy mentioned, our value proposition continues to resonate with customers. Now, let's discuss some of the key initiatives across ArcBest that are driving efficiency gains and delivering results for our customers, starting with our facility.

Seth Runser: Thank you, Judy, and good morning. I want to start by expressing my gratitude for Judy's vision and leadership. I'm excited to serve our customers and employees in this new role and am fully committed to ArcBest's strategy of accelerating growth, increasing efficiency, and driving innovation.

Seth Runser: ArcBest's innovative mindset and integrated solutions uniquely position us to help customers solve their most complex logistics challenges. And as Judy mentioned, our value proposition continues to resonate with customers.

Seth Runser: Now let's discuss some of the key initiatives across ArcBest that are driving efficiency gains and delivering results for our customers. Starting with our facility plans, we are progressing well, strategically adding capacity, increasing efficiency, and improving service. Our newest facility opened in June in Metro Atlanta, adding city capacity in key markets and freeing up transfer capacity in our network. As expected, we're already seeing productivity improvements up 16% in these locations. We added four facilities from the yellow auction as replacements for current facilities; two of those opened last month, and we expect the other two to open this quarter after renovations are complete.

Judy: Now, let's discuss some of the key initiatives across ArcBest that are driving efficiency gains and delivering results for our customers.

Seth Runser: We are progressing well, strategically adding capacity, increasing efficiency, and improving service. Our newest facility opened in June in Metro Atlanta, adding city capacity in key markets and freeing up transfer capacity in our network. As expected, we're already seeing productivity improvements of 16% in these locations. We added four facilities from the Yellow Auction as replacements for existing facilities. Two of those opened last month, and we expect the other two to open this quarter after renovations are complete.

Judy: starting with our facility plans.

Judy: We are progressing well, strategically adding capacity, increasing efficiency, and improving service.

Judy: Our newest facility opened in June in Metro Atlanta, adding city capacity in key markets and freeing up transfer capacity in our network.

Judy: As expected, we're already seeing productivity improvements up 16% in these locations.

Judy: We added four facilities from the yellow auction as replacements for current facilities.

Judy: Two of those opened last month and we expect the other two to open this quarter after renovations are complete.

Seth Runser: Additionally, in the fourth quarter, we expect to add 66 more doors in Chicago, with another 40 planned in San Bernardino, California, in early 2025. In addition to adding doors, we see a direct line of sight for these projects to significantly improve productivity. You have also heard us speak about our operation experts deployed to our largest facilities, focusing on continual improvement and operational excellence. This team's work has yielded cost savings nearly four times what was projected, and they will continue to move throughout the ABF network this year and into 2025.

Seth Runser: Additionally, in the fourth quarter, we expect to add 66 more doors in Chicago, with another 40 planned in San Bernardino, California, in early 2025. In addition to adding doors, we see a direct line of sight for these projects to significantly improve productivity. You have also heard us speak about our operation experts deployed to our largest facilities, focusing on continual improvement and operational excellence. This team's work has yield cost savings nearly four times what was projected, and they will continue to move throughout the ABF network this year and into 2025.

Judy: Additionally, in the fourth quarter, we expect to add 66 more doors in Chicago, with another 40 planned in San Bernardino, California, in early 2025. In addition to adding doors, we see a direct line of sight for these projects to significantly improve productivity.

Judy: You have also heard us speak about our operation experts deployed to our largest facilities, focusing on continual improvement and operational excellence.

Judy: This team's work has yielded cost savings nearly four times what was projected, and they will continue to move throughout the ABF network this year and into 2025.

Seth Runser: We are also advancing our innovation and technology projects. We have numerous active projects and a flow of new pilots in progress. Our city route optimization project, which uses AI to map our routes, continues to deliver significant efficiency gains, and we're expanding this project into additional phases. Our investments in innovation are paying off with direct results and value creation for our customers and shareholders.

Seth Runser: We are also advancing our innovation and technology projects. We have numerous active projects and a flow of new pilots in progress. Our city route optimization project, which uses AI to map our routes, continues to deliver significant efficiency gains, and we're expanding this project into additional phases.

Judy: We are also advancing our innovation and technology projects. We have numerous active projects and a flow of new pilots in progress.

Judy: Our City Route Optimization Project, which uses AI to map our routes, continues to deliver significant efficiency gains, and we're expanding this project into additional phases.

Seth Runser: Our investments in innovation are paying off with direct results and value creation for our customers and shareholders. Our customers tell us they need better visibility into their supply chain. As technology has evolved, we're now able to do things that weren't possible just even a few years ago. For example, over the last several months, we've made enhancements to shipment visibility, providing customers with more data about their shipments and expanding visibility to even before the shipment has been picked up. With our large and growing database of shipment data, beginning this month, customers will receive more accurate LTL shipment arrival information.

Judy: Our investments in innovation are paying off with direct results and value creation for our customers and shareholders.

Seth Runser: Our customers tell us they need better visibility into their supply chains. As technology has evolved, we're now able to do things that weren't possible just even a few years ago. Over the last several months, we've made enhancements to ship and visibility, providing customers with more data about their shipments and expanding visibility to even before the ship has been picked up. With our large and growing database of shipment data beginning this month, customers will receive more accurate LTL shipment arrival information. This is another example of how our technology investments are driving real improvements in our service and the value we provide our customers.

Judy: Our customers tell us they need better visibility into their supply chains.

Judy: As technology has evolved, we're now able to do things that weren't possible just even a few years ago.

Judy: Over the last several months, we've made enhancements to shipment visibility, providing customers with more data about their shipments, and expanding visibility to even before the shipment has been picked up.

Judy: With our large and growing database of shipment data, beginning this month, customers will receive more accurate LTL shipment arrival information.

Seth Runser: This is another example of how our technology investments are driving real improvements in our service and the value we provide our customers and AssetLite. Our digital quoting and carrier portal tools are gaining momentum. Shipment volumes have increased, and we have maintained our focus on controlling costs. As a result, employee productivity has improved over 30% year over year. We will continue to leverage technology for future productivity gains. In the third quarter, we will implement carrier payment and invoice auditing solutions from TriumphPay.

Judy: This is another example of how our technology investments are driving real improvements in our service and the value we provide our customers.

Seth Runser: In asset light, our digital coding and carrier portal tools are gaining momentum. Ship and volumes have been increased, and we have maintained our focus on controlling cost. As a result, employee productivity improved over 30% year-over-year. We will continue to leverage technology for future productivity gains. In the third quarter, we will implement carrier payment and invoice auditing solutions from Triumphs. Pay. By leveraging this technology, we expect to reduce manual tests and improve efficiency, which will allow us to grow with fewer added costs, reduce fraud potential, and improve our carrier partner experience.

Judy: In asset light, our digital quoting and carrier portal tools are gaining momentum, shipment volumes have increased, and we have maintained our focus on controlling cost.

Judy: As a result, employee productivity improved over 30% year-over-year. We will continue to leverage technology for future productivity gains.

Judy: In the third quarter, we will implement carrier payment and invoice auditing solutions from TriumphPay.

Seth Runser: By leveraging this technology, we expect to reduce manual tasks, improve efficiency, which will allow us to grow with fewer added costs, reduce fraud potential, and improve our carrier partner experience. We believe that innovation will continue to transform our industry, and ArcBest is committed to investing in innovation to drive future growth and create value. Now, I'll turn it over to Matt to go through the financials in greater detail.

Judy: By leveraging this technology, we expect to reduce manual tasks, improve efficiency, which will allow us to grow with fewer added costs, reduce fraud potential, and improve our carrier partner experience.

Seth Runser: We believe that innovation will continue to transform our industry, and ArcBest is committed to investing in innovation to drive future growth and create value.

Judy: We believe that innovation will continue to transform our industry, and ArcBest is committed to investing in innovation to drive future growth and create value. Now, I'll turn it over to Matt to go through the financials in greater detail.

Matt Beasley: Now, I'll turn it over to Matt to go through the financials in greater detail.

Matt Beasley: Thank you, Seth, and good morning. I'm pleased to report that ArcBest delivered solid financial results for the second quarter of 2024 despite the softer market. On a consolidated level, second quarter revenue was $1.1 billion, a slight 2% decrease versus last year. However, our non-GAAP operating income from continuing operations rose by 28% to $64 million. Adjusted earnings per share increased to $1.98, up from $1.54 in the second quarter of 2023.

Matt Beasley: Thank you, Seth, and good morning. I'm pleased to report that ArcBest delivered solid financial results for the second quarter of 2024 despite the software market environment. On a consolidated level, second quarter revenue was $1.1 billion, a slight 2% decrease versus last year. However, our non-GAAP operating income from continuing operations rose by 28% to $64 million. Adjusted earnings per share increased to $1.98, but from $1.54 in the second quarter of 2023. Despite lower revenue and additional costs related to the new labor contract, our asset-based business saw a $21 million increase in non-GAAP operating income compared to the same period last year.

Matt Godfrey: Thank you, Seth, and good morning. I'm pleased to report that ArcBest delivered solid financial results for the second quarter of 2024, despite the softer market environment.

Matt Godfrey: On a consolidated level, second quarter revenue was $1.1 billion, a slight 2% decrease versus last year. However, our non-GAAP operating income from continuing operations rose by 28% to $64 million.

Matt Godfrey: Adjusted earnings per share increased to $1.98.

Matt Godfrey: up from $1.54 in the second quarter of 2023.

Matt Beasley: Despite lower revenue and additional costs related to the new labor contract, our asset-based business saw a $21 million increase in non-GAAP operating income compared to the same period last year. Our asset-light business experienced a $9 million decline in non-GAAP operating income, primarily due to current truckload market conditions. Now, let's talk about our two segments and more.

Matt Godfrey: Despite lower revenue and additional costs related to the new labor contract, our asset-based business saw a $21 million increase in non-GAAP operating income compared to the same period last year.

Matt Beasley: Our asset-life business experienced a $9 million decline in non-GAAP operating income primarily due to current workload market conditions.

Matt Godfrey: Our asset-light business experienced a $9 million decline in non-GAAP operating income, primarily due to current truckload market conditions.

Matt Beasley: Now, let's talk about our two segments in more detail. Starting with our asset-based business, second quarter revenue was $713 million, a per day decrease of 2%. The segment's non-GAAP operating ratio was 89.8%, an improvement of 300 basis points compared to the second quarter of last year, and an improvement of 220 basis points from the first quarter of this year. This improvement led to the second best asset-based operating income for a second quarter in our history. Second quarter tonnage per day decreased by 20%, and daily shipments were 5% below prior year levels. To maintain consistent capacity and labor levels in our network during the first half of 2023, we took on more transactional business.

Matt Godfrey: Now, let's talk about our two segments in more detail.

Matt Beasley: Starting with our asset-based business, second quarter revenue was $713 million, a per day decrease of 2%. The segment's non-gap operating ratio was 89.8%, an improvement of 300 basis points compared to the second quarter of last year and an improvement of 220 basis points from the first quarter of this year. This improvement led to the second-best asset-based operating ratio for a second quarter in our history.

Matt Godfrey: Starting with our asset-based business, second quarter revenue, $713 million, a per day decrease of 2%.

Matt Godfrey: The segment's non-GAAP operating ratio was 89.8%, an improvement of 300 basis points compared to the second quarter of last year, and an improvement of 220 basis points from the first quarter of this year. This improvement led to the second-best asset-based operating income for a second quarter in our history.

Matt Beasley: Second quarter tonnage per day decreased by 20%, and daily shipments were 5% below the prior year level to maintain consistent capacity and labor levels in our network during the first half of 2020. We took on more transactional... As market conditions improved in the second half of the year, we reduced transactional shipments in favor of core shipments, resulting in 14 percent growth in core LTL shipments and 11 percent increase in core LTL tonnage on a year-over-year basis for the second quarter. This shift contributed to improved productivity and better financial results.

Matt Godfrey: Second quarter tonnage per day decreased by 20 percent.

Matt Godfrey: and daily shipments were 5% below prior year levels.

Matt Godfrey: To maintain consistent capacity and labor levels in our network during the first half of 2023, we took on more transactional business.

Matt Beasley: As market conditions improved in the second half of the year, we reduced transactional shipments in favor of core shipments, resulting in 14% growth in core LTL shipments and 11% increase in core LTL tonnage on a year-over-year basis for the second quarter. This shift contributed to improved productivity and better financial results. Year over year, build revenue per 100 weight increased by over 23% in the second quarter, driven by strategic price increases on transactional business and a higher proportion of core business, which has a higher revenue per 100 weight. We secured an average increase of 5.1% of our customer contract renewals and deferred pricing agreements during the second quarter, demonstrating our continued pricing disciplines.

Matt Godfrey: As market conditions improved in the second half of the year, we reduced transactional shipments in favor of core shipments, resulting in 14% growth in core LTL shipments and 11% increase in core LTL tonnage on a year-over-year basis for the second quarter.

Matt Godfrey: This shift contributed to improved productivity and better financial results.

Matt Beasley: Year-over-year billed revenue per hundredweight increased by over 23% in the second quarter, driven by strategic price increases on transactional and a higher proportion of core business, which has a higher revenue per hundred. We secured an average increase of 5.1% on our customer contract renewals and deferred pricing agreements during the second quarter, demonstrating our continued price leadership. By optimizing our freight mix, improving productivity, and lowering costs, we offset higher union contract costs, achieving higher operating income despite lower revenue. On page 11 of our conference call slide deck, we illustrate the significant impact of these actions on our second quarter results.

Matt Godfrey: Year-over-year billed revenue per hundredweight increased by over 23% in the second quarter, driven by strategic price increases on transactional business and a higher proportion of core business, which has a higher revenue per hundredweight.

Matt Godfrey: We secured an average increase of 5.1% on our customer contract renewals and deferred pricing agreements during the second quarter, demonstrating our continued pricing disciplines.

Matt Beasley: By optimizing our freight mix, improving productivity, and lowering costs, we offset higher union contract costs, achieving higher operating income despite lower revenue. On page 11 of our conference call slide deck, we illustrate the significant impact of these actions on our second quarter results. Sequentially, compared to the first quarter of 2024, the segment saw low to mid single-digit percentage improvements in revenue, tons, and shipments per day, revenue per 100 weight, and revenue per ship. We are now one year beyond several major events, including a competitor's bankruptcy, the start of our new labor contract, and the implementation of our freight mix management and cost savings initiatives.

Matt Godfrey: By optimizing our freight mix, improving productivity, and lowering costs, we offset higher union contract costs, achieving higher operating income despite lower revenue.

Matt Godfrey: On page 11 of our conference call slide deck, we illustrate the significant impact of these actions on our second quarter results.

Matt Beasley: Compared to the first quarter of 2024, the segment saw low- to mid-single-digit percentage improvements in revenue, tons, and shipments per day, revenue per hundredweight, and revenue per shipment. We are now one year beyond several major events, including a competitor's bankruptcy, the start of our new labor contract, and the implementation of our freight mix management and cost savings initiatives. For the trailing 12 months ending June 30th, 2024, our non-gap operating ratio was 89.5%, an improvement of 840 basis points since 2016, demonstrating the effectiveness of our strategy. The impact of last year's market disruptions began in mid-July 2023 and peaked from August through October.

Matt Godfrey: Sequentially, compared to the first quarter of 2024, the segment saw low to mid single-digit percentage improvements in revenue, tons, and shipments per day, revenue per hundredweight, and revenue per shipment.

Matt Godfrey: We are now one year beyond several major events, including a competitor's bankruptcy, the start of our new labor contract, and the implementation of our freight mix management and cost savings initiatives.

Matt Beasley: For the trailing 12 months ending June 30, 2024, our non-GAAP operating ratio was 89.5%, an improvement of 840 basis points since 2016, demonstrating the effectiveness of our strategy. The impact from last year's market disruptions began in mid-July 2023, and peaked from August through October. Based on preliminary results, total revenue per day and shipments per day both increase 1% year-over-year in July. We anticipate that daily tonnage levels for third quarter 2024 will be below the prior year, as some of the core business increase that began in July 2023 was project-related, and some of the increased business has shifted to other providers over the past year.

Matt Godfrey: For the trailing 12 months ending June 30, 2024, our non-gap operating ratio was 89.5 percent, an improvement of 840 basis points since 2016, demonstrating the effectiveness of our strategy.

Matt Godfrey: The impact from last year's market disruptions began in mid-July 2023 and peaked from August through October .

Matt Beasley: Based on preliminary results, total revenue per day and shipments per day both increased 1% year over year in July. However, we anticipate that daily tonnage levels for third quarter 2024 will be below the prior year, as some of the core business increase that began in July 2023 was project-related, and some of the increased business has shifted to other providers over the past year. Pricing remains rational, and the strength of our core business allows us to optimize spot prices for transactional business. On July 1st, 2024, the contractual wage rate under our union contract increased by $1.5, and the Health, Welfare, and Pension Benefit Rate increased on August 1 for a combined rate increase of approximately 2.7%.

