ARCBEST CORP DE

Previous wording

ArcBest Corporation™ (together with its subsidiaries, the “Company,” “ArcBest®,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages our technology and a full suite of solutions to meet our customers’ supply chain needs. Our operations are conducted through two reportable operating segments:

Current wording

ArcBest Corporation™ (together with its subsidiaries, the “Company,” “ArcBest®,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages technology and a full suite of solutions to meet our customers’ supply chain needs. Our operations are conducted through two reportable operating segments:

Previous wording

On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary of the Company, for an aggregate adjusted cash purchase price of $100.9 million, including post-closing adjustments. Following the sale, FleetNet was reported as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented, and reclassifications have been made to the prior-period financial statements to conform to the current-year presentation. Unless otherwise indicated, all amounts in this Annual Report on Form 10-K refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary of the Company, for an aggregate adjusted cash purchase price of $100.9 million, including post-closing adjustments. Following the sale, FleetNet® was reported as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, all amounts in this Annual Report on Form 10-K refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

Our consolidated revenues, which totaled $4.4 billion for 2023, decreased 12.0% compared to 2022. The revenue decline is primarily attributable to lower market rates for shipping and logistics services in a softer market environment with more available capacity, compared to the prior-year periods, despite an increase in demand for our core, published LTL business during the second half of 2023 following market disruption, as further discussed below. The year-over-year decrease in consolidated revenues for 2023 reflects a 4.6% decrease in our Asset-Based revenues and a 21.4% decrease in our Asset-Light revenues. The increased elimination of revenues reported in the “Other and eliminations” line of consolidated revenues in 2023, compared to 2022, includes the impact of increased intersegment business levels among our operating segments.

Current wording

Our consolidated revenues, which totaled $4.2 billion for 2024, decreased 5.6% compared to 2023. The revenue decline is primarily attributable to lower market rates for our Asset-Light shipping and logistics services in a soft market environment and a decrease in our Asset-Based daily tonnage levels. The lower tonnage levels are primarily due to lower weight per shipment, compared to the prior-year period, despite an increase in demand for LTL-rated shipments following market disruption in 2023, as further discussed below. The year-over-year decrease in consolidated revenues for 2024 reflects a 4.2% decrease in our Asset-Based revenues and a 7.6% decrease in our Asset-Light revenues. The elimination of revenues reported within the “Other and eliminations” line of consolidated revenues increased 1.6% for 2024, compared to 2023, reflecting year-over-year changes in intersegment business levels among our operating segments.

Previous wording

The decrease in revenues of our Asset-Light segment for 2023, compared to 2022, was impacted by a 25.3% decline in revenue per shipment associated with softer market conditions and changes in business mix, partially offset by a 5.3% increase in shipments per day. Our Asset-Light segment generated approximately 37% and 42% of total revenues before other revenues and intercompany eliminations for 2023 and 2022, respectively.

Current wording

The decrease in revenues of our Asset-Light segment for 2024, compared to 2023, was impacted by a 12.8% decline in revenue per shipment associated with soft market conditions and a higher mix of managed transportation business, which has smaller shipment sizes and lower revenue per shipment metrics, partially offset by a 5.5% increase in shipments per

Previous wording

Consolidated operating income decreased $221.9 million in 2023, compared to 2022, primarily due to lower revenues. Operating expenses for 2023, compared to 2022, reflect lower purchased transportation costs in both of our operating segments and lower employee costs in the Asset-Light segment due to the alignment of costs to business levels, offset partially by higher employee costs in the Asset-Based segment due to union wage increases and higher headcount. Segment operating expenses are further described in the Asset-Based Segment Results and Asset-Light Segment Results sections of Results of Operations. In addition to the results of our operating segments, the year-over-year comparison of consolidated operating income was also impacted by items described in the following paragraphs.

Current wording

Consolidated operating income increased by $71.8 million year-over-year reflecting the $90.3 million reduction in the contingent earnout consideration accrual during 2024 and a decrease in operating expenses due to lower purchased transportation costs in both of our operating segments and lower employee costs in the Asset-Light segment from continued alignment of costs to the market environment, offset partially by lower revenues in both the Asset-Light and Asset-Based segments and higher employee costs in the Asset-Based segment due to union wage and benefit rate increases. Segment operating expenses are further described in the Asset-Based Segment Results and Asset-Light Segment Results sections of Results of Operations. In addition to the results of our operating segments, the year-over-year comparison of consolidated operating income was also impacted by items described in the following paragraphs.

Previous wording

Innovative technology costs impacted our consolidated and Asset-Based segment results during 2023 and 2022. These costs include our freight handling pilot test program at ABF Freight, as further discussed in the Asset-Based Segment Results section. In March 2023, we launched our customer offering of Vaux TM – the innovative suite of hardware and software which modernizes and transforms how freight is loaded, unloaded, and transferred in warehouse and dock operations. Certain costs related to our growing number of Vaux pilot programs in customer test locations and other initiatives to optimize performance through technological innovation are reported in the “Other and eliminations” line of consolidated operating income. These combined costs impacted consolidated results by $52.4 million (pre-tax), or $39.7 million (after-tax) and $1.61 per diluted share, for 2023, compared to $40.8 million (pre-tax), or $30.8 million (after-tax) and $1.21 per diluted share, for 2022.

