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: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); and Asset-Light, which includes MoLo Solutions, LLC (“MoLo”), Panther Premium Logistics®, and certain other subsidiaries. References to the Company, including “we,” “us,” and “our,” in this Quarterly Report on Form 10-Q, are primarily to the Company and its subsidiaries on a consolidated basis.

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: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”); and Asset-Light, which includes MoLo Solutions, LLC (“MoLo”), Panther Premium Logistics®, and certain other subsidiaries. References to the Company, including “we,” “us,” and “our,” in this Quarterly Report on Form 10-Q, are primarily to the Company and its subsidiaries on a consolidated basis.

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. Unless otherwise indicated, all amounts in this Quarterly Report on Form 10-Q refer to continuing operations, including comparisons to the prior year. For more information on our discontinued operations, see Note C to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary of the Company. 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 Quarterly Report on Form 10-Q refer to continuing operations, including comparisons to the prior year.

Previous wording

The following table reflects the Company’s consolidated results, including segment revenues and operating income from continuing operations:

Current wording

The following table reflects the Company’s consolidated results, including segment revenues and operating income (loss) from continuing operations:

Previous wording

Our consolidated revenues decreased 5.8% and 4.8% for the three and nine months ended, respectively, compared to the same prior-year periods. 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 the three and nine months ended September 30, 2024 reflects decreases in our Asset-Based revenues of 4.2% and 3.1%, respectively, and decreases in Asset-Light revenues of 8.1% and 7.1%, respectively. The elimination of revenues reported in the “Other and eliminations” line of consolidated revenues decreased 0.7% for the three months ended and increased 4.1% for the nine months ended September 30, 2024, compared to the same periods of 2023, reflecting year-over-year changes in intersegment business levels among our operating segments.

Current wording

Our consolidated revenues decreased 6.7% for the three months ended March 31, 2025, compared to the same prior-year period. The revenue decline is primarily attributable to lower market rates and shipment levels for our Asset-Light shipping and logistics services in a soft market environment and a decrease in our Asset-Based daily tonnage levels. The decrease in tonnage levels is primarily due to lower weight per shipment and fewer daily shipments compared to the prior-year period. The year-over-year decrease in consolidated revenues for the three months ended March 31, 2025 reflects a decrease in our Asset-Based revenues of 3.7% and a decrease in our Asset-Light revenues of 10.2%. The elimination of revenues reported in the “Other and eliminations” line of consolidated revenues increased 12.2% for the three months ended March 31, 2025, compared to the same period of 2024, reflecting year-over-year changes in intersegment business levels among our operating segments.

Previous wording

Our Asset-Based revenue decline reflects a decrease in tonnage per day for the three and nine months ended September 30, 2024, compared to the same periods of 2023, partially offset by an increase in billed revenue per hundredweight, including fuel surcharges. The decrease in tonnage per day is a result of a softer market environment driven in part by a weaker manufacturing sector, partially offset by an increase in demand during the first half of 2024 for

Current wording

Our Asset-Based revenue decline reflects a decrease in tonnage per day for the three months ended March 31, 2025, compared to the same period of 2024, partially offset by an increase in billed revenue per hundredweight, including fuel surcharges. The decrease in tonnage per day is a result of a softer market environment driven in part by a weaker manufacturing sector. The increase in total billed revenue per hundredweight, including fuel surcharges, was driven by lower weight per shipment, a general rate increase implemented in third quarter 2024, increases to deferred pricing agreements, and fewer volume-sized shipments that exceed standard LTL dimensions but do not require a full truckload, partially offset by a decrease in fuel surcharge revenue associated with lower fuel prices.

Previous wording

The decrease in revenues of our Asset-Light segment for the three and nine months ended September 30, 2024, compared to the same prior-year periods, was impacted by a decline in revenue per shipment associated with soft market conditions and changes in business mix, partially offset by an increase in shipments per day for the nine months ended September 30, 2024, compared to the same period of 2023, while shipments per day decreased slightly for the third quarter of 2024 versus the same prior-year period. Our Asset-Light segment generated approximately 35% and 36% of our total revenues before other revenues and intercompany eliminations for the three and nine months ended September 30, 2024, respectively, compared to 36% and 37%, respectively, for the same periods of 2023.