Matt Godfrey: Based on preliminary results, total revenue per day and shipments per day both increased 1% year-over-year in July .

Matt Godfrey: We anticipate that daily tonnage levels for third quarter 2024 will be below the prior year as some of the core business increase that began in July 2023 was project related and some of the increased business has shifted to other providers over the past year.

Matt Beasley: Pricing remains rational, and the strength of our core business allows us to optimize spot prices for transactional business. On July 1, 2024, the contractual wage rate under our union contract increased, and the health, welfare, and pension benefit rate increased on August 1, for a combined rate increase of approximately 2.7%. Historically, the average sequential change in the asset-based operating ratio from the second quarter to the third quarter has ranged from flat to 100 basis point improvement. With the current market backdrop and cost outlook for the third quarter, including the previously mentioned contractual wage and benefit increase, we expect the third quarter 2024 operating ratio to be consistent with second quarter 2024.

Matt Godfrey: Pricing remains rational and the strength of our core business allows us to optimize spot prices for transactional business.

Matt Godfrey: On July 1st, 2024, the contractual wage rate under our union contract increased, and the health, welfare, and pension benefit rate increased on August 1st for a combined rate increase of approximately 2.7%.

Matt Beasley: Historically, the average sequential change in the asset-based operating ratio from the second quarter to the third quarter has ranged from flat to 100 basis points of improvement. With the current market backdrop and cost outlook for the third quarter, including the previously mentioned contractual wage and benefit increase, we expect the third quarter 2024 operating ratio to be consistent with the second quarter 2024. Moving on to our Asset Light segment, second quarter revenue was $396 million, a daily decrease of approximately 4% year-over-year.

Matt Godfrey: Historically, the average sequential change in the asset-based operating ratio from the second quarter to the third quarter has ranged from flat to 100 basis point improvement.

Matt Godfrey: With the current market backdrop and cost outlook for the third quarter, including the previously mentioned contractual wage and benefit increase, we expect the third quarter 2024 operating ratio to be consistent with second quarter 2024.

Matt Beasley: Moving on to our asset light segment, second quarter revenue was $396 million, a daily decrease of approximately 4% year-over-year. While shipments per day increased 13%, revenue per shipment decreased by 15% due to the soft freight market and growth in our managed business, which has smaller shipment sizes and lower revenue per shipment levels. The non-gap operating loss of $2.5 million for the quarter was largely due to lower margins in the current truckload market. Compared to the first quarter of 2024, revenue per day was flat, but margins improved due to lower purchase transportation costs, which increased in January due to winter weather.

Matt Godfrey: Moving on to our Asset Light segment, second quarter revenue was $396 million, a daily decrease of approximately 4% year-over-year.

Matt Beasley: While shipments per day increased 13%, revenue per shipment decreased by 15% due to the soft rate market and growth in our managed business, which has smaller shipment sizes and lower revenue per shipment levels. The non-GAAP operating loss of $2.5 million for the quarter was largely due to lower margins in the current truckload market. Compared to the first quarter of 2024, revenue per day was flat, but margins improved due to lower purchase transportation costs, which increased in January due to winter weather. Shipments per day decreased slightly as customers using our asset-light solutions experienced lower demand in their business.

Matt Godfrey: While shipments per day increased 13%, revenue per shipment decreased by 15% due to the soft freight market and growth in our managed business, which has smaller shipment sizes and lower revenue per shipment levels.

Matt Godfrey: The non-GAAP operating loss of $2.5 million for the quarter was largely due to lower margins in the current truckload market.

Matt Godfrey: Compared to the first quarter of 2024, revenue per day was flat, but margins improved due to lower purchase transportation costs, which increased in January due to winter weather.

Matt Beasley: Shipments per day decreased slightly as customers using our asset light solutions experienced lower demand in their businesses. Our asset light offerings play an integral role in our overall strategy as customers seek long-term logistics partners for all their transportation needs. Our asset light solutions also allow us to serve a much larger portion of our customer's transportation spend, and there's a tremendous market opportunity for our truckload and manage solutions. In addition, 70% of our asset light customers also use our asset-based LTL solutions. Our ability to meet our customer's needs at a price that reflects the value we offer is a key differentiator.

Matt Godfrey: Shipments per day decreased slightly as customers using our asset-light solutions experienced lower demand in their businesses.

Matt Beasley: Our AssetLite offerings play an integral role in our overall strategy as customers seek long-term logistics partners for all their transportation needs. Our asset-light solutions also allow us to serve a much larger portion of our customers' transportation needs, and there's a tremendous market opportunity for our truckload and maintenance solution. In addition, 70% of our asset-light customers also use our asset-based LTL solution.

Matt Godfrey: Our asset-like offerings play an integral role in our overall strategy as customers seek long-term logistics partners for all their transportation needs.

Matt Godfrey: Our asset light solutions also allow us to serve a much larger portion of our customers transportation spend and there's a tremendous market opportunity for our truckload and manage solutions.

Matt Godfrey: In addition, 70% of our asset-light customers also use our asset-based LTL solutions.

Matt Beasley: Our ability to meet our customers' needs at a price that reflects the value we offer is a key differentiator. Looking at preliminary results for July, revenue per day decreased 10% year-over-year due to lower revenue per shipment. Although Shipment Volumes for our Managed Solution have increased, this growth has recently moderated due to lower demand from existing customers, reflecting current macroeconomic conditions. Additionally, truckload volume has slowed as we strategically reduce less profitable freight. Purchase transportation expense as a percentage of revenue increased sequentially throughout the second quarter and into July as carrier rates rose.

Matt Godfrey: Our ability to meet our customers' needs at a price that reflects the value we offer is a key differentiator.

Matt Beasley: Looking at preliminary results for July, revenue per day decreased 10% year-over-year due to lower revenue per shipment. For shipment volumes for our managed solution have increased; this growth has recently moderated due to lower demand from existing customers, reflecting current macroeconomic conditions.

Matt Godfrey: Looking at preliminary results for July , revenue per day decreased 10% year-over-year due to lower revenue per shipment.

Matt Godfrey: Our shipment volumes for our managed solution have increased. This growth has recently moderated due to lower demand from existing customers, reflecting current macroeconomic conditions.

Matt Beasley: Actions. Additionally, truckload volume has slowed as we strategically reduce less profitable frame. Purchase transportation expense as a percentage of revenue increased sequentially throughout the second quarter and entered to July as carrier rates rose. These higher costs have reduced margins for our truckload brokerage contract business. We continue to focus on improving productivity and reducing cost per shipment. However, segment operating profit will remain impacted in the near term by current truckload brokerage market conditions. For the third quarter of 2024, we expect non-GAAP operating loss levels to be consistent with the second quarter of 2024. For the first half of 2024, we return $37 million to shareholders through share buybacks and dividends.

Matt Godfrey: Additionally, truckload volume has slowed as we strategically reduce less profitable frames.

Matt Godfrey: Purchase transportation expense as a percentage of revenue increased sequentially throughout the second quarter and into July as carrier rates rose.

Matt Beasley: These higher costs have reduced margins for our truckload brokerage contract business. We continue to focus on improving productivity and reducing cost per shipment. However, segment operating profit will remain impacted in the near term by current truckload brokerage market conditions. For the third quarter of 2024, we expect non-GAAP operating loss levels to be consistent with the second quarter of 2024.

Matt Godfrey: These higher costs have reduced margins for our truckload brokerage contract business.

Matt Godfrey: We continue to focus on improving productivity and reducing cost per shipment. However, segment operating profit will remain impacted in the near term by current truckload brokerage market conditions.

Matt Godfrey: For the third quarter of 2024, we expect non-GAAP operating loss levels to be consistent with the second quarter of 2024.

Matt Beasley: For the first half of 2024, we returned $37 million to shareholders through share buybacks and dividends. We have a $57 million net cash position and $500 million in available liquidity. Our capital expenditure plan for the year remains $325,000.

Matt Godfrey: For the first half of 2024, we return $37 million to shareholders through share buybacks and dividends.

Matt Beasley: We have a $57 million net cash position and $500 million in available liquidity. Our capital expenditure plan for the year remains in a $325 million to $375 million range. We are proud of our second quarter performance and our solid financial position. As Judy said, we continue to pursue growth, efficiency, and innovation while delivering superior service to our customers and value to our shareholders. With improvements in operating costs and productivity and continued emphasis on growth initiatives, we are well positioned for the future.

Matt Godfrey: We have a $57 million net cash position and $500 million in available liquidity.

Matt Godfrey: Our capital expenditure plan for the year remains in the $325 million to $375 million range.

Matt Beasley: The $375 million raise. We are proud of our second quarter performance and our solid financial results. As Judy said, we continue to pursue growth, efficiency, and innovation while delivering superior service to our customers and value to our shareholders. With improvements in operating costs and productivity, and continued emphasis on growth initiatives, we are well positioned for the future. Now, I'll turn the call back to Judy for some final comments. Thank you.

Matt Godfrey: We are proud of our second quarter performance and our solid financial position.

Matt Godfrey: As Judy said, we continue to pursue growth, efficiency, and innovation while delivering superior service to our customers and value to our shareholders.

Judy: With improvements in operating costs and productivity, and continued emphasis on growth initiatives, we are well positioned for the future.

Judy Mcreynolds: Now, I'll turn the call back to Judy for some final comments.

Judy Mcreynolds: Thank you, Matt. Before I wrap up, I want to highlight some of our recent achievements that reflect our commitment to excellence and sustainability. ArcBest has once again been recognized as an Inbound Logistics Green Supply Chain Partner in 2024. This honor underscores our legacy of good stewardship and our dedication to helping our customers advance their sustainability efforts. We are also proud to have been named one of the best companies to work for by U.S. News & World Report and to have been ranked as the Best Leadership Team by Comparably.

Matt Godfrey: Now, I'll turn the call back to Judy for some final comments.

Judy Mcreynolds: Thank you, Matt. Before I wrap up, I want to highlight some of our recent achievements that reflect our commitment to excellence and sustainability. Art Vest has, once again, been recognized as an inbound logistics green supply chain partner in 2024. This honor underscores our legacy of good stewardship and our dedication to helping our customers advance their sustainability efforts.

Judy: Thank you, Matt. Before I wrap up, I want to highlight some of our recent achievements that reflect our commitment to excellence and sustainability.

Judy: ArcBest has once again been recognized as an Inbound Logistics Green Supply Chain Partner in 2024. This honor underscores our legacy of good stewardship and our dedication to helping our customers advance their sustainability efforts.

Judy Mcreynolds: We are also proud to be named one of the best companies to work for by U.S. News and World Report and to be ranked as a Best Leadership Team by Comparably. These awards are a testament to our ongoing efforts to make Art Vest a leading place to work, and we're grateful for the recognition from these publications.

Judy: We are also proud to be named one of the best companies to work for by U.S. News & World Report and to be ranked as a Best Leadership Team by Comparably.

Judy Mcreynolds: These awards are a testament to our ongoing efforts to make ArcBest a leading place to work, and we're grateful for the recognition from these publications. Looking ahead, our team remains focused on continuing to deliver profitable growth through operational excellence, disciplined cost management, and ongoing innovation. And that concludes our prepared remarks, and I'll turn it over to the operator for questions.

Matt Godfrey: These awards are a testament to our ongoing efforts to make ArcBest a leading place to work, and we're grateful for the recognition from these publications.

Judy Mcreynolds: Looking ahead, our team remains focused on continuing to deliver a profitable growth through operational excellence, disciplined cost management, and ongoing innovation.

Matt Godfrey: Looking ahead, our team remains focused on continuing to deliver profitable growth through operational excellence, discipline cost management, and ongoing innovation.

Operator: And that concludes our prepared remarks, and I'll turn it over to the operator for questions.

Matt Godfrey: And that concludes our prepared remarks, and I'll turn it over to the operator for questions.

Operator: Yes, thank you.

Operator: Yes, thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question comes from Jason Seidl with TD Cowen. Please go ahead. Thanks.

Operator: At this time, I would like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad.

Speaker Change: Yes, thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad.

Jason Cidle: Your first question comes from Jason Cidle with TD Cowan. Please go ahead. Thanks Operator. Judy, Amy, Seth, and the rest of the team. Good morning. Just two quick things here.

Speaker Change: Your first question comes from Jason Seidl with TD Cowen. Please go ahead.

Jason Seidl: Thanks, Operator. Judy, Amy, Seth, and the rest of the team, good morning.

Jason Seidel: Thanks operator. Judy, Amy, Seth and the rest of the team, good morning. Just two quick things here. One, if we look at that

Judy Mcreynolds: One, if we look at that project business that you mentioned in July of last year, if we exclude that, would your tonnage be projected as positive in 3Q? And then Judy, just in general, you know, there's a lot of talk right now about a potential recession. You get a good look into the economy as a national carrier. What are your customers telling you?

Jason Seidl: Just two quick things here. One, if we look at that project business that you mentioned in July of last year, if we exclude that, would your tonnage be projected as positive in 3Q? And then Judy, just in general, you know, there's a lot of talk right now about a potential recession. You get a good look at the economy as a national carrier. What are your customers telling you?

Jason Seidel: project business that you mentioned in July of last year. If we exclude that, would your tonnage be projected as positive in 3Q? And then Judy, just in general, you know, there's a lot of talk right now about a potential recession. You get a good look into the economy as a national carrier. What are your customers telling you?

Christopher Adkins: Hey, Jason, good morning. This is Christopher.

Christopher Adkins: Hey Jason, good morning. This is Christopher.

Christopher Adkins: I'll just comment on the project business from last year. So last July, like you said, we did bring in some of that just due to the market disruption. That was good business for us. That is definitely part of the story for the tonnage decline year over year, but it's not all of it. You know, some of it was just us onboarding some of that core business for us so that we were there in that time of disruption for our customers.

Christopher Adkins: I'll just comment on the project business from last year. So last July, like you said, we did bring on some of that. Just do the market disruption. That was that was good business for us. That is definitely part of the story for the tonnage decline year over year, but it's not all of it.

Matt Godfrey: Hey Jason, good morning. This is Christopher. I'll just comment on the project business from last year.

Christopher: So last July , like you said, we did bring on some of that just due to the market disruption. That was good business for us.

Speaker Change: That is definitely part of the story for the tonnage decline year over year, but it's not all of it.

Christopher Adkins: You know, some of it was just us onboarding some of that core business for us that we were there in that time of disruption for our customers, but honestly, some of it went to lower cost providers that they were able to shift, you know, by the end of the year. So third quarter will be challenged just from a year-over-year tonnage perspective, but we're still, we continue just to make good decisions in the terms of the profitability and pre-selection for our business. And just from a wait for shipment perspective, you've seen it just draw from second quarter into July, just starting to moderate.

Matt Godfrey: You know, some of it was just us onboarding some of that core business for us, that we were there in that time of disruption for our customers. But honestly, some of it went to lower cost providers that they were able to shift, you know, by the end of the year. So third quarter will be challenged from a year over year times perspective. But we're still we continue just to make good decisions in terms of the profitability and the price selection for our business.

Christopher Adkins: But honestly, some of it went to lower cost providers that they were able to shift, you know, by the end of the year. So the third quarter will be challenged from a year over year perspective. But we're still we continue just to make good decisions in terms of profitability and price selection for our business, and the yeah, and just from a wait for shipment perspective, you've seen it just drop from second quarter into July, just that it's starting to moderate. I would expect that to continue to moderate through the rest of the year.

Speaker Change: And just from a wait for shipment perspective, you've seen it just drop from second quarter into July , just that it's starting to moderate, and I would expect that to continue to moderate through the rest of the year.

Judy Mcreynolds: I would expect that to continue to moderate through the rest of the year.

Judy Mcreynolds: Judy, overall economy?

Judy: Judy, overall economy?

Judy Mcreynolds: So, Jason, we missed part of that. If you had a follow-up.

Jason Seidl: Sorry Jason, we missed part of that if you had a follow-up.

Jason Seidl: No, yeah, I said no. I was asking Judy her opinion.

Judy Mcreynolds: No, yeah, I said no. I was asking Judy her thoughts on the overall economy, given that there's a lot of fear of recessions. And she guys have such a good look into the macro. I was wondering what you're talking about. Yes, well, Jason, I think that we're certainly being affected by those challenges. I think that what we see is that we're kind of working across the bottom here. And we really don't have a crystal ball as to win that we'll inflict, but we feel like that we're well positioned really in any environment to succeed. We've got a pipeline that's increased 40%.

Matt Godfrey: Sorry, Jason, we missed part of that if you had a follow-up. No, yeah, I said no, I was asking Judy her thoughts on the overall economy.