Current wording

Innovative technology costs impacted our consolidated segment results during 2024 and 2023. In February 2024, we announced the next step in our Vaux suite – Vaux Smart Autonomy™, which combines autonomous mobile robot forklifts and reach trucks, intelligent software, and remote teleoperation capability to autonomously handle materials movement within warehouses, distribution centers, and manufacturing facilities, while being monitored by humans. In March 2023, we launched our customer offering of Vaux TM – the innovative suite of hardware and software which modernizes and transforms how freight is loaded, unloaded, and transferred in warehouse and dock operations. Certain costs related to our growing number of Vaux pilot programs in customer test locations and other initiatives to optimize performance through technological innovation are reported in the “Other and eliminations” line of consolidated operating income. For the year ended December 31, 2023, innovative technology costs also impacted our Asset-Based segment and included our freight handling pilot test program at ABF Freight, as further discussed in the Asset-Based Segment Results section. These combined costs decreased consolidated results by $34.1 million (pre-tax), or $26.1 million (after-tax) and $1.10 per diluted share, for 2024, compared to $52.4 million (pre-tax), or $39.7 million (after-tax) and $1.61 per diluted share, for 2023.

Previous wording

The liability for contingent earnout consideration recorded for the MoLo acquisition is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income (loss). Consolidated operating results increased $19.1 million (pre-tax), or $14.4 million (after-tax) and $0.58 per diluted share, due to quarterly remeasurements which resulted in a lower liability of the contingent earnout consideration for 2023. For 2022, the quarterly remeasurements resulted in a higher contingent earnout consideration liability, which decreased consolidated operating results by $18.3 million (pre-tax), or $13.6 million (after-tax) and $0.54 per diluted share. Remeasurement of the contingent earnout consideration is further discussed in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

The liability for contingent earnout consideration recorded for the MoLo® acquisition is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income. Consolidated operating results increased by $90.3 million (pre-tax), or $67.9 million (after-tax) and $2.85 per diluted share, for 2024 and by $19.1 million (pre-tax), or $14.4 million (after-tax) and $0.58 per diluted share for 2023, in each case due to quarterly remeasurements which resulted in a lower liability of the contingent earnout consideration. Remeasurement of the contingent earnout consideration is further discussed in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

The Company recognized lease impairment charges during the third quarter of 2023 related to a freight handling pilot facility, an Asset-Based service center, and certain Asset-Light office spaces that were made available for sublease, as further described within Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Lease impairment charges reduced operating results by $30.2 million (pre-tax), or $22.6 million (after-tax) and $0.92 per diluted share. Remeasurement of the operating right-of-use assets and leasehold improvements is further discussed within Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

The Company recognized asset impairment charges for certain revenue equipment and software during the fourth quarter of 2024 as part of a strategic decision to adjust capacity within Asset-Light’s operations. These asset impairment charges reduced operating results by $1.7 million (pre-tax), or $1.3 million (after-tax) and $0.05 per diluted share, for the year ended December 31, 2024. The Company recognized lease-related impairment charges during the third quarter of 2023 for a freight handling pilot facility, an Asset-Based service center, and certain Asset-Light office spaces that were made available for sublease, as further described within Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Asset impairment charges reduced operating results by $30.2 million (pre-tax), or $22.6 million (after-tax) and $0.92 per diluted share for the year ended December 31, 2023. Remeasurement of the long-lived assets, operating right-of-use assets, and leasehold improvements is further discussed within Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

Estimated legal expenses to settle a claim related to the classification of certain Asset-Light employees under theFair Labor Standards Act reduced operating results in 2023 by $9.5 million (pre-tax), or $7.1 million (after-tax) and $0.29 per diluted share. Estimated legal settlement expenses are further discussed within Note P to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

Legal settlement expenses related to the classification of certain Asset-Light employees under theFair Labor Standards Act reduced operating results by $0.3 million (pre-tax), or $0.2 million (after-tax) and $0.01 per diluted share in 2024, compared to $9.5 million (pre-tax), or $7.1 million (after-tax) and $0.29 per diluted share in 2023. Legal settlement expenses are further discussed within Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. Changes in the cash surrender value of life insurance policies, which are reported below the operating income line in the consolidated statements of operations, increased consolidated net income by $4.6 million and $0.19 per diluted share in 2023, and reduced consolidated net income by $2.7 million and $0.11 per diluted share in 2022. We recorded an adjustment to the fair value of our equity investment in Phantom Auto, a provider of human-centered remote operation software, based on an observable price change during second quarter 2023, which increased consolidated net income by $2.8 million or $0.11 per diluted share, with no comparable prior-year impact. The vesting of restricted stock units resulted in a tax benefit of $5.3 million and $0.21 per diluted share for 2023, compared to a tax benefit of $8.1 million and $0.32 per diluted share in 2022.