Current wording

The decrease in revenues of our Asset-Light segment for the three months ended March 31, 2025, compared to the same prior-year period, was impacted by a decline in revenue per shipment associated with soft market conditions, changes in business mix, and a decline in shipments per day versus the same prior-year period. Our Asset-Light segment generated approximately 36% and 37% of our total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Consolidated operating income improved year-over-year reflecting the $91.9 million reduction in the contingent earnout consideration accrual during third quarter 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 business levels, offset partially by 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.

Current wording

Consolidated operating income declined year-over-year, reflecting the decrease in revenues, partially offset by a decrease in operating expenses from lower purchased transportation expense and lower employee costs in our Asset-Light segment. The year-over-year comparison of consolidated operating income was also impacted by the prior year increase in the contingent earnout consideration with no such remeasurement adjustment in the first quarter of 2025. 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 operating results for the three and nine months ended September 30, 2024 and our consolidated and Asset-Based segment results for the same periods of 2023. In March 2023, we publicly launched our customer offering of Vaux™ – the innovative suite of hardware and software which modernizes and transforms how freight is loaded, unloaded, and transferred in warehouse and dock operations. 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. Certain costs related to our growing number of Vaux pilot programs in customer test locations and other initiatives to optimize our performance through technological innovation are reported in the “Other and eliminations” line of consolidated operating income. For the three and nine months ended September 30, 2023, innovative technology costs also included our freight handling pilot test program at ABF Freight, as further discussed in the Asset-Based Segment Results section. Our combined innovative technology costs decreased consolidated operating results by a total of $8.5 million (pre-tax), or $6.5 million (after-tax) and $0.27 per diluted share, for third quarter 2024, compared to $14.1 million (pre-tax), or $10.6 million (after-tax) and $0.43 per diluted share, for third quarter 2023. For the nine months ended September 30, 2024, these costs decreased consolidated results by a total of $26.5 million (pre-tax), or $20.3 million (after-tax) and $0.85 per diluted share, compared to $41.4 million (pre-tax), or $31.3 million (after-tax) and $1.26 per diluted share, for the same period of 2023.

Current wording

Innovative technology costs impacted our consolidated operating results for the three months ended March 31, 2025 and 2024, including costs associated with Vaux™ – the innovative suite of hardware and software which modernizes and transforms how freight is loaded, unloaded, and transferred in warehouse and dock operations and combines autonomous mobile robot forklifts and reach trucks, intelligent software, and remote teleoperation capability to independently handle materials movement within warehouses, distribution centers, and manufacturing facilities, while being monitored by humans. 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. Our innovative technology costs decreased consolidated operating results by a total of $7.5 million (pre-tax), or $5.7 million (after-tax) and $0.25 per diluted share, for first quarter 2025, compared to $9.7 million (pre-tax), or $7.4 million (after-tax) and $0.31 per diluted share, for first quarter 2024.

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. For the third quarter of 2024, consolidated operating results increased by $91.9 million (pre-tax), or $69.1 million (after-tax) and $2.92 per diluted share, due to quarterly remeasurement which resulted in a lower liability of the contingent earnout consideration, and increased consolidated operating results by $17.8 million (pre-tax), or $13.4 million (after-tax) and $0.55 per diluted share for the third quarter of 2023. For the nine months ended September 30 2024, the quarterly remeasurement increased consolidated operating results by $80.7 million (pre-tax), or $60.7 million (after-tax) and $2.54 per diluted share, compared to an increase of $12.8 million (pre-tax), or $9.6 million (after-tax) and $0.39 per diluted share for the same period of 2023. Remeasurement of the contingent earnout consideration is further described within Note B to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

The liability for contingent earnout consideration recorded for the MoLo® acquisition is evaluated 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 were not impacted for first quarter 2025 as the fair value of the contingent earnout consideration liability was not adjusted from the December 31, 2024 balance of $2.7 million. For first quarter 2024, consolidated operating results decreased by $7.3 million (pre-tax), or $5.5 million (after-tax) and $0.23 per diluted share, due to quarterly remeasurement which resulted in a higher liability of the contingent earnout consideration. Remeasurement of the contingent earnout consideration is further described within Note B to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

For the nine months ended September 30, 2024, consolidated net income and earnings per share were impacted by a one-time, noncash impairment charge of $21.6 million (after-tax), or $0.90 per diluted share, to write off our equity investment in Phantom Auto, a provider of human-centered remote operation software, which ceased operations during the first quarter of 2024. We recorded an adjustment to the fair value of our equity investment in Phantom Auto based on an observable price change during second quarter 2023, which increased consolidated net income by $2.8 million (after-tax), or $0.11 per