Speaker Change: Given that, there's a lot of fear of a recession since you guys have...

Judy Mcreynolds: Oh, yes. Well, Jason, you know, I think that, you know, we're certainly being affected by those challenges. I think that what we see is that we're, you know, kind of working across the bottom here. And we really don't have a crystal ball as to when that will affect us.

Judy: have such a good look.

Judy: into the macro.

Judy: Jason, you know, I think that, you know, we're certainly, you know, being affected by those challenges.

Judy: I think that what we see is that we're, you know, kind of working across the bottom here and we really don't have a crystal ball as to when that will inflect, but, you know, we feel like that we're well-positioned.

Judy Mcreynolds: But, you know, we feel like we're well positioned, really, in any environment to succeed. We've got a pipeline, you know, that's increased 40% since, you know, the beginning of the year that really includes opportunities across LTL, truckload, and managed, you know, which we're excited about. And the work that we do with customers in this kind of environment shifts more to looking at cost efficiencies for them, and the way that we've structured the company just really addresses that well.

Judy: Really, in any environment to succeed, we've got a pipeline, you know, that's increased 40% since, you know, the beginning of the year that really includes opportunities across LTL, truckload, and managed.

Judy Mcreynolds: The beginning of the year that really includes opportunities across LTL, truckload, and managed, which we're excited about. And the work that we do with customers in this kind of environment shifts more to looking at cost efficiencies for them. And the way that we've structured the company just really addresses that well. And so, while we don't have a crystal ball, we feel confident in our ability to navigate through the choppy waters as they hopefully settle down and we can move to a more normal environment, but feel like we're well positioned regardless.

Judy: You know, which we're excited about and the work that we do with customers.

Judy: In this kind of environment, it shifts more to looking at cost efficiencies for them, and the way that we've structured the company just really addresses that well. And, you know, so while we don't have a crystal ball, we feel, you know, confident in our ability to navigate through.

Judy Mcreynolds: And, you know, so while we don't have a crystal ball, we feel, you know, confident in our ability to navigate the choppy waters as they, you know, hopefully, settle down and we can move to a more normal environment, but I feel like we're well positioned regardless. Okay, so that lowering weight per shipment is not that much of a cause of concern.

Judy: You know, the choppy waters as they, you know, hopefully settle down and we can move to a more normal environment, but feel like we're well positioned regardless.

Judy Mcreynolds: Okay, so that lowering way for shipment is not that much of a cause for concern then. Well, it's been there. You know, we've seen that and have navigated pretty well. We saw, you know, a nearly 30% improvement in operating income in the second quarter. And that was in the face of some cost challenges and some macro challenges, but was overcome by a lot of great efforts to improve our operation. So we know that relate to efficiency efforts, as well as the completion of some Tier One technology projects that we have.

Speaker Change: Okay, so that lowering weight per shipment is not that much of a cause of concern then?

Judy Mcreynolds: Well, it's been there. You know, we've seen that and negotiated pretty well. We saw, you know, a nearly 30% improvement in operating income in the second quarter. And that was in the face of some cost challenges and some macro challenges but was overcome by a lot of great efforts to improve our operation, you know, that relate to efficiency efforts, as well as the completion of some tier one technology projects that we have.

Judy: Well, it's been there. You know, we've seen that and have navigated pretty well. We saw, you know, a nearly 30% improvement in operating income in the second quarter, and that was in the face of some cost challenges and some macro challenges.

Judy: but was overcome by a lot of great efforts to improve our operation that relate to efficiency efforts as well as the completion of some Tier 1 technology projects that we have.

Judy Mcreynolds: Sounds good.

Jason Seidl: Sounds good. Appreciate the time, as always, everyone.

Judy Mcreynolds: Appreciate the time is always everyone. Thanks.

Speaker Change: Sounds good. Appreciate the time, as always, everyone.

Daniel Imbro: Our next question comes from Daniel Imbro with Stevens. Please go ahead. Yeah. Hey, good morning, everybody. Thanks for our questions.

Operator: Our next question comes from Daniel Imbro.

Matt Godfrey: [inaudible]

Matt Godfrey: Our next question comes from Daniel Imbro with Stevens. Please go ahead.

Daniel Imbro: Yeah. Hey, good morning, everybody.

Daniel Imbro: Yeah. Hey, good morning, everybody. Thanks for taking our questions.

Daniel Imbro: I want to start on the pricing side. I guess looking at the second quarter revenue per 100 weight, including fuel, was up sequentially, but fuel was down one Q to two. So I guess the right read here is that core pricing X fuel actually accelerated in your business, and can you just talk about how you're thinking about core pricing trends into the back from the two Q level. Sure.

Daniel Imbro: Thanks for taking our questions. I guess looking at the second quarter, revenue per hundredweight, including fuel, was up sequentially, but fuel was down 1Q to 2Q. So I guess is the right read here that core pricing x fuel actually accelerated in your business? And can you just talk about how you're thinking about core pricing trends going forward from the 2Q level?

Daniel Imbro: I want to start on the pricing side. I guess, looking at the second quarter, revenue per hundredweight, including fuel, was up sequentially, but fuel was down 1Q to 2Q. So, I guess, is the right read here that core pricing x fuel actually accelerated in your business? And can you just talk about how you're thinking about core pricing trends?

Speaker Change: into the back from the 2Q level.

Christopher Adkins: Sure, hey Daniel, this is Christopher. So I would say in terms of just pricing trends, we remain disciplined in making sure that we're getting increases on our core business. Like we talked about, we got a 5.1% increase in the second quarter on our deferred negotiations, and that's just annual increases that we take on those customers. I'm honestly really proud of that result from our sales and our pricing team, to get that just in this challenging freight environment, our customers are recognizing the value that we're providing, and we're able to get good increases.

Christopher Adkins: Hey, Daniel. This is Christopher. So I would say, in terms of just pricing trends. We remain disciplined and making sure that we're getting increases on our core business. Like we talked about, we got a 5.1% increase in the second quarter on our deferred negotiations. And that's just annual increases that we take on those customers. I'm honestly really proud of that result from our sales and our pricing team to get that just in this challenge. I'm afraid environment that despite the environment, our customers are recognizing the value that we're providing and we're able to get good increases.

Daniel Imbro: Sure. Hey Daniel, this is Christopher.

Christopher: So I would say in terms of just pricing trends, we remain disciplined in making sure that we're getting increases on our core business.

Christopher: Like we talked about, we got a 5.1% increase in the second quarter on our deferred negotiations. And that's just annual increases that we take on those customers. I'm honestly really proud of that result from our sales and our pricing team to get that just in this challenged freight environment.

Daniel Imbro: That despite the environment, our customers are recognizing the value that we're providing and we're able to get good increases.

Christopher Adkins: I was looking back over history, that's actually the fourth best increase over the last 20 years that we've gotten in the second quarter. So really great result, and that's something that will continue through the rest of the year as well. So, like you said, there was some progression from first to second. We'll continue to get good increases throughout the rest of the year as well.

Christopher Adkins: I was looking back over history. That's actually the fourth best increase over the last 20 years that we've gotten in the second quarter. So really great result. And that's something that we will continue through the rest of the year as well. So, like you said, there was some progression from first to second will continue to get good increases throughout the rest of the year as well.

Speaker Change: I was looking back over history, that's actually the fourth best increase.

Daniel Imbro: over the last 20 years that we've gotten in the second quarter. So really great result, and that's something that will continue through the rest of the year as well. So like you said, there was some progression from first to second. We'll continue to get good increases throughout the rest of the year as well.

Matt Beasley: and then if I can follow up, maybe on the back half OR outlook, Matt, I think you said OR flatish in 3Q from 2Q. I think cost inflation is moderating a little bit, so I guess if revenue growth is improving and pricing is improving, why wouldn't that get a little bit better?

Daniel Imbro: And then if I can follow up maybe on the back half OR outlook, Matt, I think you said OR flattish in 3Q from 2Q. I think cost inflation is moderating a little bit. So I guess if revenue growth is improving and pricing is improving, why wouldn't that get a little bit better? And then can you just remind us what normal seasonality is on OR from 3Q to 4Q as we think about that? Thanks.

Speaker Change: And then if I can follow up maybe on the back half OR outlook, Matt, I think you said OR flattish in 3Q from 2Q. I think cost inflation is moderating a little bit. So I guess if revenue growth is improving and pricing is improving, why wouldn't that get a little bit better? And then can you just remind us what normal seasonality is on OR from 3Q to 4Q as we think about that? Thanks.

Matt Beasley: And then can you just remind us what normal seasonality is on OR from 3Q to 4Q as we think about that. Thanks. Yeah, absolutely. So I would say generally revenue levels are fairly consistent from the second quarter to the third quarter. We did talk about a range of 0 to 100 basis points of improvement. When we look at things sequentially, just kind of considering the environment and considering the freight mix that we're looking at for the third quarter, we do think that it's... And just considering our cost profile that we're looking at, we do have an increase that goes in July 1st for a wage rate on our median contract and the benefit increase that goes in in August, which are moderate levels but are still a little bit higher than what seasonality has been outside of last year.

Matt Beasley: Yeah, absolutely. So, you know, I would say, generally, revenue levels are fairly consistent from the second quarter to the third quarter. We did talk about a range of zero to 100 basis points of improvement. You know, when we look at things sequentially, just kind of considering the environment and considering the freight mix that we're looking at for the third quarter, we do think that it's, and just considering our cost profile that we're looking at, you know, we do have an increase that goes into effect July 1st for our wage rate on our union contract and then a benefit increase that goes into effect August, you know, which are at moderate levels but are And so all those things, you know, taken into account, you know, puts us at currently an expectation of roughly flat.

Speaker Change: Yeah, absolutely. So, you know, I would say generally revenue levels are fairly consistent from the second quarter to the third quarter. You know, we did talk about, you know, a range of zero to 100 basis points of improvement.

Speaker Change: You know, when we look at things sequentially, just kind of considering the environment and considering the freight mix.

Speaker Change: that we're looking at for the third quarter, we do think that it's, and.

Speaker Change: Just considering our cost profile that we're looking at, we know we do have an increase.

Speaker Change: That goes in July 1st for our wage rate on our union contract and the benefit increase that goes in in August , you know, which are at moderate levels, but are still a little bit higher than what seasonality has been outside of last year.

Matt Beasley: And so all those taken into account puts us at currently an expectation of roughly flat. And certainly we had a very strong operational execution quarter in the second quarter. We've talked about just where our efficiency and productivity metrics, service metrics are very strong compared to recent history, and some of those metrics probe the highest in our company's history. And so certainly if we can continue that strong performance and that momentum into the third quarter, I'd say there's some potential for an improvement off of that flat outlook.

Speaker Change: And so all those, you know, taken into account, you know, puts us at currently an expectation of roughly flat. I mean, certainly we had a very strong operational execution quarter in the second quarter. You know, we've talked about just where our efficiency and productivity metrics, service metrics are very strong, you know, compared to recent history. And some of those metrics, you know, approach the highest in our company's history. And so certainly if we can continue that strong performance and that momentum into the third quarter, I'd say there's some potential for an improvement off of that flat outlook. And then as you're looking from the third quarter to the fourth quarter.

Matt Beasley: I mean, certainly, we had a very strong operational execution quarter in the second quarter. You know, we've talked about just where our efficiency and productivity metrics, and service metrics are very strong, you know, compared to recent history. And some of those metrics, you know, approach the highest in our company's history. And so certainly, if we can continue that strong performance and that momentum into the third quarter, I'd say there's some potential for an improvement off of that, off of that flat outlook.

Matt Beasley: And then as you're looking from the third quarter to the fourth quarter, typically, we do see an increase in operating ratio when you move from the third to the fourth quarter. You know, that has been up to 400 basis points, you know, if you look over the last few years. But I think with the revenue initiatives, with the strong pipeline that we talked about, and with some of the efficiency work and just some of the productivity performance that we've seen in our network, I think we've got, you know, a lot better opportunity for a more consistent result from the third quarter to the fourth quarter than we've had in the past.

Matt Beasley: And then, as you're looking from the third quarter to the fourth quarter, typically we do see an increase in operating ratio when you move from the third to the fourth quarter. That has been up to 400 basis points. If you look over the last few years, but I think with the revenue initiatives, with the strong pipeline that we talked about and with some of the efficiency work and just some of the productivity performance that we've seen around that work, I think we've got a lot better opportunity for more consistent result from the third quarter to the fourth quarter than we've had in past years.

Speaker Change: Typically, we do see an increase in operating ratio when you move from the third to the fourth quarter. You know, that has been up to 400 basis points, you know, if you look over the last few years. But I think

Speaker Change: With the revenue initiatives, with the strong pipeline that we talked about, and with some of the efficiency work and just some of the productivity performance that we've seen in our network, I think we've got a lot better opportunity for a more consistent result from the third quarter to the fourth quarter than we've had in past years.

Daniel Imbro: Thanks for all the color.

Daniel Imbro: Thanks for all the color. Best of luck. Our next question comes from

Speaker Change: Thanks for all the color. Best of luck.

Jordan Allinger: Our next question comes from Jordan Allinger with Goldman Sachs. Please go ahead. Hey, morning Jordan. Oh, hi, sorry about that. Yeah, I just wanted to follow up a little bit on some of the trends that you would put out there for July. And I think there was a couple more operating days in July versus a year ago, you know, sort of made the distort some of the per day growth. This curious is there way to sort of give some sense for how August and September might look broadly in terms of tons per day or revenue per day, you know, taking to account.

Operator: Our next question comes from Jordan Alliger with Goldman Sachs. Please go ahead.

Speaker Change: Thanks.

Speaker Change: Our next question comes from Jordan Alliger with Goldman Sachs. Please go ahead.

Jordan Alliger: Oh, hi, sorry about that. Yeah, I just wanted to follow up a little bit on some of the trends that you had put out there for July. And I think there were a couple more.

Jordan: Hey, morning, Jordan.

Jordan: Oh, hi. Sorry about that. Yeah, I just wanted to follow up a little bit on some of the trends that you had put out there for July . And I think there was a couple more.

Jordan Alliger: Operating days in July versus a year ago might sort of maybe distort some of the per day growth. Just curious, is there a way to sort of give some sense for how August and September might look broadly in terms of tons per day or revenue per day, you know, taking into account the norm, you know, the days? I suspect it should start to look better on a year-to-year basis for both those relative to July, but I'm just curious if you have any thoughts on that.

Speaker Change: operating days in July versus a year ago.

Speaker Change: you know

Speaker Change: Sort of maybe distort some of the per day growth

Speaker Change: Just curious, is there a way to sort of give some sense for how August and September might look?

Speaker Change: I suspect it should start to look better on a year-to-year basis for both those relative to July , but I'm just curious if you have any thoughts on that.

Jordan Allinger: The norm, you know, the days, I suspect it should start to look better on a year of year basis for both those relative to July, but I'm just curious if you've made any thoughts.

Seth Runser: Hey, good morning, Jordan. So I think just the typical seasonality of our business; we see, as we all know, July has a holiday in it, and we see that just typically, the progression of growth from July to August to September, September being the end of the quarter, month tends to be the strongest in the quarter, so we see upside in terms of just tonnage per day, shipments per day, as you just move sequentially through the quarter.

Jordan Allinger: Hey, good morning, Jordan. So I think just a typical seasonality of our business. We see, as we all know, July has a holiday in it. And we see that just typically the progression of growth from July to August to September, September being the end of quarter month, tends to be the strongest in the quarter. So we see upside in terms of just tonnage and per day, shipments per day as you just move sequentially through the quarter. Okay.

Speaker Change: Hey, good morning, Jordan. So I think just the typical seasonality of our business, we see, as we all know, July has a holiday in it, and we see that just typically the progression of growth from July to August to September , September being the end of quarter, month tends to be the strongest in the quarter, so we see upside in terms of just tonnage.

Speaker Change: per day, shipments per day, as you just move sequentially through the Corps.

Jordan Alliger: Okay, um, and, um, And I guess sort of like, you know, the same thing. We do start to enter a period of, you know, tougher comps for the industry, post a year ago with yellow, and now there's a bunch of terminals opening. I know you gave some color around price.

Jordan Allinger: And, and I guess sort of like, you know, the same thing, you know, we do start to enter a period of tougher comps for the industry, you know, post the year ago with yellow and now there's a bunch of terminals opening. I know you gave some color around price. It would seem like industry discipline is still pretty strong, but you know, there's been some recently pretty difficult ISM readings that came out yesterday, which weren't particularly good.

Speaker Change: And I guess sort of like, you know, the same thing, you know, we do start to enter a period of

Speaker Change: You know, tougher comps for the industry, you know, post a year ago with yellow and

Speaker Change: Now there's a bunch of terminals opening. I know you gave some color around price.