Current wording

In addition to the above items, the year-over-year changes in consolidated net income and earnings per share were impacted by changes in the cash surrender value of variable life insurance policies, tax benefits from the vesting of share-based compensation awards, and other changes in the effective tax rate as described within the Income Taxes section of MD&A and in Note F to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. A portion of our variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. Changes in the cash surrender value of life insurance policies, which are reported below the operating income line in the consolidated statements of operations, increased consolidated net income by $3.3 million and $0.14 per diluted share in 2024, and $4.6 million and $0.19 per diluted share in 2023. The vesting of restricted stock units resulted in a tax benefit of $11.3 million and $0.47 per diluted share for 2024, compared to a tax benefit of $5.3 million and $0.21 per diluted share in 2023.

Previous wording

We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, using these measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light segment, changes in the fair value of contingent earnout consideration and equity investment, lease impairment charges, estimated legal settlement expenses of the Asset-Light segment, gain on sale of subsidiary, and transaction costs, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Fourth Amended and Restated Credit Agreement (see Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). Other companies may calculate Adjusted EBITDA differently; therefore, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Adjusted EBITDA should not be construed as a better measurement than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP. The following table presents a reconciliation of Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented.

Current wording

We report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, utilized for internal analysis provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance. These measures provide meaningful comparisons between current and prior period results, as well as important information regarding performance trends. Accordingly, using these measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key measure of performance and for business planning. The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light segment, changes in the fair value of contingent earnout consideration and our equity investment, asset impairment charges, legal settlement expenses of the Asset-Light segment, and gain on sale of subsidiary, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Fourth Amended and Restated Credit Agreement (see Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). Other companies may calculate Adjusted EBITDA differently; therefore, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Adjusted EBITDA should not be construed as a better measurement than operating income, net income (loss), or earnings per share, as determined under GAAP. The following table presents a reconciliation of Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented.

Previous wording

The Asset-Based segment consists of ABF Freight System, Inc., a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries. Our Asset-Based segment provides freight transportation services through one of North America’s largest less-than-truckload (“LTL”) carriers. Our customers trust the LTL solutions ABF Freight has provided for over a century and rely on our unwavering commitment to quality, safety, and customer service to solve their transportation challenges through market disruptions and rapidly changing economic conditions. We are strategically investing in our Asset-Based operations to utilize technology to drive efficiency and productivity and to enrich our deep customer relationships to navigate challenges now and in the future.

Current wording

The Asset-Based segment consists of ABF Freight System, Inc., a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries. Our Asset-Based segment provides freight transportation services through one of North America’s largest less-than-truckload (“LTL”) carriers. Our customers trust the LTL solutions ABF Freight has provided for over a century and rely on our unwavering commitment to quality, safety, and customer service to solve their transportation challenges through market disruptions and rapidly changing economic conditions. We are strategically investing in our Asset-Based operations to utilize technology to drive efficiency and productivity. We are also committed to our deepening customer relationships to navigate challenges now and in the future.

Previous wording

Tonnage per day (average daily shipment weight) – tonnage divided by the number of workdays in the period.

Current wording

Tonnage per day (average daily shipment weight) – total weight of shipments processed during the period in U.S. tons divided by the number of workdays in the period.

Previous wording

Pounds per shipment (weight per shipment) – total pounds divided by the number of shipments during the period.

Current wording

Weight per shipment – total weight of shipments processed during the period in U.S. pounds divided by the number of shipments during the period.

Previous wording

We also quantify certain key operating statistics, which are used by management to evaluate productivity of operations within the Asset-Based freight network and to measure the effectiveness of strategic initiatives to

Current wording

We also quantify certain key operating statistics, which are used by management to evaluate productivity of operations within the Asset-Based freight network and to measure the effectiveness of strategic initiatives to manage the segment’s cost structure from period to period. These measures are defined below and further discussed under Asset-Based Operating Expenses within the Asset-Based Segment Results section:

Previous wording

We allow shippers with established accounts and without negotiated published rates, instant access to competitive LTL rates through an online portal and API connectivity, matching their shipping needs with capacity available in the ABF Freight network at the time of the quote. The market has been receptive to this dynamic pricing option for transactional LTL shipments, and this program has been beneficial in optimizing our business levels by improving capacity utilization in the Asset-Based network. In a softer market environment, such as the conditions we experienced in the first half of 2023, our dynamic pricing option allowed us to strategically fill empty capacity, enabling us to reduce the need for employee furloughs or layoffs and be better positioned for a market rebound of higher freight demand, as well as provide a more sustainable service offering by reducing “empty miles” (or the number of miles we move empty or near-empty equipment for repositioning purposes).

Current wording

We allow shippers with established accounts and without negotiated published rates, instant access to competitive LTL rates through an online portal and API connectivity, matching their shipping needs with capacity available in the ABF Freight network at the time of the quote. The market has been receptive to this dynamic pricing option for transactional LTL shipments, and this program has been beneficial in optimizing our business levels by improving capacity utilization in the Asset-Based network. In the current soft market environment, our dynamic pricing option has allowed us to strategically fill empty capacity, enabling us to reduce the need for employee furloughs or layoffs and be better positioned for a market rebound of higher freight demand, as well as provide a more sustainable service offering by reducing “empty miles” (or the number of miles we move empty or near-empty equipment for repositioning purposes). Although we continually evaluate our business mix to ensure revenue optimization, any resulting increase in revenues could be offset partially or entirely by the related increase in expenses needed to service higher shipment volumes.