Current wording

For the three months ended March 31, 2024, consolidated net loss and earnings per share were impacted by a one-time, noncash impairment charge of $28.7 million (pre-tax), or $21.6 million (after-tax) and $0.90 per diluted share, to write off our equity investment in Phantom Auto, a provider of human-centered remote operation software, which ceased operations during the first quarter of 2024. This charge was recognized in “Other, net” within “Other income (costs).” The write-off of our equity investment is further described within Note B to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous 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. 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 $1.3 million, or $0.06 per diluted share, and $3.0 million, or $0.13 per diluted share, for the three and nine months ended September 30, 2024, respectively, compared to $0.2 million, or $0.01 per diluted share, and $2.8 million, or $0.11 per diluted share, for the same respective prior-year periods. While a small amount of restricted stock units vested during the three months ended September 30, 2024 resulting in an immaterial tax benefit, the vesting of restricted stock units resulted in a tax benefit of $11.3 million, or $0.47 per diluted share, for the nine months ended September 30, 2024, compared to a tax benefit of $0.2 million, or $0.01 per diluted share, and $5.1 million, or $0.21 per diluted share, for the three and nine months ended September 30, 2023, respectively.

Current wording

In addition to the above items, the year-over-year changes in consolidated net income (loss) 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. 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, decreased consolidated net income by $0.7 million, or $0.03 per diluted share, for the first quarter 2025, compared to an increase in net loss of $1.2 million, or $0.05 per diluted share, for the same prior-year period.

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. 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, and lease impairment charges, 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 G to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q). 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 from continuing operations, 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, 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 F to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q). 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 (loss) from continuing operations, 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

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

Our Asset-Based operations are affected by general economic conditions, as well as a number of other competitive factors that are more fully described in Item 1 (Business) and in Item 1A (Risk Factors) of Part I of our 2023 Annual Report on Form 10-K. See Note J to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the three and nine months ended September 30, 2024 and 2023.

Current wording

Form 10-K. See Note I to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the three months ended March 31, 2025 and 2024.

Previous wording

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

Current wording

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

Previous wording

As of September 2024, approximately 81% of our Asset-Based segment’s employees were covered under the ABF National Master Freight Agreement (the “2023 ABF NMFA”), the collective bargaining agreement with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2028. 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 contractual wage rate under the 2023 ABF NMFA 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%.

Current wording

As of March 2025, approximately 81% of our Asset-Based segment’s employees were covered under the ABF National Master Freight Agreement (“2023 ABF NMFA”), the collective bargaining agreement with the International Brotherhood of Teamsters (“IBT”), which will remain in effect through June 30, 2028. 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 over the term of the agreement, with potential profit-sharing bonuses representing additional costs under the 2023 ABF NMFA. The contractual wage rate under the 2023 ABF NMFA 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

Asset-Based segment revenues for the three and nine months ended September 30, 2024, totaled $709.7 million and $2,093.9 million, respectively, compared to $741.2 million and $2,161.0 million, respectively, for the same periods of 2023. The decrease in revenues, compared to the prior-year periods, primarily reflects a decrease in tonnage per day. Billed revenue decreased 4.8% and 3.5%, respectively, on a per-day basis for the three and nine months ended September 30, 2024, compared to the same periods of 2023, primarily reflecting a 11.3% and 16.4% decrease, respectively, in tonnage per day, partially offset by a 7.4% and 15.4% increase, respectively, in billed revenue per hundredweight, including fuel surcharges. The number of workdays was greater by one day in both the three and nine months ended September 30, 2024, versus the same respective periods of 2023.

Current wording

Asset-Based segment revenues for the three months ended March 31, 2025, totaled $646.3 million, compared to $671.5 million, for the same period of 2024. The decrease in revenues, compared to the prior-year period, primarily reflects a decrease in tonnage per day and weight per shipment. Billed revenue decreased 2.7% on a per-day basis for the three months ended March 31, 2025 compared to the same period of 2024, primarily reflecting a 4.3% decrease in tonnage per day, partially offset by a 1.7% increase in billed revenue per hundredweight, including fuel surcharges. The number of workdays was fewer by half of a day in the first quarter of 2025, versus the first quarter of 2024.

Previous wording

The decreases in tonnage per day for the three and nine months ended September 30, 2024, compared to the same prior-year periods, are primarily related to the soft market environment related to prolonged weakness in industrial production, which has resulted in lower average weight per shipment levels as well as lower daily shipment levels. Total shipments, which decreased 0.7% and 4.0% for the three- and nine-month periods ended September 30, 2024, respectively, on a per-day basis, were impacted by changes in the Asset-Based business mix as well as the softer freight environment.