Jordan Alliger: It would seem like industry discipline is still pretty strong. But you know, there's been some pretty difficult ISM readings that came out yesterday, which weren't particularly good. I mean, how do you think about the industry's ability to sort of take into account these terminal openings and these new orders index, which continues to be pretty soft? And you know, how does the industry keep core pricing firm? Thanks.

Speaker Change: It would seem like industry discipline is still pretty strong, but you know, there's been some recently pretty difficult ISM readings that came out yesterday, which wasn't particularly good. I mean, how do you think about...

Jordan Allinger: I mean, how do you think about the industry's ability to sort of take into account these terminal openings and these new orders index, which continues to be pretty soft? And how does the industry, you know, keep poor pricing firm. Thanks.

Speaker Change: The industry's ability to sort of take into account these terminal openings and these new orders index, which continues to be pretty soft and how does the industry, you know, keep core pricing firm. Thanks.

Seth Runser: Hey, Jordan, it's set. So we were really looking at things sequentially because that we think that's a better way to view kind of what's going on with all the market disruption that you mentioned. So when you think about the 10 year history on shipments to Christopher, what he was talking about, normally they declined from June, going into July, and we've actually seen about a half a percent increase, as well as tonnage. We've seen that same type of result. Normally, we're down about 5%; where we're down only about 2% in July. So when you think about the industry overall, you know, in capacity, what's coming in from a real estate standpoint, we still see net terminals and capacity being down, you know, from when Yellow was in the market.

Seth Runser: Hey, Jordan. It's Seth. So we're really looking at things sequentially because we think that's a better way to understand kind of what's going on with all the market disruption that you mentioned. So when you think about the 10 year history of shipments to Christopher, what he was talking about, normally, they decline from June going into July. And we've actually seen about a half percent increase, as well as tonnage. We've seen that same type of result. Normally, we're down about 5%. But we're down only about 2% in July.

Speaker Change: Hey Jordan, it's Seth. So we're really looking at things sequentially because that we think that's a better way to view kind of what's going on with all the market disruption that you mentioned. So

Speaker Change: When you think about the 10-year history on shipments to Christopher, what he was talking about, normally they decline from June going into July , and we've actually seen about a half a percent increase, as well as tonnage, we've seen that same type of result. Normally we're down about 5%, and we're down only about 2% in July .

Seth Runser: So when you think about the industry, overall, you know, in capacity, what's coming in, from a real estate standpoint, we still see net terminals and capacity being down, you know, from when Yellow was in the market. So when we look at our investments and what we've been investing in, it's really strategic. I don't think we overspent on our capacity.

Speaker Change: So when you think about the industry overall, you know, in capacity, what's coming in from a real estate standpoint, we still see net terminals and capacity being down, you know, from when yellow was in the market. So when we look at our investments and what we've been investing in, it's really strategic.

Seth Runser: So when we look at our investments and what we've been investing in, it's really strategic. I don't think we overspend on our capacity, and we've had this long-term roadmap that we've been working on for many years, so we're investing where we see growth opportunities or productivity improvements. Great example that was. Let the springs that we opened. I mentioned in my opening comments, a 16% improvement of productivity almost overnight. So we're really focused on the service improvements because we believe that's what's going to lead to long-term customer value. And we're seeing some amazing numbers there. Continue to win some external awards, but we think by focusing on the customer that's going to position us well. But I do think industry capacity overall is going to be down over the long term with the yellow capacity.

Speaker Change: I don't think we overspent on our capacity, and we've had this long-term roadmap that we've been working on for many years. So we're investing where we see.

Speaker Change: growth opportunities or productivity improvements. Great example of that was Lithia Springs that we opened. I mentioned in my opening comments a 16% improvement of productivity almost overnight. So we're really focused on the service improvements because we believe that's what's going to lead to long-term customer value. We're seeing some amazing numbers there, continue to win some external awards, but

Seth Runser: And we've had this long-term roadmap that we've been working on for many years. So we're investing where we see growth opportunities or productivity improvements. A great example of that was Lithia Springs that we opened. I mentioned in my opening comments, a 16% improvement in productivity almost overnight. So we're really focused on service improvements because we believe that's what's going to lead to long-term customer value. And we're seeing some amazing numbers there, and they continue to win some external awards.

Speaker Change: We think by focusing on the customer, that's going to position us well, but I do think industry capacity overall is going to be down over the long term with this yellow capacity. There's still about half of their facilities not back online.

Seth Runser: There's still about half of their facilities not back online.

Ken Hexter: Thank you. All right, our next call comes from Ken Hexter with Bank of America. Please go ahead. Hey, great.

Seth Runser: But we think by focusing on the customer, that's going to position us well. But I do think industry capacity overall is going to be down over the long term with this yellow capacity; there's still about half of their facilities not back online.

Operator: All right, our next call comes from Ken Hoexter with Bank of America. Please go ahead.

Speaker Change: All right our next call comes from Ken Hoexter with Bank of America. Please go ahead.

Ken Hexter: Good morning and congrats Dave Sess and Matt on your moving on, and Seth and Matt new positions. You know, just see throughout there the comment in it that peers were taking more share. I think the last few questions asking about price competition trying to get out that what maybe you can define how they're being aggressive and winning that share if it's not being on price because I think Judy also mentioned that. Somewhere we're just moving to more to different price providers. So maybe you can compare contrast the comment about the piercing share thing.

Kenneth Hoexter: Hey, great. Good morning, and congrats, Dave, Seth, and Matt, on your, Dave, on your moving on, and Seth and Matt, on their new positions.

Ken Hexter: Hey, great. Good morning. And congrats, Dave, Seth and Matt on your, Dave on your moving on and Seth and Matt, new positions.

Kenneth Hoexter: You see throughout there the comment in it that peers were taking more share. I think the last few questions asking about price competition were trying to get at that. Maybe you can define how they're being aggressive in winning that share if it's not being on price, because I think Judy also mentioned that some were just moving to more, to different price providers. So maybe you can compare and contrast the comment about the peers taking share, thanks.

Speaker Change: You know, you see throughout there, the comment in it that peers were taking more share. I think the last few questions asking about price competition, trying to get at that. Maybe you can define...

Speaker Change: how they're being aggressive in winning that share if it's not being on price because I think Judy also mentioned that somewhere we're just moving to more to different price providers so maybe you can compare contrast the comment about the peers taking share thanks

Christopher Adkins: Hey, Ken, it's Christopher again. Just to clarify, that comment was really about the disruption from late last year. So we onboarded some core business in that late July-August timeframe, and we were able to be there for our customers. And honestly, there were prices that were substantially higher than what Yellow was providing them, and then there were some of those customers that were able to find cheaper options there. But that was probably over the course of the next 30-60 days. It's all settled out now. That quickly settled in the second half of last year, and I see it on a much more consistent basis now and moving forward.

Christopher Adkins: Hey, Kim, this is Christopher again.

Christopher Adkins: Just to clarify, that comment was really about the disruption from late last year. So we onboarded some core business in that late July, August timeframe. We were able to be there for our customers. Honestly, there were prices that were substantially higher than what Yellow was providing them. And then there were some of those customers that were able to find cheaper options there. But that was probably over the course of the next 30, 60 days. That's all settled out. That was that quickly settled in a second half.

Speaker Change: Hey Ken, it's Christopher again. Just to clarify, that comment was really about the disruption from late last year. So we onboarded some core business in that late July-August time frame. We were able to be there for our customers.

Speaker Change: And honestly, there were prices that were substantially higher than what Yellow was providing them.

Speaker Change: And then there were some of those customers that were able to find cheaper options there. But that was probably over the course of the next 30, 60 days. But that's all settled out. That was that quickly settled in the second half of last year. I see a much more consistent basis now and moving forward.

Christopher Adkins: Last year, I see a much more consistent based basis now and moving forward.

Christopher Adkins: All right, great. Then if I can just get a follow up then on, I just want to understand the transactional thing is caused so much confusion, I think, with your volumes, right? I mean, normally when a company's losing 20 plus percent volumes, you're kind of scared of running for the hills, but yet your pricing is up 25%. So that tells you that the core is really kind of taking off here. But if you're still down 20% on volumes and your systems were, you know, kind of created that you could maybe do it more variable.

Kenneth Hoexter: All right, great. Then if I can just get a follow-up on that, I just want to understand the transactional thing has caused so much confusion, I think, with your volumes, right? I mean, normally when a company's losing 20 plus percent of its volumes, you're kind of scared and running for the hills, but yet your pricing is up 25%. So that tells you that the core is really kind of taking off here. But if you're still down 20% on volumes and your systems were, you know, kind of created so you could maybe do it more variable, why is it such a vicious move if you're not filling it up, and the opportunity to keep taking that transactional volume with accommodative, what's missing there that we're seeing maybe such huge swings in that transactional volume?

Speaker Change: All right, great. Then if I can just get a follow up then on that, I just want to understand the transactional thing has caused so much

Speaker Change: Confusion, I think, with your volumes, right? I mean, normally, when a company's losing 20-plus percent volumes...

Speaker Change: you're kind of scared and running for the hills, but yet your pricing is up 25% so that tells you that

Speaker Change: The core is really kind of taking off here.

Speaker Change: But if you're still down 20% on volumes and your systems were, you know, kind of created that you could...

Christopher Adkins: Why is it such a vicious move if you're not filling it up in and the opportunity to keep taking that transactional volume with a common date of what's missing there that we're seeing maybe such huge swings in that in that transactional volume? Yeah, so I think you got to kind of rewind the tape on that because 20. I go back to 2023. We continue to see the weakness and the macro. So we use that transactional tonnage. To fill our network and keep employees working when you think about the years throughout the pandemic, very challenging to find qualified CDL employees.

Speaker Change: Maybe do it more variable.

Speaker Change: Why is it such a vicious move if you're not filling it up and the opportunity to keep taking that transactional volume with accommodative...

Speaker Change: What's missing there that we're seeing such maybe such huge swings in that in that transactional volume?

Seth Runser: Yeah, so I think you kind of rewind the tape on that. Because if I go back to 2023, we continue to see weakness in the macro. So we use that transactional tonnage to fill our network and keep employees working. When you think about the years throughout the pandemic, it was very challenging to find qualified CDL employees. So we thought that was the right strategy at the time. We were also going through our, you know, contractual negotiations as well, just as a reminder. So we started to see the yellow story play out.

Speaker Change: Yeah, so I think you've got to kind of rewind the tape on that,

Speaker Change: I go back to 2023. We continue to see the weakness in the macro, so we use that transactional tonnage to fill our network and keep employees working. When you think about the years throughout the pandemic, very challenging to find qualified CDL employees, so we thought that was the right strategy at the time. We were also going through our

Christopher Adkins: So we thought that was the right strategy at the time. We were also going through our, you know, contractual negotiations as well, just as a reminder. So we started to see the yellow story play out. So we wanted to keep our people working, but we also saw that that could potentially happen. So after we got clarity on our costs with the ratification, our contract, the demise of Yellow, I think what we did shifting strategies to more poor business. What we really focused on was serving those core customers that come at a better price, better margin, more consistency, which allows us to plan labor much more consistently and why you're seeing some of the productivity gains. But it really is truly just a mix in our business.

Speaker Change: You know, contractual negotiations as well, just as a reminder. So we started to see the yellow story play out. So we wanted to keep our people working, but we also saw that that could potentially happen.

Seth Runser: So we wanted to keep our people working, but we also saw that that could potentially happen. So after we got clarity on our costs with the ratification of our contract, and the demise of yellow, I think what we did with shifting strategies to more core business was serve those core customers that come at a better price, a better margin, and more consistency, which allows us to plan labor much more consistently, and while you're seeing some of the productivity gains, but it really is truly just a mix in our business.

Speaker Change: So after we got clarity on our costs with the ratification of our contract, the demise of Yellow, I think what we did with shifting strategies to more core business

Speaker Change: What we really focused on was serving those core customers that come at a better price, better margin, more consistency, which allows us to plan labor much more consistently, and why you're seeing some of the productivity gains. But it really is truly just a mix in our business. And I think it worked well when you look at our second quarter.

Christopher Adkins: And I think it worked well when you look at our second quarter generating 21 million more in income with less top line revenue and almost 31 million dollars' worth of extra contractual costs. I think we handled that very well. But the way we really target transactional businesses is it's a daily decision based on profit maximization and capacity in the network. So I think now that our core is in a good spot with the yellow demise. I feel like you're going to see more consistency as we move through the rest of the year, less of these wild swings.

Seth Runser: And I think it worked well when you look at our second quarter, generating 21 million more in operating income with less top line revenue and almost $31 million worth of extra contractual costs. I think we handled that very well. But the way we really target transactional businesses is a daily decision based on profit maximization and capacity in the network. So I think now that our core is in a good spot with the yellow demise, I feel like you're going to see more consistency as we move through the rest of the year.

Speaker Change: Generating 21 million more in op income with less top line revenue and almost 31 million dollars worth of extra contractual costs. I think we handled that very well.

Speaker Change: But the way we really target transactional business is it's a daily decision based on profit maximization and capacity in the network. So I think now that our core is in a good spot with the yellow demise, I feel like you're going to see more consistency as we move through the rest of the year and less of these wild swings.

Seth Runser: Less of these wild swings, but it's probably going to take till about November to get there just because of the yellow situation. Then we have the cyber event later in the year, and everything was just still sorting out, like Christopher pointed out. So that's why we like to look at sequential trends, and we feel pretty good about the progress.

Christopher Adkins: But it's probably going to take till about November to get there just because of the yellow situation that we have, the cyber event later in the year, and everything was just still sorting out, like Christopher pointed to. So that's why we like to look at sequential trends, and we feel pretty good about the progress with me.

Christopher: But it's probably going to take until about November to get there just because of the yellow situation. Then we have the cyber event later in the year, and everything was just still sorting out like Christopher pointed to. So that's why we like to look at sequential trends, and we feel pretty good about the progress we've made.

Kenneth Hoexter: Can you clarify what percentage is left of the total base that's transactional versus contract? Or Corp, sorry, yeah.

Christopher Adkins: Can you clarify what percentage is left of the total base that's transactional versus contract or core? Yeah, we don't provide that number mainly because it changes so, so often. So the business is primarily cool or transactional. Business is really to help maintain consistency in the network and allow us to be positioned when the network, when the market does change. When you think about what we did in the first, after what we're doing moving forward, we feel like our mixes in a much better place. Jason, you'll see more.

Speaker Change: Can you clarify what percentage is left of the total base that's transactional versus contract?

Seth Runser: Yeah, we don't provide that number mainly because it changes so often. So the business is primarily core. Transactional business is really to help maintain consistency in the network and allow us to be positioned when the network, when the market does change. When you think about what we did in the first half compared to what we're doing moving forward, we feel like our mix is in a much better place.

Speaker Change: or Corp, sorry.

Speaker Change: Yeah, we don't provide that number mainly because it changes so often. So the business is primarily core. Transactional business is really to help maintain consistency in the network and allow us to be positioned when the network, when the market does change.

Speaker Change: When you think about what we did in the first half to what we're doing moving forward, we feel like our mix is in a much better place than you'll see.

Christopher Adkins: Appreciate the time, dots.

Kenneth Hoexter: Appreciate the time and thoughts. Thank you.

Operator: Thank you.

Matt Milask: Our next question comes from Bruce Chan with Stiefel. Please go ahead. Good morning.

Speaker Change: Appreciate the time, thanks.

Operator: Our next question comes from Bruce Chan with Stiefel. Please go ahead.

Speaker Change: Our next question comes from Bruce Chan with Stiefel. Please go ahead.

Bruce Chan: Good morning. This is Matt Mylasko, and for Bruce, thanks for taking our questions here. On the AssetLight business, can you comment on the mix of spot versus transactional at the moment?

Matt Milask: This is Matt Milask going for Bruce. Thanks for taking our questions here. On the asset light business, can you come in on the mix of spot versus transactional at the moment? The current mix on the truckload business. I mean, if you think about asset light for us overall, that's several services. But on truckload business, we're roughly in that 60-40 range on contract versus spot. You know, the other thing that's going on in truckload, if you look at kind of what we're doing, you know, year over year, we're continuing to see improvements in productivity and, you know, continuing to work through a strong pipeline of opportunities and, you know, really looking to the future and well positioned to grow as the market improves.

Matt Mylasko: Good morning. This is Matt Mylasko. And for Bruce, thanks for taking our questions here. On the asset-light business, can you comment on the mix of spot versus transactional at the moment?

Seth Runser: The current mix on the truckload business, I mean, if you think about asset light for us overall, that's several services, but on the truckload business, we're roughly in that 60-40 range on contract versus spot. You know, the other thing that's going on in truckload, if you look at kind of what we do year over year, we're continuing to see improvements in productivity and continuing to work through a strong pipeline of opportunities and really looking to the future and are well-positioned to grow as the market improves.