Previous wording

We also utilize a space-based pricing approach for shipments subject to LTL tariffs to align our pricing with freight shipping trends in the industry, including the overall growth and ongoing profile shift to bulkier, yet often lighter, shipments across the supply chain, the acceleration in e-commerce, and the unique requirements of many shipping and logistics solutions. Space-based pricing involves the use of freight dimensions (length, width, and height) to determine applicable cubic minimum charges (“CMC”) that supplement weight-based metrics when appropriate. Traditional LTL pricing is generally weight-based, while our linehaul costs are generally space-based (i.e., costs are impacted by the volume of space required for each shipment). We believe space-based pricing better aligns our pricing mechanisms with the metrics which affect our resources and, therefore, our costs to provide logistics services. We seek to provide logistics solutions to our customers’ businesses and the unique shipment characteristics of their various products and commodities, and we believe that we are particularly experienced in handling freight that is generally considered difficult to handle. CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments.

Current wording

We also utilize a space-based pricing approach for shipments subject to LTL tariffs to align our pricing with freight shipping trends in the industry, including the overall growth and ongoing profile shift to bulkier, yet often lighter, shipments across the supply chain, the acceleration in e-commerce, and the unique requirements of many shipping and logistics solutions, such as accommodating for smaller LTL shipments. An increasing percentage of freight is taking up more space in trailers without a corresponding increase in weight. Traditional LTL pricing is generally weight-based, while our linehaul costs are generally space-based (i.e., costs are impacted by the volume of space required for each shipment). Space-based pricing involves the use of freight dimensions (length, width, and height) to determine applicable cubic minimum charges (“CMC”) that supplement weight-based metrics when appropriate. We believe space-based pricing better aligns our pricing mechanisms with the metrics which affect our resources and, therefore, our costs to provide logistics services. We seek to provide logistics solutions to our customers’ businesses and the unique shipment characteristics of their various products and commodities, and we believe that we are particularly experienced in handling freight that is generally considered difficult to handle. CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments.

Previous wording

Our Asset-Based labor costs, including retirement and healthcare benefits for contractual employees that are provided by a number of multiemployer plans (see Note K to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K), are impacted by contractual obligations under the 2023 ABF NMFA and other related supplemental agreements. Total salaries, wages, and benefits, amounted to 48.1% and 43.0% of revenues for 2023 and 2022, respectively. Changes in salaries, wages, and benefits expense and shared services expenses, which include labor costs related to ABF Freight’s portion of company-wide functions, as a percentage of revenues are discussed in the following Asset-Based Segment Results section.

Current wording

(“IBT”), which will remain in effect through June 30, 2028, and other related supplemental agreements. Total salaries, wages, and benefits, amounted to 50.5% and 48.1% of revenues for 2024 and 2023, respectively. Changes in salaries, wages, and benefits expense and shared services expenses, which include labor costs related to ABF Freight’s portion of company-wide functions, as a percentage of revenues are discussed in the Asset‑Based Segment Results section.

Previous wording

ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers. Nonunion competitors have a lower fringe benefit cost structure and less stringent labor work rules, and certain carriers also have lower wage rates for their freight-handling and driving personnel. ABF Freight has continued to address with the IBT the effect of the segment’s wage and benefit cost structure on its operating results. Under the 2023 ABF NMFA, ABF Freight continues to pay some of the highest benefit contribution rates in the industry, and through this contract, ABF Freight may implement location-specific wage increases in areas where hiring has been challenging.

Current wording

ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers. Nonunion competitors have a lower fringe benefit cost structure and less stringent labor work rules, and certain carriers also have lower wage rates for their freight-handling and driving personnel. ABF Freight has continued to address with the IBT the effect of the segment’s wage and benefit cost structure on its operating results. As of December 2024, approximately 82% of our Asset-Based segment’s employees were covered under the 2023 ABF NMFA. The terms of the 2023 ABF NMFA continue to provide some of the best wages and benefits in the industry to our contractual employees. The combined contractual wage and benefits top hourly rate is estimated to increase approximately 4.2% on a compounded annual basis through the end of the agreement, with potential profit-sharing bonuses representing additional costs under the 2023 ABF NMFA.

Previous wording

ABF Freight’s benefit contributions for its contractual employees include contributions to multiemployer plans. These contributions to multiemployer pension plans and health and welfare plans totaled $162.5 million and $215.6 million, respectively, in 2023, and $154.6 million and $194.4 million, respectively, in 2022. As previously outlined, the 2023 ABF NMFA provided for ABF Freight’s contributions to multiemployer pension plans to remain at the rates that were paid under the prior labor agreement with the IBT, while wage rates and health and welfare contribution rates for most plans increased annually in accordance with the terms of the 2023 ABF NMFA. Union wages increased 13.0% effective July 1, 2023 related to contractual wage and mileage rate increases under the 2023 ABF NMFA, and the contractual wage rate increased 1.9% effective July 1, 2022 under the 2018 ABF NMFA. The average health, welfare, and pension benefit contribution rate increased approximately 3.6% and 2.5% effective primarily on August 1, 2023 and 2022, respectively.