Current wording

The decrease in tonnage per day for the three months ended March 31, 2025, compared to the same prior-year period, is primarily related to the soft market environment related to prolonged weakness in industrial production, which has resulted in lower average weight per shipment levels, while daily shipment levels decreased 0.4% for the three months ended March 31, 2025, on a per-day basis, impacted by changes in the Asset-Based business mix, as well as the softer freight environment. Some higher-weight LTL shipments have also shifted to the truckload market with its continued low rates and excess capacity.

Previous wording

The increases in total billed revenue per hundredweight, including fuel surcharges, for the three and nine months ended, compared to the same periods of 2023, were also driven by lower weight per shipment, which generally increases revenue per hundredweight, offset partially by lower fuel surcharge revenue associated with lower fuel prices, compared to the prior-year periods. The pricing environment 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 high single-digits and low-double digits, respectively, for the three and nine months ended September 30, 2024, compared to the same periods of 2023. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts which were renewed during the three and nine months ended September 30, 2024, increased approximately 4.6% and 5.0%, respectively, compared to the same periods of 2023. The Asset-Based segment implemented a general rate increase on its LTL base rate tariffs of 5.9% effective on September 9, 2024, although the rate changes vary by lane and shipment characteristics.

Current wording

The increase in total billed revenue per hundredweight, including fuel surcharges, for the three months ended March 31, 2025, compared to the same period of 2024, was driven by lower weight per shipment, which generally increases revenue per hundredweight, and pricing increases, offset partially by lower fuel surcharge revenue associated with lower fuel prices, compared to the prior-year period. The pricing environment continues to be rational. Excluding the impact of fuel surcharges, the percentage increase in billed revenue per hundredweight was in the low- to mid-single digits for the three months ended March 31, 2025, compared to the same period of 2024. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts which were renewed during the three months ended March 31, 2025, increased an average of 4.9%, compared to the same period of 2024. The Asset-Based segment implemented nominal general rate increases on its LTL base rate tariffs of 5.9% effective on September 9, 2024, although the rate changes vary by lane and shipment characteristics.

Previous wording

The Asset-Based segment’s average nominal fuel surcharge rate decreased by approximately 5 percentage points and 3 percentage points in the three- and nine-month periods ended September 30, 2024, compared to the same periods of 2023. During periods of changing diesel fuel prices, the fuel surcharge and associated direct diesel fuel costs also vary by differing degrees. Depending upon the rates of these changes and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Whether fuel prices fluctuate or remain constant, operating results may be adversely affected if competitive pressures limit our ability to recover fuel surcharges. In periods of declining fuel prices, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight measure and, consequently, revenues. The revenue decline may be disproportionate to the change in our fuel costs. The segment’s operating results will continue to be impacted by further changes in fuel prices and related fuel surcharges.

Current wording

The Asset-Based segment’s average nominal fuel surcharge rate decreased by approximately 2 percentage points in the three-month period ended March 31, 2025, compared to the same period of 2024. During periods of changing diesel fuel prices, the fuel surcharge and associated direct diesel fuel costs also vary by differing degrees. Depending upon the rates of these changes and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Whether fuel prices fluctuate or remain constant, operating results may be adversely affected if competitive pressures limit our ability to recover fuel surcharges. In periods of declining fuel prices, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight measure and, consequently, revenues. The revenue decline may be disproportionate to the change in our fuel costs. The segment’s operating results will continue to be impacted by further changes in fuel prices and related fuel surcharges.

Previous wording

Labor costs, which are reported in operating expenses as salaries, wages, and benefits, amounted to 50.5% and 50.4% of Asset-Based segment revenues for the three- and nine-month periods ended September 30, 2024, respectively, compared to 48.2% and 48.0%, respectively, for the same periods of 2023. Salaries, wages, and benefits increased $0.9 million and $18.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods of 2023, due to contract rate increases under the 2023 ABF NMFA, as previously discussed in the Asset-Based Revenues section. On July 1, 2023, wage rates increased 13.1% and the health, welfare and benefits rate increased 4.0% on August 1, 2023, for a blended increase of 9.1% during the third quarter 2023. On July 1, 2024, wages increased another 2.5% and benefits increased 2.9% on August 1, 2024, for a blended increase of 2.7% in third quarter 2024. The increases in salaries, wages, and benefits from the union contract rates were offset in part, by improved productivity, as measured by shipments per DSY hour, a decrease in headcount to align with lower shipment levels, and by lower utilization of purchased transportation as discussed later in this section.