Speaker Change: The current mix on the truckload business, I mean, if you think about Asset Light for us overall, that's several services, but on truckload business, we're roughly in that 60-40 range on contract versus spot.

Speaker Change: You know, the other thing that's going on in truckload, if you look at kind of what we're doing, you know, year over year, we're continuing to see improvements in productivity and, you know, continuing to work through a strong pipeline of opportunities and, you know, really looking to the future and well-positioned to grow as the market improves.

Matt Beasley: Can you walk us through the mechanics of the guide for the broker's or being flat, maybe what you're expecting in terms of gross margin compression, if any, and maybe some opportunities to take out some more costs. Thanks. Yeah, you know, the the God it's there's based, you know, basically attributed to the market conditions and just not seeing a strong indicator of a strong improvement in the second half. You know, we'll continue to work through the opportunities that we mentioned in our pipeline. We also have a good roadmap of efficiency gains that we can see play out as we implement new technology and process.

Bruce Chan: Can you walk us through the mechanics of the guide for the brokerage OR being flat? Maybe what you're expecting in terms of gross margin compression, if any, and maybe some opportunities to take out some more costs? Thanks.

Speaker Change: And can you walk us through the mechanics of the guide for the brokerage OR being flat, maybe what you're expecting in terms of gross margin compression, if any, and maybe some opportunities to take out some more costs? Thanks.

Seth Runser: Yeah, you know, the guidance there is based basically on market conditions and just not seeing a strong indicator of a strong improvement in the second half. We'll continue to work through the opportunities that we mentioned in our pipeline. We also have a good roadmap of efficiency gains that we can see play out as we implement new technology and processes. So we will continue to improve efficiency as we move through the rest of the year. But most importantly, we want to be positioned for the market to improve and to take advantage of that and grow, you know, as we see the market start to improve.

Speaker Change: Yeah, you know, the guidance there is basic.

Speaker Change: you know, basically attributed to the market conditions and just not seeing a strong

Speaker Change: indicator of a strong improvement in the second half.

Speaker Change: We'll continue to work through the opportunities that we mentioned in our pipeline. We also have a good roadmap of efficiency.

Speaker Change: that we can see play out as we implement new technology and process so

Matt Beasley: So we will continue to improve efficiency as we move through the rest of the year, but most importantly, we want to be positioned for the market to improve and to take advantage of that and grow, you know, as we see the market start to improve. Great. Thanks for that.

Speaker Change: We will continue to improve efficiency as we move through the rest of the year. But most importantly, we want to be positioned for the market to improve and to take advantage of that and grow, you know, as we see the market start to improve.

Bruce Chan: And lastly, can you remind us of where you are in terms of door capacity utilization, and is there a way to tell what that might be if you wound the transactional spot business down to zero?

Matt Beasley: And lastly, can you remind us of where you are in terms of door capacity utilization? And is there a way to tell, you know, what that might be if you want the transactional spot business, you know, down to zero? Yeah, we feel like right now, as far as our access capacity is what you're asking. Sure. Okay. Yeah. So we estimate that we have about 15 to 20% access capacity in our network right now. And that includes people, real estate, you know, equipment. We've talked about a real estate plan quite a bit. So we feel like we've built up to be able to handle this eventual market swing.

Speaker Change: Great, thanks for that. And lastly, can you remind us of where you are in terms of door capacity utilization, and is there a way to tell, you know, what that might be if you wound the transactional spot business, you know, down to zero?

Seth Runser: Yeah, we feel like right now, as far as our excess capacity is concerned, is what you're asking. Sure.

Speaker Change: Yeah, we feel like right now, as far as our excess capacity, is what you're asking.

Operator: Okay, yeah, so we estimate that we have about 15 to 20% excess capacity in our network right now, and that includes people, real estate, you know, equipment. We've talked about a real estate plan quite a bit, so we feel like we've built up to be able to handle this eventual market swing, and we continuously optimize the network and adjust based on the opportunities that we see to better serve our customers. We really have a long-term outlook here, so we don't want to limit our growth potential when the market does turn, and that's why we've made the investments that we're making, and we continue to make throughout our network.

Speaker Change: Sure.

Speaker Change: OK.

Speaker Change: Yeah, so we estimate that we have about 15 to 20% excess capacity in our network right now and that includes people, real estate, you know, equipment.

Speaker Change: We've talked about a real estate plan quite a bit, so we feel like we've built up to be able to handle this eventual market swing.

Matt Beasley: And we continuously optimize the network and adjust based off the opportunities that we see to better service our customers. We really have a long-term outlook here. So we don't want to limit our growth potential when the market does turn. And that's why we've made the investments that we're making. We've continued to make throughout our network. So we feel like if the market does turn, we get more for business. We want to grow with that. And we think transactional is a way for us to balance our network better and optimize that daily based on what the freight demand is and what the market prices are.

Speaker Change: And we continuously optimize the network and adjust based off the opportunities that we see to better service our customers.

Speaker Change: We really have a long-term outlook here, so we don't want to limit our growth potential when the market does turn. And that's why we've made the investments that we're making, and we've continued to make.

Operator: So we feel like if the market does turn, we get more for business. We want to grow with that, and we think transactional is a way for us to balance our network better and optimize that daily based on what the freight demand is and what the market prices are. So it's really a daily optimization, and when the market turns, it should benefit.

Speaker Change: throughout our network. So we feel like if the market does turn, we get more for business.

Speaker Change: We want to grow with that, and we think transactional is a way for us to balance our network better and optimize that daily based on what the freight demand is and what the market prices are. So it's really a daily optimization, and when the market turns, it should benefit us.

Matt Beasley: So it's really a daily optimization. And when the market turns, it should benefit. for us. Thanks for the color.

Thomas Wadewitz: Your next question comes from Tom Wadewitz with UBS. Please go ahead. Yeah, good morning. Wanted to see you were asked a little bit about the weight per shipment on July, kind of, I think July, getting a little lighter versus June, but I'm not sure if I understand what the perspective is or got the perspective. Do you think that's like softness in economy a little bit, or is that a function of some mix, and you mentioned project business going away? Was that project business heavier? Just wanted to see if you could give a little more thought on the kind of lighter weight per shipment in July versus June.

Speaker Change: Thanks to the caller.

Tom Wadewitz: Your next question comes from Tom Wadewitz with UBS. Please go ahead.

Speaker Change: Your next question comes from Tom Wadewitz with UBS. Please go ahead.

Tom Wadewitz: Yeah, good morning. Wanted to see, you were asked a little bit about the weight per shipment for July, kind of I think July is getting a little lighter versus June, but I'm not sure if I understand what your perspective is or got the perspective. Do you think that's like softness in the economy a little bit? Or is that a function of some other mix? And you mentioned project business going away with that project business heavier. Just wanted to see if you could give a little more thought to that kind of lighter weight per shipment in July versus June.

Tom Wadewitz: Yeah, good morning. Wanted to see, you were asked a little bit about the weight per shipment on July , kind of I think July getting a little lighter versus June , but I'm not sure if I

Speaker Change: Understand what you what the perspective is or got the perspective do you think that's like softness in

Speaker Change: economy a little bit or is that a function of some mix and you mentioned project business going away with that project business heavier just wanted to see if you could give a little more thought on that kind of lighter weight per shipment in July versus June

Christopher Adkins: Hey, Tom, it's Christopher. I'd say it's both. It's the economy just being softer than we'd obviously like to see. You know, I think we've talked at length in the past about higher weight per shipment being a sign of an improving economy. And that hasn't turned the corner yet, even on our core business. And then, from a year-over-year perspective, it's really all about this mixed – the majority is this mixed management, just moving more towards core business that tends to have a lower weight per shipment than the transactional business.

Thomas Wadewitz: Hey, Thomas, Christopher. I'd say it's both. It's the economy just being softer than obviously we'd like to see. I think we've talked at LinkedIn the past about higher weight per shipment is a sign of an improving economy, and that hasn't turned the corner yet, even on our core business. And then it's really from a year of a year perspective. It's really all about this. It's the majority of this mix management, just moving more towards core business that tends to have a lower weight per shipment than the transactional business. So do you think the July look is representative and stable just in terms of mix of business as well as kind of, you know, I guess some of the business that had moved away.

Speaker Change: Hey Tom, it's Christopher. I'd say it's both.

Speaker Change: Peace.

Speaker Change: The economy just being softer than obviously we'd like to see, you know, I think we've talked

Speaker Change: at length in the past about higher wafer shipment is a sign of an improving economy, and that hasn't turned the corner yet, even on our core business.

Speaker Change: And then it's really, from a year-over-year perspective, it's really all about this mixed...

Speaker Change: The majority is this mixed management, just moving more towards core business that tends to have a lower weight per shipment than the transactional business.

Tom Wadewitz: So do you think the July look is representative and stable, just in terms of the mix of business, as well as kind of, you know, I guess some of the business that had moved away, is that the right look? Or do you think it's kind of trending further in terms of lighter weight per shipment, as you look to, you know, August, September, 4Q?

Speaker Change: So do you think the July look is representative and stable just in terms of mix of business as well as

Speaker Change: kind of

Thomas Wadewitz: Is that the right look? Or do you think it's kind of trending further in terms of lighter weight per shipment as you look to, you know, August, September, or 4Q?

Speaker Change: You know, I guess some of the business that had moved away, is that the right look, or do you think it's kind of trending further in terms of lighter weight per shipment as you look to, you know, August , September , 4Q?

Thomas Wadewitz: I would say I don't see anything significantly changing within our view right now. Obviously, things could change, but what we've seen from June to July feels consistent and obviously moving forward. We'd love to see that in Peru, but we're still, we're positioned well to respond to whatever the market gives us there. Right. Okay.

Christopher Adkins: I would say I don't see anything significantly changing within our view right now. Obviously, things could change, but what we've seen from June to July feels consistent. Obviously, moving forward, we'd love to see that improve, but we're still positioned well to respond to whatever the market gives us there.

Tom Wadewitz: Right. Okay.

Speaker Change: I would say I don't see anything...

Speaker Change: Significantly, you know, changing within our view right now. Obviously, things could change, but what we've seen from June to July feels consistent. And obviously, moving forward, we'd love to see that improve. But we're still we're positioned well to respond to to whatever the market gives us there.

Tom Wadewitz: And then on the asset light side as well, it sounded like you saw a little bit of softening in July, too. Is that, is that, you know, just the trade activity market getting softer? What's the asset light read on what you're seeing in July?

Matt Beasley: And then on the asset light side as well, it sounded like you saw a little bit of softening in July too. Is that, is that, you know, just trade activity market getting softer? What's the asset light read on what you're seeing in July? Yeah, we are seeing, you know, some drop in demand from current customers. A lot of that was associated with the first week of the month, with the holiday. And then, you know, we just continue to work through opportunities and make sure we're, you know, making good selections on the, you know, the shipments that we add and that type of thing; that impacted that as well.

Speaker Change: Right. Okay. And then on the asset light side as well, it sounded like you saw a little bit of softening in July too. Is that, you know, just trade activity market getting softer or what's the asset light read on what you're seeing in July ?

Seth Runser: Yeah, we are seeing, you know, some drop in demand from current customers. A lot of that was associated with the first week of the month with the holiday. And then, you know, as we just continue to work through opportunities and make sure we're making good selections on the shipments that we add and that type of thing, that impacted that as well.

Speaker Change: Yeah, we are seeing, you know, some drop in demand from current customers. A lot of that was associated with the first week of the month, with the holiday, and then, you know, as we just continue to work through opportunities.

Speaker Change: and make sure we're, you know, making good selections on the, you know, the shipments that we add and that type of thing. That impacted that as well.

Tom Wadewitz: Okay, great. Thanks for the time.

Matt Beasley: Okay. Great.

Matt Beasley: Thanks for the time.

Speaker Change: Okay, great. Thanks for the time.

Chris Weatherby: Thank you. Our next question comes from Chris Weatherby with Wells Fargo. Please go ahead. Hey, thanks. Good morning, guys. Um, I guess maybe I wanted to come back to sort of overall volume and maybe your strategy. So if I look at, you know, tons per day is down at levels that maybe we haven't seen and, you know, quite some time. Shipments, maybe that quite is low, but still, you know, relatively low outside of maybe 2020. So obviously, you've been proving the mix of the business profitability hasn't suffered during that dynamic. But I guess, are we at the point where this is the appropriate level of volume?

Operator: Our next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.

Speaker Change: Thank you

Speaker Change: Our next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.

Chris Wetherbee: Hey, thanks. Good morning, guys.

Chris Wetherbee: I guess maybe I wanted to come back to sort of overall volume and maybe your strategy. So, if I look at tons per day down at levels that maybe we haven't seen in quite some time, shipments maybe not quite as low, but still, you know, relatively low outside of maybe 2020. So, obviously, you've been proving the mix of the business profitability hasn't suffered during that dynamic. But I guess, are we at the point where this is the appropriate level of volume?

Chris Wetherbee: Hey, thanks. Good morning, guys.

Chris Wetherbee: I guess maybe I wanted to come back to sort of...

Chris Wetherbee: Overall volume and maybe your strategy. So if I look at, you know, tons per day is down at levels that maybe we haven't seen in, you know, quite some time shipments, maybe not quite as low, but still, you know, relatively low outside of maybe 2020.

Speaker Change: So obviously improving the mix of the business profitability hasn't suffered during that dynamic, but I guess, are we at the point where this is the appropriate level of volume? And I know we're in a software market now, but as market comes back,

Chris Wetherbee: And I know we're in a software market now, but as the market comes back, would you be looking to grow into this? I know you have capacity. I'm just kind of getting a sense of where it is because the numbers are, you know, seemingly fairly low, but still sort of under some pressure on a year-over-year basis. Just want to get a sense of what the strategy is going forward.

Chris Weatherby: And I know we're in a software market now, but as the market comes back, you know, we'll be looking to grow into this. I know you have capacity. I'm just kind of getting the sense of where it is because the numbers are, you know, seemingly fairly low, but still sort of under some pressure on a year of your basis. There's only going to get a sense of where the strategy is going.

Speaker Change: Would you be looking to grow into this? I know you have capacity. I'm just kind of getting a sense of where it is because the numbers are seemingly fairly low, but still sort of under some pressure on a year-over-year basis. I just want to get a sense of what the strategy is going forward.

Christopher Adkins: Yeah, I think the results in the second quarter kind of speak to what we're doing there. We're trying to enhance, you know, profitability while having capacity for growth. So, like I mentioned earlier, it's better to look at the sequential numbers, and we're seeing improvements in our core weight per shipment. We just talked about that. We expect to kind of flat sequentially. Most of that is due to the market conditions and what's going on there. So you got to think the first year of the contractual wage increases were pretty large, and we were able to overcome that.

Seth Runser: Yeah, I think the results in the second quarter kind of speak to what we're doing there. We're trying to enhance profitability while having capacity for growth. So, like I mentioned earlier, it's better to look at those sequential numbers, and we're seeing improvements in our core. Weight per shipment, we just talked about that.

Speaker Change: Yeah, I think the results in the second quarter kind of speak to what we're doing there. We're trying to enhance profitability while having capacity for growth.

Speaker Change: So, like I mentioned earlier, it's better to look at those sequential numbers, and we're seeing improvements in our core.

Seth Runser: We expect it to kind of flatten sequentially. Most of that is due to market conditions and what's going on there. So you have to think the first year of the contractual wage increases was pretty large, and we were able to overcome that. You saw the cost productivity things we did. So we feel good about that moving forward. It's a much more reasonable rate, like this year's only a 2.7 increase all in for wages and HWP.

Speaker Change: Weight per shipment, we just talked about that. We expect it kind of flat sequentially. Most of that is due to the market conditions and what's going on there.

Speaker Change: So, you got to think the first year of the contractual wage increases were pretty large and we were able to overcome that. You saw the cost productivity things we did, so we feel good about that. Moving forward, it's a much more reasonable rate.

Christopher Adkins: You saw the cost productivity things we did. So we feel good about that moving forward. It's a much more reasonable rate at like this year's only a 2.7 increase all in for wages and HWP. So that's going to allow us to make some gains on growth and yield. We knew that this business was continue to shift post disruption. So that's why we're saying it's better to look at that sequential history. We believe that the environment's going to be, you know, continue to be kind of unpredictable. We've heard about PMI and what's going on there. But what gives us a lot of confidence in the future is a 40% increase in our sales pipelines.

Speaker Change: Like this year is only a 2.7% increase all in for wages and HWP, so that's going to allow us to make some gains on growth and yield.

Seth Runser: So that's going to allow us to make some gains on growth and yield. We knew that this business would continue to shift post disruption, so that's why we're saying it's better to look at that sequential history. We believe that the environment's going to, you know, continue to be kind of unpredictable.