Current wording

Under the 2023 ABF NMFA, ABF Freight continues to pay some of the highest benefit contribution rates in the industry, and through this contract, ABF Freight may implement location-specific wage increases in areas where hiring has been challenging. ABF Freight’s benefit contributions for its contractual employees include contributions to multiemployer plans. These contributions to multiemployer pension plans and health and welfare plans totaled $157.9 million and $218.5 million, respectively, in 2024, and $162.5 million and $215.6 million, respectively, in 2023. ABF Freight’s latest labor agreement with IBT requires wage rates and health, welfare, and pension contribution rates for most plans to increase annually in accordance with the terms of the 2023 ABF NMFA. Union wages increased 13.0% effective July 1, 2023 related to contractual wage and mileage rate increases under the 2023 ABF NMFA, the contractual wage rate increased effective July 1, 2024, and the health, welfare, and pension benefit contribution rate increased effective primarily on August 1, 2024, resulting in a combined contractual wage and benefits top hourly rate increase of approximately 2.7%.

Previous wording

The terms of the 2023 ABF NMFA continue to provide some of the best wages and benefits in the industry to our contractual employees. The combined contractual wage and benefits top hourly rate is estimated to increase approximately 4.2% on a compounded annual basis through the end of the agreement, with potential profit-sharing bonuses representing additional costs under the 2023 ABF NMFA. The 2023 ABF NMFA provides for:

Current wording

The 2023 ABF NMFA provides for:

Previous wording

collective bargaining agreements for ABF Freight’s contractual employees, our future contribution rates to multiemployer pension plans may be less likely to increase as a result of legislation in recent years that has provided funding relief to many underfunded plans (see Note K to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). If ABF Freight were to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Further, ABF Freight could also trigger complete or partial withdrawal liability from certain multiemployer pension plans through, among other things, mergers and other fundamental corporate transactions and as a result of operational changes, site closures and job losses, which could result in material liabilities.

Current wording

Through the term of the 2023 ABF NMFA, which extends through June 30, 2028, ABF Freight’s multiemployer pension contribution obligations generally will be satisfied by making the specified contributions when due. Future contribution rates will be determined through the negotiation process for contract periods following the term of the current collective bargaining agreement. While we cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees, our future contribution rates to multiemployer pension plans may be less likely to increase as a result of legislation in recent years that has provided funding relief to many underfunded plans (see Note J to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). If ABF Freight were to completely withdraw from certain multiemployer pension plans, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Further, ABF Freight could also trigger complete or partial withdrawal liability from certain multiemployer pension plans through, among other things, mergers and other fundamental corporate transactions and as a result of operational changes, site closures and job losses, which could result in material liabilities.

Previous wording

Asset-Based segment revenues totaled $2.9 billion and $3.0 billion for the year ended December 31, 2023 and 2022, respectively. The decrease in revenue compared to the prior year primarily reflects a softer market environment and our response to market conditions, which included changes to the Asset-Based business mix. Billed revenue (as described in the Asset-Based Segment Overview) decreased 4.5% on a per-day basis in 2023 compared to 2022, primarily reflecting a 2.4% decrease in tonnage per day, and a 2.2% decrease in total billed revenue per hundredweight, including fuel surcharges.

Current wording

Asset-Based segment revenues totaled $2.8 billion and $2.9 billion for the years ended December 31, 2024 and 2023, respectively. The decrease in revenue compared to the prior year primarily reflects a decrease in tonnage per day and weight per shipment. Billed revenue (as described in the Asset-Based Segment Overview section) decreased 4.3% on a per-day basis in 2024, compared to 2023, primarily reflecting a 14.3% decrease in tonnage per day, partially offset by a 11.7% increase in billed revenue per hundredweight, including fuel surcharges. There was one more workday in 2024 versus 2023.

Previous wording

The 2.2% decrease in total billed revenue per hundredweight for 2023, including fuel surcharges, compared to 2022, was primarily impacted by the softened pricing environment and the effect of changes in business mix. During the first half of 2023, lower-priced dynamic LTL-rated shipments increased as a proportion of total business as we worked to strategically fill capacity to avoid employee furloughs and layoffs in the recessionary freight environment. During the second half of 2023, we experienced an increase in demand and improved pricing on both dynamic and published LTL shipments following tightening in market capacity resulting from the exit of a larger LTL competitor, which drove core, published LTL tonnage to be a higher proportion of total business mix in the Asset-Based network. Lower fuel surcharge revenues associated with decreased fuel prices also negatively impacted the total billed revenue per hundredweight measure in 2023, compared to 2022. The Asset-Based segment’s average nominal fuel surcharge rate for 2023 decreased approximately 7 percentage points from 2022 levels. Excluding the impact of fuel surcharges, the percentage increase in billed revenue per hundredweight on our traditional published LTL-rated freight was in the low-single digits for 2023, compared to 2022. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts that were renewed during 2023 increased an average of 4.2%, compared to the prior year which reflected the second highest average increase we have secured in company history, primarily due to tight market capacity which continued through the first half of 2022. The Asset-Based segment implemented nominal general rate increases on its LTL base rate tariffs of 5.9%, 5.9% and 6.9% effective on October 2, 2023, November 7, 2022, and November 15, 2021, respectively, although the rate changes vary by lane and shipment characteristics.

Current wording

for LTL shipments continues to be rational. Excluding the impact of fuel surcharges, the percentage increase in billed revenue per hundredweight on our traditional LTL-rated freight was in the low-single digits for 2024, compared to 2023. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts which were renewed during 2024 increased an average of 4.9%, compared to the prior year. The Asset-Based segment implemented nominal general rate increases on its LTL base rate tariffs of 5.9% effective on September 9, 2024, October 2, 2023, and November 7, 2022, although the rate changes vary by lane and shipment characteristics.

Previous wording

Current economic conditions and the Asset-Based segment’s pricing approach, as previously discussed in the Pricing section of the Asset-Based Segment Overview within Results of Operations, will continue to impact the segment’s tonnage levels and the prices it receives for its services and, as such, there can be no assurance that our Asset-Based segment will maintain or achieve improvements in its current operating results. The marketplace pricing environment has remained rational which has benefited our efforts to secure needed price increases, and pricing was strong during the market disruption of 2023; however, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods.

Current wording

Current economic conditions and the Asset-Based segment’s pricing approach, as previously discussed in the Pricing section of the Asset-Based Segment Overview within Results of Operations, will continue to impact the segment’s tonnage levels and the prices it receives for its services and, as such, there can be no assurance that our Asset-Based segment will maintain or achieve improvements in its current operating results. The industry pricing environment remains rational, which has benefited our efforts to secure needed price increases; however, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods.

Previous wording

The Asset-Based segment generated operating income of $253.2 million in 2023, compared to $381.1 million in 2022, with an operating ratio of 91.2% and 87.3%, respectively. The 3.9 percentage point increase in the Asset-Based segment’s operating ratio for 2023, compared to 2022, primarily reflects the decreased revenues, partially offset by lower operating expenses, reflecting cost control efforts to reduce utilization of outside resources.

Current wording

The Asset-Based segment generated operating income of $242.6 million in 2024, compared to $253.2 million in 2023, with an operating ratio of 91.2% in both periods. The Asset-Based segment’s operating ratio was impacted by the decline in revenues, offset by lower operating expenses, reflecting primarily cost control efforts to reduce utilization of outside resources and optimize internal resources, and the pausing of the freight handling pilot test program at ABF Freight during third quarter 2023, as discussed in the following paragraphs.

Previous wording

Rents and purchased transportation as a percentage of revenue decreased 2.8 percentage points in 2023, compared to 2022, primarily due to focused reduction in the utilization of local delivery agents and linehaul purchased transportation. Rail miles also decreased approximately 11% in 2023, compared to 2022. The year-over-year decrease in purchased transportation costs also benefited from lower fuel surcharges related to these services due to lower fuel costs.

Current wording

Rents and purchased transportation as a percentage of revenue decreased 1.8 percentage points in 2024, compared to 2023, primarily due to focused reduction in the utilization of local delivery agents and linehaul purchased transportation and a decrease in rail fuel surcharge cost per mile. Rail miles decreased approximately 9% in 2024, compared to 2023.

Previous wording

Innovative technology costs related to the freight handling pilot test program (the “pilot”) at ABF Freight impacted operating results of the Asset-Based segment by $21.7 million and $27.2 million for 2023 and 2022, respectively. The freight handling pilot at ABF Freight included both hardware and software elements. During the third quarter of 2023, the Company paused the hardware portion of the pilot at ABF Freight distribution centers in Kansas City, Missouri and Salt Lake City, Utah, as the implementation team’s efforts were refocused toward training managers and employees on operational best practices. The software portion of the pilot program, which provides greater visibility into Asset-Based operations, continues to be utilized in the Asset-Based operations network to drive efficiency, productivity, and service

Current wording

We paused the hardware portion of the pilot at ABF Freight distribution centers in Kansas City, Missouri and Salt Lake City, Utah during third quarter 2023. The Asset-Based segment did not incur innovative technology costs during the year

Previous wording

Our Asset-Light segment is a key component of our strategy to offer a single source of integrated logistics solutions, designed to satisfy customers’ complex supply chain needs and unique shipping requirements. We are focused on growing and making strategic investments in our Asset-Light segment that enhance our service offerings and strengthen our customer relationships. Throughout our operations, we are seeking opportunities to expand our revenues by deepening existing customer relationships, securing new customers, and adding capacity options for our customers. We continue to develop our managed transportation solutions as part of our strategic efforts to cross-sell our service offerings and meet the demand for these services that increase operational efficiencies, reduce costs, and give better insights into their supply

Current wording

Our Asset-Light segment is a key component of our strategy to offer a single source of integrated logistics solutions, designed to satisfy customers’ complex supply chain needs and unique shipping requirements. We are focused on growing and making strategic investments in our Asset-Light segment that enhance our service offerings and strengthen our customer relationships. Throughout our operations, we are seeking opportunities to expand our revenues by deepening existing customer relationships, securing new customers, and adding capacity options for our customers.