Speaker Change: We knew that this business would continue to shift post-disruption, so that's why we're saying it's better to look at that sequential history.

Speaker Change: We believe that the environment is going to continue to be kind of unpredictable. We've heard about PMI and what's going on there. But what gives us a lot of confidence in the future is a 40% increase in our sales pipeline since January , as Judy mentioned in her opening comments.

Seth Runser: We've heard about PMI and what's going on there, but what gives us a lot of confidence in the future is a 40% increase in our sales pipeline since January, as Judy mentioned in her opening comments. We've had some of the best service numbers in the industry over the last five years, so we're providing value for our customers. We've been celebrating our 40th quality anniversary, and our people have taken that to heart.

Christopher Adkins: It's January, as Judy mentioned in her opening comments. We've had some of the best service numbers over the last five years. So we're providing value for our customers. We've been celebrating our 40-year quality anniversary, and our people have taken that to heart. We've really seen that resonate with our customer retention numbers and our efficiencies hit multi-year highs. So that allows us to improve service capacity for growth. And just it impacts the bottom line cost measures well. So we continue to see those benefits. And I feel like that momentum is going to take us forward for continued growth.

Speaker Change: We've had some of the best service numbers over the last five years, so we're providing value for our customers.

Judy: We've been celebrating our 40-year quality anniversary, and our people have taken that to heart. We've really seen that resonate with our customer retention numbers.

Seth Runser: We've really seen that resonate with our customer retention numbers and our efficiencies hitting all multi-year highs. So that allows us to improve service, capacity for growth, and it impacts the bottom line cost measure as well. So we continue to see those benefits, and I feel like that momentum is going to take us forward for continued growth, and we've built the capacity for it. So we're continuing to execute on growing our core business while optimizing that transactional mix based on what the market's saying.

Speaker Change: and our efficiencies hit multi-year highs. So that allows us to improve service, capacity for growth, and just it impacts the bottom line cost measure as well. So we continue to see those benefits.

Christopher Adkins: And we built the capacity forward. So we're continuing to execute on growing our core business while optimizing that transactional mix based on what the market's doing.

Speaker Change: And I feel like that momentum is going to take us forward for continued growth and we've built the capacity for it. So we're continuing to execute on growing our core business while optimizing that transactional mix based on what the market's doing.

Christopher Adkins: That's a really helpful answer. I appreciate that. And maybe if I could zoom out the lens a little bit and think about the industry over the next couple of years.

Chris Wetherbee: That's a really helpful answer. I appreciate that.

Speaker Change: That's a really helpful answer. I appreciate that. And maybe if I could zoom out the lens a little bit and think about the industry over the next couple of years. So, you know, you have 15 to 20 percent excess capacity. I guess if I go around sort of the horn of the other public carriers, I think having that much, maybe in some cases, more extra capacity, yellow kind of down, cut in half from a capacity perspective in the market now, I guess. Do you see the market dynamics changing at all in terms of the ability to get price or profitable mix improvements as we move forward? Or is it that there is enough growth and maybe there's some freight that's outside of the market that comes back in in a tighter environment? Just kind of curious how you might see the next sort of cycle play out for the industry.

Chris Wetherbee: And maybe I could zoom out the lens a little bit and think about the industry over the next couple of years. So, you know, you have 15 to 20 percent excess capacity. I guess if I go around sort of the horn of the other public carriers, I think having that much, maybe in some cases, more extra capacity, the yellow kind of down cut in half from a capacity perspective in the market now, I guess. Do you see the market dynamics changing at all in terms of the ability to get price or profitable mix improvements as we move forward?

Christopher Adkins: So, you know, you get 50 to 20% excess capacity.

Christopher Adkins: I guess if I go around sort of the horn of the other public carriers. I think having that much maybe in some cases more extra capacity, yellow kind of downcutten half from a capacity perspective in the market now. I guess if you see the market dynamics changing at all in terms of the ability to get price or real profitable mix improvements as we move forward, or is it that there is enough growth. And maybe there's some freight that's outside of the market that comes back in in a tighter environment. Just kind of curious how you might see the next sort of cycle play out for the industry.

Chris Wetherbee: Or is it that there is enough growth, and maybe there's some freight that's outside of the market that comes back in in a tighter environment? Just kind of curious how you might see this next sort of cycle play out for the industry.

Christopher Adkins: Yeah, I think I think we're really well positioned for growth. I think we demonstrated that the middle of last year when we had similar excess capacity and we were able to meet the demands of our customers that had that disruption; we were able to onboard that business quickly without really missing a beat from a service standpoint. So, really we're playing the same playbook that we played last year. We have the excess capacity; we still have the transactional lever that we could tamp in that down even further if needed. Core business grows further. So, feel great about our position to bring on additional growth when it's available.

Seth Runser: Yeah, I think we're really well positioned for growth. I think we demonstrated that in the middle of last year when we had similar excess capacity, and we were able to meet the demands of our customers that had that disruption. We were able to onboard that business quickly without really missing a beat from a service standpoint.

Speaker Change: Yeah, I think we're really well positioned for growth, and I think we demonstrated that at the middle of last year when we had similar excess capacity and we were able to...

Speaker Change: To meet the demands of our customers that had that disruption, we were able to onboard that business quickly without really missing a beat from a service standpoint. Really, we're playing the same playbook that we played last year. We have the excess capacity. We still have the transactional lever that we could.

Chris Wetherbee: So really, we're playing the same playbook that we played last year. We have the excess capacity. We still have the transactional lever that we could tampon that down even further if needed, if core business grows further. So I feel great about our position to bring on additional growth when it's available.

Speaker Change: We could tampen that down even further, if needed, if core business grows further. So, I feel great about our position to bring on additional growth when it's available.

Christopher Adkins: Okay, I appreciate the comments.

Chris Wetherbee: Okay, I appreciate the comment. Thanks very much.

Speaker Change: Okay, I appreciate the comment. Thanks very much.

Brian Austin: Our next question comes from Brian Austin, back with JP Morgan. Please go ahead. Hey, good morning. Thanks for taking the question.

Operator: Our next question comes from Brian Ossenbeck with J.P. Morgan. Please go ahead.

Speaker Change: Our next question comes from Brian Ossenbeck with JP Morgan. Please go ahead.

Brian Ossenbeck: Hey, good morning. Thanks for taking the time to answer the question. So let's go back on the service improvements. Just wanted to see what the feedback from customers has been so far. I know the MassGEO survey is going on again right now, but it's been a focal point of improving it over the last couple of years. So what are customers saying right now, and when do you think you will start to see this sort of change in either the freight mix or the pricing? Can that start to improve next year if things kind of bounce along the bottom, or would that really be something you'd need an upcycle to help monetize if service does continue to improve?

Brian Austin: Let's go back on the service improvements. Just wanted to see what's the feedback from customers so far. I know the master's service going on again right now, but it's been a focal point of improving that over the last couple of years. So what are customers saying right now, and when do you think you start to see this sort of in either the freight mix or the pricing. Can that start to improve next year if things kind of bounce along the bottom, or would that really be something you need enough? Cycle to help monetize it if service does continue to improve.

Brian Ossenbeck: Hey, good morning. Thanks for taking the question.

Brian Ossenbeck: Let's go back on the service improvements. Just wanted to see what's the feedback from

Speaker Change: customers so far.

Brian Ossenbeck: I know the MassGEO survey is going on again right now, but...

Speaker Change: It's been a focal point of approving that over the last couple of years, so.

Speaker Change: What are customers saying right now and when do you think you start to see this?

Speaker Change: Sort of in either the...

Speaker Change: The freight mix or the pricing, can that start to improve next year if things kind of bounce along the bottom, or would that really be something you'd need an upcycle to help monetize if service does continue to improve?

Judy Mcreynolds: Yeah, we really, when you think about our service levels, we have a commitment to excellence, and historically we've been in a really good spot on the Mastio survey. We've made a lot of improvements since the last one came out. We do our own internal surveys with customers to measure our NPS, and our internal scores have continued to improve consistently quarter after quarter, and we're seeing that in our own internal metrics as well because we've improved tactical execution, the shipment visibility. I mentioned in my opening comments, we've made a lot of efforts to improve in that area, and all the optimization efforts, when you improve efficiency, you improve your throughput, which in turn generates a better service for our customers.

Seth Runser: Yeah, we really, when you think about our service levels, we have a commitment to excellence. And historically, we've been in a really good spot on the MassDO survey. We've made a lot of improvements since the last one came out. We do our own internal surveys with customers to measure our NPS, and our internal scores have continued to improve consistently quarter after quarter.

Speaker Change: Yeah, we really, when you think about our service levels, we have a commitment to excellence and historically we've been in a really good spot.

Speaker Change: on the MassDO survey. We've made a lot of improvements since the last one came out. We do our own internal surveys with customers to measure our NPS, and our internal scores have continued to improve consistently quarter after quarter, and we're seeing that in our own internal metrics.

Speaker Change: as well, because we've improved tactical execution, the shipment visibility, I mentioned in my opening comments.

Seth Runser: And we're seeing that in our own internal metrics, as well, because we've improved tactical execution, the shipment visibility. I mentioned in my opening comments that we've made a lot of efforts to improve in that area. And all the optimization efforts: when you improve efficiency, you improve your throughput, which in turn generates better service for our customers. So we have better visibility into network issues. So if we do see an issue popping up, whether it's labor, whatever it is, we can react much faster and resolve those issues before it impacts our customers. And that's because of all the data that we have and all the infrastructure that we built around network visibility.

Speaker Change: We've made a lot of efforts to improve in that area, and all the optimization efforts, when you improve efficiency, you improve your throughput, which in turn generates a better service for our customers.

Judy Mcreynolds: So we have better visibility into network issues. So if we do see an issue popping up, whether it's labor, whatever it is, we can react much faster and resolve those issues before it impacts our customers. And that's because of all the data that we have and all the infrastructure that we build around network visibility.

Speaker Change: We have better visibility into network issues, so if we do see an issue popping up, whether it's labor or whatever it is, we can react much faster and resolve those issues before it impacts our customers.

Speaker Change: and that's because of all the.

Speaker Change: All the data that we have and all the infrastructure that we built around network visibility. So the real estate plan obviously gives our customers more capacity.

Judy Mcreynolds: So the real estate plan obviously gives our customers more capacity. But I feel like with our service metrics being at a five-year high, continued internal NPS improvement, we feel like that's going to continue to benefit our customers. I've spent a lot of time with customers throughout the second quarter, and they've communicated back just the difference that they feel in our service level. We think that translates the long-term value for our customers. Just from a price perspective, obviously the value prop that Seth is describing plays into that price, and really we just want to be at a consistent place where our price is outperforming our cost increases through.

Seth Runser: So the real estate plan obviously gives our customers more capacity, but I feel like with our service metrics being at a five-year high, and continued internal NPS improvement, we feel like that's going to continue to benefit our customers. I've spent a lot of time with customers throughout the second quarter, and they've communicated back just the difference that they feel in our service level. And we think that translates to long-term value for our customers.

Speaker Change: But I feel like with our service metrics being at a five-year high, continued internal NPS improvement, we feel like that's going to continue to benefit our customers. I've spent a lot of time with customers throughout the second quarter, and they've

Speaker Change: communicated back just the difference that they feel in our service level. We think that translates to long-term value for our customers.

Matt Beasley: Just from a price perspective, yeah, obviously, the value prop that Seth is describing plays into that price. And really, we just want to be at a consistent place where our price is outperforming our cost increases, you know, through there. So we're winning both from a price standpoint and from a cost management standpoint to improve our off-balance sheet income over time. So, the value prop is definitely a big play there.

Seth Runser: Just from a price perspective, yeah, obviously, the value prop that Seth is describing plays into that price, and really we just want to be at a consistent place where our price is outperforming, our cost increases, you know, so we're winning both from a price standpoint and from a cost management standpoint to improve our op income over time.

Judy Mcreynolds: So we're winning both from a price standpoint and from a cost management standpoint to improve our off income over time. So the value prop is definitely a big play there, and in terms of just getting the increase and retaining the customers that we have.

Speaker Change: So the value prop is definitely a big play there in terms of just getting the increase and retaining the customers that we have. The other thing I would just comment on is that our price is the highest in the market, so our price is already at a really good place.

Judy Mcreynolds: The other thing I would just comment on is that our price is the highest in the market. So our price is already at a really good place. And so there's an opportunity likely for other carriers to catch up with where we are on a price basis.

Brian Ossenbeck: And in terms of just getting the increase and retaining the customers that we have, the other thing I would just comment on is that our price is the highest in the market. So our price is already at a really good place. And so there's an opportunity, probably, for other carriers to catch up with where we are on a cost-price basis.

Speaker Change: And so there's an opportunity likely for other carriers to catch up with where we are on a price basis.

Judy Mcreynolds: Okay, thanks. That's helpful.

Brian Ossenbeck: Okay, thanks. That's very helpful. Just to switch to the broader truckload market, it doesn't sound like you're seeing or expecting much of an improvement from that perspective. I just wanted to get maybe a little more commentary on that, what you're seeing here in July and into the typical peak season, and just in general how that would impact some of the truckload spillover freight and ADF and how you might be able to offset some of that on the asset light side.

Judy Mcreynolds: Just to switch to the broader truckload market, it doesn't sound like you're seeing or inspecting much of an improvement from that perspective. I just want to get maybe a little more commentary on that what you're seeing here in July into the typical peak season and just in general how that would impact some of the truckload spillover freight in ABF, and I might be able to offset some of that on the asset light side. Yeah, I mean, from an overall perspective, you know, we feel like we're at the bottom, but we're not really seeing anything that's just a strong indicator that things are going to improve rapidly.

Speaker Change: Okay, thanks. That's helpful. Just to switch to the broader truckload market, it doesn't sound like you're seeing or expecting much of an improvement from that perspective. I just wanted to get maybe a little more

Speaker Change: Commentary on that what you're seeing here in July and into the typical peak season and just in general how that would

Speaker Change: impact, you know, some of the...

Speaker Change: The truckload spillover freight in ABF, and I might be able to offset some of that.

Seth Runser: Yeah, I mean, from an overall perspective, you know, we feel like we're at the bottom, but we're not really seeing anything that is just a strong indicator that things are going to improve rapidly. We, like a lot of others, just feel like we're at the bottom and moving towards a time of improvement. But, you know, one of the things that we are confident in is our team, how we're positioned, you know, the MOLO team, specifically in the truckload space. We provide a great service.

Speaker Change: on the AssetLite side.

Speaker Change: Yeah I mean from an overall perspective you know we we feel like we're at the bottom but we're not really seeing anything that's...

Speaker Change: Just a strong indicator that things are going to improve rapidly You know, we're like a lot of others just

Judy Mcreynolds: You know, we're like a lot of others just feel like we're at the bottom and moving towards a time of improvement. But you know, one of the things that we are confident in is our team, how we're positioned, you know, the MOLO team specifically in the truckload space. We provide a great service. You know, Seth mentioned in PS, that's one of the kind of high points that we have with our truckload service. We see customers continuously telling us that we're doing a great job there and really appreciate the service and value we provide. So we're well positioned as a market recovers, but you know, like a lot of others, you know, right now we're just looking for that improvement, but we're not seeing anything that tells us that there's a dramatic improvement coming.

Speaker Change: You know, feel like we're at the bottom and moving towards a time of improvement.

Speaker Change: But, you know, one of the things that we are confident in is our team, how we're positioned.

Speaker Change: you know the MOLO team specifically in the truckload space we provide

Seth Runser: You know, Seth mentioned NPS; that's one of the kind of high points that we have with our truckload service. We see customers continuously telling us that we're doing a great job there and really appreciate the service and value we provide. So we're well positioned as the market recovers, but, you know, like a lot of others, we're just looking for that improvement, but we're not seeing anything that tells us that there's a dramatic improvement coming in the third quarter.

Speaker Change: A great service, you know, Seth mentioned NPS, that's one of the...

Seth Runser: kind of high points that we have.

Seth Runser: With our truckload service, we see customers...

Speaker Change: Continuously telling us that we're doing a great job there and really appreciate the service and value we provide. So we're well positioned as the market recovers, but you know, like a lot of others, you know, right now we're

Speaker Change: We're just looking for that improvement, but we're not seeing anything that tells us that there's a dramatic improvement coming in the third quarter.

Judy Mcreynolds: You know, in the in the third quarter.

Brian Ossenbeck: Okay, understood. Thanks for your time. I appreciate it.

Stephanie Moore: Appreciate it. Our next question comes from Stephanie Moore with Jeffries. Please go ahead. Hi, good morning. Thank you.

Speaker Change: Okay, understood. Thanks for your time, appreciate it.

Operator: Our next question comes from Stephanie Moore with Jeffreys. Please go ahead.