Previous wording

Our Asset-Light operations are affected by general economic conditions, as well as several other competitive factors that are more fully described in Part I, Item 1 (Business) and in Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. See Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2023, 2022, and 2021.

Current wording

Our Asset-Light operations are affected by general economic conditions, as well as several other competitive factors that are more fully described in Part I, Item 1 (Business) and in Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K. See Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating income (loss) for the years ended December 31, 2024, 2023, and 2022.

Previous wording

Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies. Key performance indicators should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP.

Current wording

Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies. Key performance indicators should be viewed in addition to, and not as an alternative for, our reported results. Our key performance indicators should not be construed as better measurements of our results than operating income, net income, or earnings per share, as determined under GAAP.

Previous wording

Asset-Light segment revenues totaled $1.7 billion and $2.1 billion in 2023 and 2022, respectively. The 21.4% decrease in 2023 revenues, compared to 2022, primarily reflects the impact of changes in business mix and lower average revenue per shipment associated with a softer market environment. Although average daily shipment levels increased due to growth in both the truckload and managed transportation service offerings despite weak market demand, lower revenue per shipment drove the reduction in revenue compared to 2022.

Current wording

Asset-Light segment revenues totaled $1.6 billion and $1.7 billion in 2024 and 2023, respectively. The 7.6% decrease in 2024 revenues, compared to 2023, primarily reflects the impact of lower average revenue per shipment associated with a soft market environment and a higher mix of managed transportation business, which has smaller shipment sizes and lower revenue per shipment metrics. Excess capacity in the truckload market continues to impact spot market rates resulting in lower revenue per shipment and compressed margins. Despite an increase in average daily shipment levels for the year ended December 31, 2024, driven by growth in managed transportation service offerings, lower revenue per shipment levels resulted in an overall revenue decline, compared to the same period of 2023.

Previous wording

Purchased transportation costs as a percentage of revenue increased by 2.0 percentage points for 2023, compared to 2022, reflecting lower revenue outpacing the reduction of purchased transportation costs in 2023. Changes in market capacity impact the cost of purchased transportation and may not correspond to the timing of revisions to customer pricing and changes in revenue per shipment. There can be no assurance that we will be able to secure prices from our customers that will allow us to maintain or improve our margins on the cost of sourcing carrier equipment capacity.

Current wording

Purchased transportation costs as a percentage of revenue increased by 0.9 percentage point for 2024, compared to 2023, reflecting lower revenue outpacing the $95.8 million reduction of purchased transportation costs in 2024. Changes in market capacity impact the cost of purchased transportation and may not correspond to the timing of revisions to customer pricing and changes in revenue per shipment. There can be no assurance that we will be able to secure prices from our customers that will allow us to maintain or improve our margins on the cost of sourcing carrier equipment capacity.

Previous wording

Contingent earnout consideration decreased as a percentage of revenue by 2.0 percentage points for 2023, compared to 2022, as the fair value of the contingent earnout consideration related to the MoLo acquisition decreased $19.1 million in 2023, compared to the $18.3 million increase in fair value recognized in 2022. The fair value remeasurements in 2023 considered the impact of the continued soft market environment on the achievement of earnout targets through 2025. The contingent earnout consideration is discussed further in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

Contingent earnout consideration, as previously described, decreased as a percentage of revenue by 4.7 percentage points for 2024, compared to 2023. The contingent earnout consideration is discussed further in Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

Lease-related impairment charges of $14.4 million recorded in the third quarter for certain office spaces made available for sublease were 0.9 percentage point of revenue for 2023. The lease-related impairment charges are discussed further in Note C and Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

Asset impairment charges, as previously described, of $1.7 million recorded in the fourth quarter of 2024 and $14.4 million recorded in the third quarter of 2023 were 0.1 percentage point for 2024 and 0.9 percentage point of revenue for 2023. The lease-related impairment charges are discussed further in Note C and Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

The segment recorded estimated legal settlement expenses of $9.5 million, or 0.6 percentage point of revenue, in the fourth quarter of 2023 related to estimated expenses to settle a claim related to the classification of certain Asset-Light employees under theFair Labor Standards Act. These settlement expenses are discussed further in Note P to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

During the first quarter of 2025, the Company settled a claim related to the classification of certain Asset-Light employees under theFair Labor Standards Act. The Asset-Light segment recorded legal settlement expenses of $0.3 million in the fourth quarter of 2024 and $9.5 million in the fourth quarter of 2023 related to this claim. These settlement expenses are discussed further in Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

We report our financial results in accordance with GAAP. However, management believes that certain non-GAAP performance measures and ratios, such as Asset-Light Adjusted EBITDA, which is utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Asset-Light Adjusted EBITDA as a key measure of performance and for business planning. This measure is particularly meaningful for analysis of our Asset-Light segment, because it excludes amortization of acquired intangibles and software, changes in the fair value of contingent earnout consideration, lease impairment charges, and estimated legal settlement expenses, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Management also believes Asset-Light Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations. Other companies may calculate adjusted EBITDA differently; therefore, our calculation of Asset-Light Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Asset-Light Adjusted EBITDA should not be construed as a better measurement than operating income (loss), operating cash flow, net income, or earnings per share, as determined under GAAP.