Speaker Change: Our next question comes from Stephanie Moore with Jeffreys. Please go ahead.

Stephanie Moore: Hi, good morning. Thank you. I wanted to touch on, I think you mentioned clearly driving some cost initiatives and other productivity initiatives in the second quarter and expectations of that continuing as the year progresses. I think on both the asset base and asset light side, could you maybe give us some more examples of some of the actions that you've been putting into place on both sides of the business? Thanks.

Stephanie Moore: I want to touch on, I want to touch on, I think you mentioned, you know, clearly driving some cost initiatives and other productivity initiatives in the second quarter and expectations. So that can seem you as to your progresses. I think I'm both an asset-based and asset-light side. Could you maybe give us some more examples of some of the actions that you've been putting into place on both sides of the business? Thanks.

Stephanie Moore: Hi, good morning, thank you.

Stephanie Moore: I wanted to touch on...

Stephanie Moore: Good morning. I wanted to touch on, I think you mentioned clearly driving some cost initiatives and other productivity initiatives in the second quarter and expectations of that continue as the year progresses. I think on both the asset-based and asset-light side, could you maybe give us some more examples of some of the actions that you've been putting into place on both sides of the business? Thanks.

Judy Mcreynolds: Yeah, Stephanie. Good morning. When you think about how many cycles and what we've been through, you know, we have a long history of adapting to challenging environments, and we really go out to the field, listen to our people, get feedback from employees, and that really shapes what we have to do to service our customers better. So we built those tools for better network visibility, labor planning. We invested in those operational experts that I mentioned earlier. They've only been to four of our largest locations so far. So throughout the third quarter, they're going to visit the next three, which are very large distribution centers as well, and we'll continue that throughout the year.

Seth Runser: Yeah, Stephanie, good morning. When you think about how many cycles and what we've been through, you know, we have a long history of adapting to challenging environments. And we really go out to the field, listen to our people, and get feedback from employees. And that really shapes what we have to do to serve our customers better. So we built those tools for better network visibility, labor planning, and we invested in those operational experts that I mentioned earlier. They've only been to four of our largest locations so far. Throughout the third quarter, they're going to visit the next three, which are very large distribution centers as well. And we'll continue that throughout the year.

Speaker Change: Yeah, Stephanie, good morning. When you think about how many cycles and what we've been through, you know, we have a long history of adapting to challenging environments.

Speaker Change: and we really go out to the field, listen to our people, get feedback from employees.

Speaker Change: And that really shapes what we have to do to service our customers better. So, we built those tools for better network visibility, labor planning. We invested in those operational experts that I mentioned earlier. They've only been to four of our largest locations so far. So, throughout the third quarter, they're going to visit the next three, which are very large distribution centers as well. And we'll continue that throughout the year.

Seth Runser: We also rolled out city optimization last year; we saw material benefits from that, and we're rolling out the next two phases of that that have been in pilot mode throughout the second quarter. So we think we'll get to operationalize those on the third and fourth. We're also in the process of rolling out new doc software. And that creates better visibility for our people, our customers, and allows us to see by-employee productivity levels

Judy Mcreynolds: We also rolled out city optimization last year. We saw material benefit from that. We're rolling out the next two phases of that that have been in pilot mode throughout the second quarter. So we think we'll get to operationalize those on the third and fourth. We're also in the process of rolling out new docs software. And that creates better visibility for our people, our customers, and allows us to see by employee productivity levels. And we have that implemented at 97 locations, and we think we'll finish that roll out in the first quarter of 2025. I mentioned the productivity improvements and let the springs and what we saw in Olathe in the first quarter.

Speaker Change: We also rolled out city optimization last year. We saw material benefit from that. We're rolling out the next two phases of that that have been in pilot mode throughout the second quarter. So we think we'll get to operationalize those in the third and fourth. We're also in the process of rolling out new dock software.

Speaker Change: And that creates better visibility for our people, our customers, and allows us to see by employee productivity levels. And we have that implemented at 97 locations, and we think we'll finish that rollout in the first quarter of 2025.

Seth Runser: And we have that in place at 97 locations, and we think we'll finish that rollout in the first quarter of 2025. I mentioned the productivity improvements in Lithia Springs and what we saw in Olathe in the first quarter. So we'll continue to see productivity gains as these real estate initiatives come online. We also have a lot of projects in the pilot phase right now that we expect will operationalize throughout the back half. So we're really excited about our pipeline of innovation projects and the efficiency gains we're going to see as we move through the back half of the year. That's some of the upside that Matt talked about.

Speaker Change: I mentioned the productivity improvements in Lithia Springs and what we saw in Olathe in the first quarter, so we'll continue to see productivity as real estate initiatives come online. We also have a lot of projects in pilot phase right now.

Judy Mcreynolds: So we'll continue to see productivity as these real estate initiatives come online. We also have a lot of projects in pilot phase right now that we expect will operationalize throughout the back half. So we're really excited about our pipeline of innovation projects and the efficiency gains we're going to see as we move through the back half the year. That's some of the upside that Matt talked about.

Speaker Change: that we expect will operationalize throughout the back half. So, we're really excited about our pipeline of innovation projects and the efficiency gains we're going to see as we move through the back half of the year. That's some of the upside that Matt talked about.

Judy Mcreynolds: Great. Thank you.

Stephanie Moore: Great, thank you. And then I'm just switching gears to the truckload side of the business. You know, I'd love to get your thoughts on what you're hearing from an overall freight cycle standpoint. I think we've heard of capacity exits for some time now, but really not to the extent or the magnitude that or what we would hope to get us out of this. So, I would love to hear your overall thoughts on just capacity exits and the supply side of the equation. Thank you. Yeah, I mean, you know what we're talking about.

Stephanie Moore: And then just switching gear to the truckload side of the business. You know, I'm looking at your thoughts and what you're hearing from an overall freight cycle standpoint. I think we've heard of capacity exits for some time now, but really not to the extent that the magnitude that we would hope to get us out of this. So I'd love to hear your thoughts. I'm just capacity exit. The supply set of the equation.

Speaker Change: Great, thank you. And then just switching gears to the truckload side of the business, you know, I'd love to get your thoughts on what you're hearing from an overall freight cycle standpoint. I think we've heard of capacity exits for some time now, but really not to the extent that or the magnitude that we would hope to get us out of this. So, love to hear your overall thoughts on just capacity exits and the supply side of the equation. Thank you.

Judy Mcreynolds: Thank you. Yeah, I mean, you know what we're seeing is capacity is coming out of the market. It's just a slow pace. And so, you know, without a dramatic increase in demand, it's just taking some time for that to get to the right balance. But we are seeing movement and capacity coming out of the market, which is a movement towards a more balanced market. Like I said, it's just slow, you know, kind of a slow movement in that direction. Great.

Seth Runser: Yeah, I mean, you know, what we're seeing is capacity coming out of the market. It's just at a slow pace. And so, you know, without a dramatic increase in demand, it's just taking some time for that to get to the right balance. But we are seeing movement and capacity coming out of the market, which is a movement towards a more balanced market. Like I said, it's just slow, you know, kind of a slow movement in that direction.

Speaker Change: Yeah, I mean, you know, what we're seeing is...

Speaker Change: Capacity is coming out of the market. It's just at a slow pace.

Stephanie Moore: And so, you know, without a dramatic increase in demand, it's just taking some time for that to...

Speaker Change: get to the right balance. But we are seeing movement and capacity coming out of the market, which is a movement towards a more balanced market. Like I said, it's just slow, you know, kind of a slow movement in that direction.

Stephanie Moore: Thank you, guys.

Jeff Kaufman: Our next question comes from Jeff Kaufman with Vertical Research Partners. Please go ahead. Thank you very much, and best to David Humphries, and congratulations, Seth and Matt. Really two questions. When we think about the cost per pound versus revenue per pound dynamic, it's been shifted negative because of the big wage increases in the union contract. Now you have the July August increases. When do we get a chance to offset that with the GRI or an increase in the revenue per pound? And when do we see that relationship flip more to the positive? Do we have to wait for January 1?

Operator: Our next question comes from Jeff Kauffman with Vertical Research Partners. Please go ahead.

Speaker Change: Great. Thank you, guys.

Stephanie Moore: Our next question comes from Jeff Kauffman with Vertical Research Partners. Please go ahead.

Jeffrey Kauffman: Thank you very much and best to David Humphreys and congratulations to Seth and Matt. Really, two questions. When we think about the cost... (inaudible)

Speaker Change: Thank you very much and best to David Humphreys and congratulations Seth and Matt.

Speaker Change: Really, two questions.

Speaker Change: When we think about the cost...

Speaker Change: per pound versus revenue per pound dynamic. It's been shifted negative because of the big wage increases in the union contract.

Speaker Change: Now you have the July-August increases.

Speaker Change: When do we get a chance to offset that with the GRI or an increase in the revenue per pound? And when do we see that relationship flip more to the positive? Do we have to wait for January 1? Is it something that could start to happen in the fourth quarter?

Jeff Kaufman: Is it something that could start to happen in the fourth quarter?

Jeff Kaufman: Yeah, hey, Jeff is Christopher, just from a GRI perspective. So our last GRI was early October of last year. I think our normal trends are in that 10 to 12 month cycle. So, if you kind of do the math there, we're getting up close to that GRI cycle that we would normally have. OK, but you haven't made any announcement at this point. That's probably still a lot of plays away. But we don't have to wait for January to see a GRI, hopefully. Yeah, if history plays out like it normally does, like I said, 10 to 12 months and we haven't announced anything formally yet, Jeff.

Christopher Adkins: Yeah, hey, Jeff, it's Christopher. Just from a GRI perspective. So our last GRI was in October, early October of last year. I think our normal trends are in that 10 to 12 month cycle. So if you kind of do the math there, we're getting up close to that GRI cycle that we would normally have.

Speaker Change: Hey Jeff, it's Christopher. Just from a GRI perspective, so our last GRI was October , early October of last year. I think our normal trends are in that 10 to 12 month cycle, so if you kind of do the math there, we're getting up close to that GRI cycle that we would normally have.

Jeffrey Kauffman: Okay, but you haven't made any announcements at this point. That's probably still a ways away, but hopefully, we don't have to wait for January to see a GRI.

Jeff: Okay, but you haven't made any announcement at this point. That's probably still a lot of ways away, but we don't have to wait for January to see a GRI, hopefully.

Christopher Adkins: Yeah, if history plays out like it normally does, like I said, 10, 12 months, and yeah, we haven't announced anything formally yet, Jeff.

Speaker Change: Yeah, if history plays out like it normally does, like I said, 10-12 months, and yeah, we haven't announced anything formally yet, Jeff.

Jeff Kaufman: OK, thanks.

Matt Beasley: Now I thought the LTL business looked great.

Matt Beasley: My big question is on the asset light and not to be throwing rocks here, but it doesn't make sense to do business for practice. And it feels like we're doing that with asset light. Now I recognize the difference in the contingent consideration accounted for about 14 million of the swing. So I do understand that that's a little odd, but with asset light, it's so challenged.

Speaker Change: Okay, thanks. No, I thought the LTL business looked great. My big question is on the asset flight and not to be...

Jeffrey Kauffman: light and not to be throwing rocks here, but it doesn't make sense to do business for practice, and it feels like we're doing that with asset light. Now, I recognize the difference in the contingent consideration accounted for about 14 million of the swing.

Speaker Change: Throws rocks here, but you know it doesn't make sense to do business for practice And it feels like we're doing that with us at light now. I recognize the difference in the contingent consideration accounted for about 14 million of the swing

Matt Beasley: So, I do understand that that's a little odd, but with asset light so challenged, how are we raising contingent consideration for MOLO and maybe breaking down what's going on the asset light side a little bit because it's not just one business; it's a series of businesses. Why is the loss not getting better in the third quarter? Do we have another contingent consideration headwind that we might be looking at, or is there an issue with the business that we used to call Panther because there's just no emergency shipments going on? How do we turn the corner on these losses? Because I think all of us would argue these losses are bigger than we ever thought we'd see in the asset light business.

Speaker Change: So, I do understand that that's a little odd, but with AssetLite...

Matt Beasley: How are we raising contingent consideration for MOLO and maybe break down what's going on on the asset light side a little bit? Because it's not just one business; it's a series of businesses. You know, why is the loss not getting better in the third quarter? Do we have another contingent consideration headwind that we might be looking at? Or is there an issue with the business that we used to call Panther? Because there's just no emergency shipments going on. How do we turn the corner on these losses? Because I think all of us would argue these losses are bigger than we ever thought we'd see at the asset-light business.

Speaker Change: So challenged, you know, how are we raising contingent consideration for MOLO and you know, maybe break down what's going on on the asset light side a little bit because it's not just one business. It's a series of businesses, you know, why is the loss

Speaker Change: I'm not getting better.

Speaker Change: In the third quarter, do we have another contingent consideration, Edwin, that we might be looking at, or is there an issue with the business that we used to call Panther, because there's just no...

Speaker Change: How do we turn the corner on these losses? I think all of us would argue these losses are bigger than we ever thought we'd see at the asset light business.

Matt Beasley: Yeah, so Jeff, it's Matt. Maybe I'll just walk through at a high level. I mean, certainly we've made some comments about the business, and we do feel like that we're positioned well there. But I'll just touch a little bit on your questions about contingent consideration because you're right. That's something that we revalue under the accounting standards every quarter. We look at a simulation of the potential outcomes for that business as it relates to the urn out that we entered into that structured, you know, some additional value. Some performance metrics were met when we purchased that business.

Matt Beasley: Yeah, so Jeff, it's Matt. Maybe I'll just walk through at a high level. I mean, certainly, we've made some comments about the business, and we do feel like we're positioned well there, but I'll just touch a little bit on your questions about contingent iteration because you're right. That's something that we revalue under the accounting standards every quarter. We look at a simulation of the potential outcomes for that business as it relates to the earn-out that we entered into that structured some additional value, some performance metrics were met when we purchased that business, and so.

Speaker Change: Yes, so Jeff, it's Matt. Maybe I'll just walk through at a high level. I mean, certainly we've made some comments about the business and we do feel like that we're positioned well there, but I'll just touch a little bit on your questions about contingent iteration because you're right. That's something that we

Speaker Change: Revalue under the accounting standards every quarter, we look at a simulation of the potential outcomes for that business as it relates to the earn out that we entered into that structured, you know, some additional value, some, some performance metrics were met when we, when we purchased that business. And so.

Matt Beasley: And so, you know, as we've looked at that, you're right. On a year-over-year basis, there was a change as we look at that. And some of that just has to do with just getting closer to the potential urn out period. You just got the time value impact coming into effect. Is that payout period getting close? Professor, but I would say when we're talking about the outlook that we're giving, or in terms of the expectations on being flat, from the second quarter results to the third quarter results, we're not really considering that impact. That's kind of exclusive to that impact.

Matt Beasley: You know, as we've looked at that, you're right, on a year over year basis, there was a change as we looked at that. And some of that just has to do with just getting closer to the potential earn out period. You just got the time value impact coming into effect as that payout period is getting closer.

Speaker Change: You know, as we've looked at that, you're right. On a year-over-year basis, there was...

Speaker Change: a change as we look at that. And some of that just has to do with just getting closer to the potential earn out period. You just got the time value impact coming into effect as that payout period is getting closer, but.

Matt Beasley: But, you know, I would say when we're talking about the outlook that we're giving or the expectations for being flat, you know, from the second quarter results to the third quarter results, we're not really considering that impact. You know, that's kind of exclusive of that impact. That's not something that we'll project into the third quarter.

Speaker Change: You know, I would say when we're talking about the outlook...

Speaker Change: We're giving or the, you know, in terms of the expectations on being flat, you know, from the second quarter results to the third quarter results. We're not really considering that impact. You know, that's kind of exclusive to that impact. That's not something that we're projecting forward.

Matt Beasley: That's not something that we're projecting forward to the third quarter. And then I think in that business, there's the dynamics that we have been talking about. I mean, certainly we've done a great job with the productivity and efficiency work that we've been doing. When you've seen that in the results, I think we're taking the right steps now to make sure that we're prioritizing the profitable business on the truckload side and keeping the right relationships with customers. I mean, if you look at all the industry forecasts, that business is going to turn; the shift has been a little bit more delayed than others were anticipating.

Matt Beasley: And then I think, you know, in that business, there are the dynamics that we have been talking about. I mean, certainly, we've done a great job with the productivity and efficiency work that we've been doing. And you've seen that in the results.

Speaker Change: to the third quarter. And then I think, you know, in that business, there's the dynamics that we have been talking about. I mean, certainly, we've done a great job with the productivity and efficiency work that we've been doing. You've seen that in the results. I think we're taking the right steps now.

Speaker Change: To make sure that we're prioritizing the profitable business on the truckload side and keeping the right relationships with customers. I mean, if you look at all the industry forecasts, you know, that business is going to turn.

Matt Beasley: I think we're taking the right steps now to make sure that we're prioritizing profitable business on the truckload side and keeping the right relationships with customers. I mean, if you look at all the industry forecasts, you know, that business is going to turn, you know, that the shift has been maybe a little bit more delayed than others were anticipating. But I think from where we are with the customer service and customer satisfaction levels, technology, and efficiency, you know, we'll be in a good spot. And you're right.

Matt Beasley: But I think from where we are with the customer service and customer satisfaction level, technology, efficiency will be in a good spot. And you're right. I mean, that is a mix of businesses that provide a lot of different services to our customers that they're appreciating. Certainly, part of that is our managed transportation business, and part of the significant growth in the pipeline that we talked about earlier has to do with just the continued interest that we're seeing in that solution. And those wins are very significant wins when they come on board. I mean, that business comes on in very large chunks, and we're having some good state discussions there, expedite business, certainly part of that business as well international.

Speaker Change: The shift has been...

Speaker Change: Maybe a little bit more delayed than others we're anticipating.

Speaker Change: I think from where we are with the customer service and customer satisfaction level, technology, efficiency, we'll be in a good spot. And you're right. I mean, that is a mix of businesses that provide a lot of different services to our customers that they're appreciating. Certainly part of that is our main transportation business and part of the significant growth in the pipeline.

Speaker Change: that we talked about earlier has to do with just the continued interest.

Matt Beasley: I mean, that is a mix of businesses that provide a lot of different services to our customers that they're appreciating. Certainly, part of that is our managed transportation business. And part of the significant growth in the pipeline that we talked about earlier has to do with just the continued interest that we're seeing in that solution. And those wins are very significant wins when they come on board. I mean, that business comes in very large chunks, and we're having some very good late-stage discussions there. Expedite business is certainly part of that business as well. International.

Speaker Change: that we're seeing in that solution, and those wins are very significant wins when they come on board. I mean, that business comes on in very large chunks, and we're having some very...

Speaker Change: Good. Late stage discussions there. Expedite Business is certainly part of that business as well. International. I mean, so there are multiple different solutions.

Matt Beasley: I mean, so there are multiple different solutions that come in there.

Matt Beasley: I mean, there are multiple different solutions that come in there. And, you know, again, we are in a period kind of bouncing along the bottom here. But, you know, we do know that that business is going to turn, and we're in a good position.

Matt Beasley: And again, we are in a period kind of bouncing along the bottom here, but we do know that that business is going to turn, and we're in a good position when it does. Thank you for that. Yeah.

Speaker Change: We are in a period of bouncing along the bottom here, but we do know that that business is going to turn and we're in a good position.

Jeffrey Kauffman: Thank you for that question.

Judy Mcreynolds: Yeah. Hey, Jeff. This is Judy.

Matt Beasley: and Matt Beasley.

Judy Mcreynolds: Hey, Justice Judy, I want to just speak to the strategic decision to own, you know, the asset-light solutions that we have. It's extremely important to our customers to be able to do business with a logistics company that has solutions like we do with truck load, ground expedite, the managed solution that Matt was just talking about. And so it is when I'm in customer conversations, you know, we have the right conversations, and it's helped us to be able to execute through some of these market disruptions. You know that that we've seen. I mean, it's really positioned us well to do that.

Speaker Change: Thank you for that clip.

Judy Mcreynolds: I wanted to speak to the strategic decision to own, you know, the asset-light solutions that we have. It's extremely important for our customers to be able to do business with a logistics company that has solutions like we do with truckload, ground expedite, and the managed solution that Matt was just talking about. And so it is when I'm in customer conversations, you know; we have the right conversations, and it's helped us to be able to execute through some of these market disruptions that we've seen.

Judy: Judy, I wanted to speak to the strategic

Judy: decision to own, you know, the asset light solutions that we have.

Judy: It's extremely important to our customers to be able to do business with a logistics company.

Speaker Change: that has solutions like we do with truckload, ground expedite.

Judy: the Manage solution that Matt was just talking about. And so it is, when I'm in customer conversations,

Speaker Change: You know, we have the right conversations and it's helped us to be able to execute through some of these market disruptions.

Judy Mcreynolds: I mean, it's really positioned us well to do that. You know, we're in a market that's unusual, no spot market, you know, because of the carrier capacity that's here, but we are well positioned when that changes and we have a better demand environment. And again, you know, we have the right conversations with customers. And when we do well with customers, that translates into shareholder value. And this is all, you know, a part of the story of our integrated solutions that we go to market with.

Matt: You know, that we've seen. I mean, it's really positioned us well to do that. You know, we're in a market that's unusual. No spot market, you know, because of the carrier capacity that's here, but we are well positioned.

Judy Mcreynolds: You know, we were in a in a market that's unusual, no spot market, you know, because of the carrier capacity that's here, but we are well positioned. You know, when that changes and we have a better demand environment. And again, you know, we have the right conversations with customers. And when we do well with customers, that turns into shareholder value. And this is all, you know, a part of the story of our integrated solutions set that we go to market with that I feel great about.

Speaker Change: You know, when that changes and we have a better demand environment.

Matt: And again, you know, we have the right conversations with customers, and when we do well with customers, that turns into shareholder value. And this is all, you know, a part of the story of our, you know, integrated solutions that we go to market with that I feel great about.

Judy Mcreynolds: No, Judy, thanks for the clarity. It's just I've had 10 other asset-like divisions report this quarter, and yours is by far the worst performing in terms of operating margin change. And you know, I get that a lot of that's the contingent consideration, but you know, historically it's just done so much better than that. So I'm just trying to figure out what's weighing on this a little more. Yeah, I know what you're saying. I know what you're saying, Jeff, but you know, when we look operationally, you know, we put that contingent, you know, liability as a part of the overall purchase price.

Speaker Change: Now Judy, thanks for the clarity. It's just, I've had ten other asset-light divisions report this quarter and yours is by far the worst performing.

Jeffrey Kauffman: And I get that a lot of that's a contingent consideration, but historically, it's just done so much better than that. So I'm just trying to figure out what's weighing on this a little more than everybody else. Yeah, I know what you're saying. I know what you're saying, Jeff.

Speaker Change: in terms of operating margin change and you know I get that a lot of that's a contingent consideration but you know historically it's just done so much better than that so I'm just trying to figure out what's what's weighing on this a little more.

Jeffrey Kauffman: But when we look operationally, we put that contingent liability as a part of the overall purchase price for the company, which I think we would all agree if we're able to pay something on that, that means the results are there. When you say operating loss should be flat, I think that's what I heard. Are you saying the dollar amount of operating loss? Are you saying the operating margin? Are you saying the revenues? When we say flat, 3Q versus 2Q, what specifically is it?

Judy: I know what you're saying, I know what you're saying, Jeff, but, you know, when we look operationally.

Jeff Kauffman: We put that contingent liability as a part of the overall purchase price.

Judy Mcreynolds: You know, for the company, which I think we would all agree, if we're able to pay something on that, that means the results are there. And that all that story will be told in 2025, you know, and none of us can help the way that we have to account for it. But I wouldn't put, you know, those dollars in as operational because that's not the operation of the business. That's a part of the purchase price.

Jeff Kauffman: You know, for the company, which I think we would all agree, if we're able to pay something on that, that means the results are there and that all that story will be told in 2025, you know, and none of us can help the way that we have to account for it.

Speaker Change: But I wouldn't put, you know, those dollars in as operational because that's not the operation of the business. That's a part of the purchase price.

Matt Beasley: And I just get one clarification. When you say operating loss should be flat, I think that's what I heard. Are you saying the dollar amount of operating loss, are you saying the operating margin, are you saying the revenues? When we say flat, 3Q versus 2Q, what specifically is that we're talking about? Yeah, I mean, I think we're talking about the non-GAAP operating loss that we had. We had a $2.5 million operating loss in the second quarter. We're, you know, hopeful to improve on that, but right now, you know, particularly based on the trends that we're seeing in July, we're saying that we're expecting to be roughly at that same level as we move to the fourth, too, sorry, as we move to the third quarter.

Speaker Change: Can I just get one clarification? When you say operating loss should be flat, I think that's what I heard. Are you saying the dollar amount of operating loss? Are you saying the operating margin? Are you saying the revenues? When we say flat, 3Q versus 2Q, what specifically is it we're talking about?

Matt Beasley: We're talking about the non-GAAP operating loss that we had. We had a $2.5 million operating loss. We're hopeful to improve on that, but right now, you know, particularly based on the trends that we're seeing in July, we're saying that we're expecting, roughly at that same level as to... Sorry, as we move to the third quarter. Okay.

Speaker Change: We're talking about the non-GAAP operating loss that we had. We had a $2.5 million operating loss in the second quarter.

Jeffrey Kauffman: Okay.

Speaker Change: We're, you know, hopeful to improve on that, but right now, you know, particularly based on the trends that we're seeing in July , we're saying that we're expecting to be...

Speaker Change: Roughly at that same level as we...

Matt Beasley: Okay.

Operator: Thanks, Jeff, operator. It looks like we've got one more in the queue, so we can take one more question.

Speaker Change: to move to the fourth, sorry, to move to the third.

Operator: Thanks Jeff. Operator, it looks like we've got one more in the queue, so we can take one more question.

Speaker Change: Okay, thank you.

Speaker Change: Thanks, Jeff. Operator, it looks like we've got one more in the queue so we can take one more question.

Operator: Perfect, thanks. Our final question for today comes from Ravi Shanker with Morgan Stanley. Please go ahead.

Operator: Perfect. Thanks.

Ravi Shankar: Our final question for today comes from Ravi Shankar with Morgan Stanley. Please go ahead. Great. Thanks for the time. Maybe they're going to switch it up a little bit and follow up on the productivity initiatives. Is there a way to quantify how much of a war lift we can get from those initiatives alone in the irrespective of macro? And also, would you characterize initiatives as catching up to the rest of the industry, or are you going to have pulling ahead with industry-leading initiatives here? Yeah, we provide our long-term or our OAR guidance of the 10 to 15% margin, and that's really where we're leaning towards.

Speaker Change: Perfect, thanks. Our final question for today comes from Ravi Shanker with Morgan Stanley . Please go ahead.

Ravi Shanker: Great, thanks for the time. Maybe we're going to switch it up a little bit and follow up on the productivity initiatives. Is there a way to quantify how much of an OR lift we can get from those initiatives alone, irrespective of macro? And also, would you characterize the initiatives as catching up to the rest of the industry, or are you pulling ahead with industry-leading initiatives?

Ravi Shanker: Great. Thanks for the time. Maybe we're going to switch it up a little bit, Kenneth, and follow up on the productivity initiatives. Is there a way to quantify how much of an OR lift

Ravi Shanker: we can get from those initiatives alone, irrespective of macro. And also, would you characterize the initiatives as kind of catching up to the rest of the industry, or are you kind of pulling ahead with industry-leading initiatives here?

Seth Runser: Yeah, we provide our long-term OR guidance of the 10 to 15 percent margin, and that's really where we're leaning towards. And we've tried to get there consistently over the past few years.

Kenneth: Yeah, we provide our long-term OR guidance of the 10-15% margin, and that's really where we're leaning towards, and we've tried to get there consistently.

Ravi Shankar: And we've tried to get there consistently over the past few years. So if you look at, I believe it's page 12 of the earnings presentation that 840 basis point improvement improvement we've had over the last few years.

Seth Runser: So if you look at, I believe it's page 12 of the earnings presentation, that 840 basis point improvement we've had over the last few years, I feel like we've made a step in the right direction on the OR, but we have more work to do. And that's why I'm so excited about Matt's leadership coming into the president role of ABF because he really spearheaded a lot of those efficiency improvements that we saw, and the real estate plan we've talked about. So obviously, a lot of things depend on the macro.

Matt: over the past few years. So if you look at, I believe it's page 12 of the earnings presentation, that 840 basis point improvement improvement we've had over the last few years. So I feel like we've made a step in the right direction on the OR, but we got more work to do, and that's why I'm so excited about Matt's leadership coming into the president role of ABF.

Ravi Shankar: I feel like we've made a step in the right direction on the OAR, but we got more work to do, and that's why I'm so excited about Matt's leadership coming into the president role of ABF because he really spearheaded a lot of those efficiency improvements that we saw in the real estate plan we've talked about. So obviously, a lot of things depend on the macro. You know, we need top line growth, and we've talked about that a lot; others have as well. But we feel like we still have a lot of runway on the efficiency side of things, with the amount of projects we have in the hopper.

Speaker Change: because he really spearheaded a lot of those efficiency improvements that we saw, the real estate plan we've talked about. Obviously, a lot of things depend on the macro. We need top-line growth, and we've talked about that. A lot of others have as well, but we feel like we still have a lot of runway on the efficiency side of things.

Seth Runser: You know, we need top-line growth, and we've talked about that. A lot of others have as well, but we feel like we still have a lot of runway on the efficiency side of things with the amount of projects we have in the hopper. It's hard to give guidance on what that's going to translate to in terms of OR until we get through some of this pilot phase, but we feel good about our future and where we're going.

Ravi Shankar: So it's hard to give guidance on what that's going to translate to in terms of OAR until we get through some of this pilot phase, but we feel good about our future and where we're going.

Speaker Change: with the amount of projects we have in the hopper, so it's hard to give guidance, you know, on what that's going to translate to in terms of OR until we get through some of this pilot phase, but we feel good about our future and where we're going.

Ravi Shankar: God, I may be able to follow up.

Ravi Shanker: Gaurav, maybe as a follow-up, I think Judy, you opened the call by saying that your sales pipeline is up 40%. Is there anything we can read into kind of what that means for what the cycle looks like in the next kind of six, nine, 12 months, or is that just long-term? Well, it's it's the

Ravi Shankar: I think, too, to you open the call by saying that your sales pipeline is up 40%. Is there anything you can read into what that means for what the cycle looks like in the next 6, 9, 12 months, or is that just long-term statistics? Well, it's a statistic that covers a span of time, but I wouldn't necessarily characterize it as longer term, although there are elements of it that they're at longer term sales cycle, like the managed part of it. But you know, it's what's good about what we're seeing is that we're getting into later stages, you know, on those opportunities from where they were at the beginning of the year.

Speaker Change: Got it. Maybe as a follow-up, I think, Judy, you opened the call by saying that your sales pipeline is up 40%. Is there anything we can read into what that means for what the cycle looks like in the next 6, 9, 12 months? Or is that just long-term statistics?

Judy Mcreynolds: Well, it's a statistic that covers a span of time, but I wouldn't necessarily characterize it as longer-term, although there are elements of it that are longer-term sales cycles, like the managed part of it. But what's good about what we're seeing is that we're getting into later stages on those opportunities from where they were at the beginning of the year. So what I think when I see that is just about how we'll go into the latter part of the fourth quarter and maybe into 2025.

Judy: Well, it's a statistic that covers a span of time, but I wouldn't necessarily characterize it as longer-term, although there are elements of it that are longer-term sales cycle, like the managed part of it.

Speaker Change: But, you know, what's good about what we're seeing is that we're getting into later stages.

Speaker Change: You know, on those opportunities from where they were at the beginning of the year. So what I think when I see that is just about, you know, how we'll go into the latter part of the fourth quarter and maybe into 2025.

Judy Mcreynolds: So what I think when I see that is just about, you know, how we'll go into the latter part of the fourth quarter and maybe into 2025. And you know, it's what I've always wanted our team to do, which is to, you know, outpace what's going on in the macro, particularly if it's negative, and to really control our own destiny in terms of the growth that we have at the company. And so that's the way I think about it. It's not, it is not super long-term or anything, though. I think we are replenishing it every day.

Speaker Change: And, you know, it's what I've always wanted our team to do, which is to, you know, outpace what's going on in the macro, particularly if it's negative, and to really control our own destiny in terms of the growth that we have at the company. And so that's the way I think about it. It's not – it is not super long-term or anything, though. I think we are replenishing it every day.

Judy Mcreynolds: And it's what I've always wanted our team to do, which is to outpace what's going on in the macro, particularly if it's negative, and to really control our own destiny in terms of the growth that we have at the company. And so that's the way I think about it. It isn't super long-term or anything, though. I think we are replenishing it every day.

Judy Mcreynolds: Great, thank you.

Amy Mendenhall: I will now turn the call back over to Amy for closing remarks. Thanks to everyone for joining us today. We appreciate your interest in ArcBest. Have a great day.

Speaker Change: Great, thank you.

Amy Mendenhall: I will now turn the call back over to Amy for her closing remarks.

Ravi Shanker: Thanks, Ravi.

Speaker Change: I will now turn the call back over to Amy for closing remarks.

Amy Mendenhall: Thanks to everyone for joining us today. We appreciate your company.