Current wording

We report our financial results in accordance with GAAP. However, management believes that certain non-GAAP performance measures and ratios, such as Asset-Light Adjusted EBITDA, which is utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends. The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Asset-Light Adjusted EBITDA as a key measure of performance and for business planning. This measure is particularly meaningful for analysis of our Asset-Light segment, because it excludes amortization of acquired intangibles and software, changes in the fair value of contingent earnout consideration, asset impairment charges, and legal settlement expenses, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations. Management also believes Asset-Light Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations. Other companies may calculate adjusted EBITDA differently; therefore, our calculation of Asset-Light Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results. Asset-Light Adjusted EBITDA should not be construed as a better measurement than operating income (loss), net income, or earnings per share, as determined under GAAP.

Previous wording

Given the uncertainties of current economic conditions, there can be no assurance that our estimates and assumptions regarding the pricing environment and economic conditions, which are made for purposes of impairment tests related to operating assets and deferred tax assets, will prove to be accurate. Extended periods of economic disruption and resulting declines in industrial production and manufacturing and consumer spending could negatively impact demand for our services and have an adverse effect on our results of operations, financial condition, and cash flows. The softer economic environment, which we experienced during 2023, resulted in a year-over-year decline in market pricing for many of our services, as compared to 2022. Following the previously mentioned market disruption in late July 2023 which resulted in a decline in LTL industry carrier capacity, our Asset-Based segment was able to secure additional core, published LTL-rated shipments at profitable rates. There can be no assurance that we will be able to secure adequate prices from this new business or from our existing customers to maintain or improve our operating results. Significant declines in our business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in impairment and a resulting noncash write-off of a significant portion of the goodwill and intangible assets of our Asset-Light segment, which would have an adverse effect on our financial condition and operating results.

Current wording

Given the uncertainties of current economic conditions, there can be no assurance that our estimates and assumptions regarding the pricing environment and economic conditions, which are made for purposes of impairment tests related to operating assets and deferred tax assets, will prove to be accurate. Extended periods of economic disruption and resulting declines in industrial production and manufacturing and consumer spending could negatively impact demand for our services and have an adverse effect on our results of operations, financial condition, and cash flows. The soft freight environment, which we experienced during 2024, resulted in a year-over-year decline in market pricing for many of our Asset-Light services, as compared to 2023. There can be no assurance that we will be able to secure adequate prices from this new business or from our existing customers to maintain or improve our operating results. Significant declines in our business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in impairment and a resulting noncash write-off of a significant portion of the goodwill and intangible assets of our Asset-Light segment, which would have an adverse effect on our financial condition and operating results.

Previous wording

Inflation remains above normal levels. Global supply chain volatility and labor and energy shortages, in addition to the impact of federal programs and monetary policy, have elevated costs higher across a broad array of consumer goods. The consumer price index (CPI) increased 3.1%, before seasonal adjustment, year-over-year in January 2024 and 0.3% from December 2023. While CPI has declined year-over-year since June 2022 as a direct market response to the Federal Reserve’s tighter monetary policy implemented in March 2022, the latest increase in CPI indicates an ongoing challenge in achieving the Federal Reserve’s target inflation of 2%. Inflation is impacted by energy prices, including petroleum products; shelter prices; and food prices, which have moderated in recent months while remaining elevated. Most of our

Current wording

Inflation remains above the Federal Reserve’s long-term target inflation rate of 2%. Global supply chain volatility and labor and energy shortages, in addition to the impact of federal monetary policy, have elevated costs higher across a broad array of consumer goods. The consumer price index (CPI) increased 3.0%, before seasonal adjustment, year-over-year in January 2025 and 0.7% from December 2024. While CPI has declined from the level reached in June 2022 due to market response to the Federal Reserve’s tighter monetary policy implemented in March 2022, recent CPI readings continue to indicate an ongoing challenge in achieving the Federal Reserve’s target inflation rate. Inflation is impacted by energy prices, including petroleum products; housing prices; and insurance services, which have increased in recent months. Most of our expenses are affected by inflation, which generally results in increased operating costs. As such, there can be no assurances of the potential impact of inflationary conditions on our business, including demand for our transportation services.

Previous wording

Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges. In periods of increasing fuel prices, the effect of higher associated fuel surcharges on the overall price to the customer influences our ability to obtain increases in base freight rates. In addition, certain nonstandard arrangements with some of our customers have limited the amount of fuel surcharge recovered. The timing and extent of base price increases on our Asset-Based revenues may not correspond with contractual increases in wage rates and other inflationary increases in cost elements and, as a result, could adversely impact our operating results. Our Asset-Based segment’s ability to fully offset inflationary and contractual cost increases can be challenging during periods of recessionary and uncertain economic conditions.

Current wording

Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges. In periods of increasing fuel prices, the effect of higher associated fuel surcharges on the overall price to the customer influences our ability to obtain increases in base freight rates. In addition, certain nonstandard arrangements with some of our customers have limited the amount of fuel surcharge recovered. Our Asset-Based segment’s ability to fully offset inflationary and contractual cost increases can be challenging during periods of recessionary and uncertain economic conditions.