Current wording

Labor costs, which are reported in operating expenses as salaries, wages, and benefits, amounted to 53.2% of Asset-Based segment revenues for the three-month period ended March 31, 2025, compared to 51.4%, for the same period of 2024. Salaries, wages, and benefits decreased $0.9 million for the three months ended March 31, 2025, compared to the same period of 2024, primarily reflecting lower accruals of annual incentives in the first quarter of 2025, compared to the first quarter of 2024, due to a higher operating ratio. The decrease in labor costs were also impacted by improved productivity, as measured by shipments per DSY hour, a decrease in headcount to align with lower shipment levels, and by higher utilization of purchased transportation as discussed later in this section. These productivity improvements were partially offset by contract rate increases under the 2023 ABF NMFA, as previously discussed in the Asset-Based Revenues section, including a 2.5% wage rates increase on July 1, 2024, and a 2.9% health, welfare and benefits rates increase on August 1, 2024, for a blended increase of 2.7% in 2024.

Previous wording

to City Route Optimization technology implemented in 2023, the separation of city operations from certain distribution centers in late 2023, and during the first nine months of 2024, and training and development at certain key locations, as the ABF Freight process compliance team continues to reinforce operational best practices throughout the Asset-Based network. For the three and nine months ended September 30, 2024, the year-over-year decrease in pounds per mile of 4.3% and 4.4%, respectively, reflects lower weight per shipment, partially offset by an improvement in linehaul productivity and an increase in the average length of haul.

Current wording

The Asset-Based segment manages costs with shipment levels; however, a number of factors impact DSY productivity, including the effect of freight profile and mix changes, utilization of local delivery agents, and efficiency of personnel. Shipments per DSY hour improved for the first quarter of 2025, compared to the same period of 2024, primarily due to continued investments in technology and network and ongoing training and development at certain key locations as the ABF Freight process compliance team continues to reinforce operational best practices throughout the Asset-Based network. For the three months ended March 31, 2025, the year-over-year decrease in pounds per mile of 1.3% reflects lower weight per shipment and an increase in the average length of haul, partially offset by an improvement in linehaul productivity.

Previous wording

Insurance as a percentage of revenue increased 1.0 percentage point and 0.6 percentage point during the three and nine months ended September 30, 2024, respectively compared to the same periods of 2023, primarily due to an increase in the severity of third-party casualty claims, including an increase in the number of large claims in recent years.

Current wording

Insurance as a percentage of revenue increased 0.7 percentage point during the three months ended March 31, 2025, compared to the same period of 2024, primarily due to an increase in the severity of third-party casualty claims in recent years and higher retention limits.

Previous wording

Rents and purchased transportation as a percentage of revenue decreased 0.3 percentage point and 2.6 percentage points for the three and nine months ended September 30, 2024, respectively, compared to the same periods of 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 increased approximately 2% for the three months ended September 30, 2024, compared to the same prior-year period, while decreasing approximately 13%, respectively, for the nine months ended September 30, 2024, compared to the same period of 2023.

Current wording

Rents and purchased transportation as a percentage of revenue increased 0.6 percentage point for the three months ended March 31, 2025, compared to the same period of 2024, primarily due to increased rent expense for new service centers, and higher utilization of rail, partially offset by rail fuel surcharge cost per mile and focused reduction in the utilization of local delivery agents and linehaul purchased transportation. Rail miles increased approximately 5% for the three months ended March 31, 2025, compared to the same prior-year period.

Previous wording

Our acquisition of MoLo, which was completed on November 1, 2021, accelerated the growth of our company by increasing the scale of truckload brokerage services offered within our Asset-Light segment and expanding our access to truckload capacity partners. 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 services that increase operational efficiencies, reduce costs, and provide better supply chain visibility. We expect to benefit from these and other strategic initiatives as we continue to deliver innovative solutions to customers.

Current wording

our managed transportation solutions as part of our strategic efforts to cross-sell our service offerings and meet the demand for services that increase operational efficiencies, reduce costs, and provide better supply chain visibility. We expect to benefit from this and other strategic initiatives as we continue to deliver innovative solutions to 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 Item 1 (Business) and in Item 1A (Risk Factors) of Part I of our 2023 Annual Report on Form 10-K. See Note J to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating income (loss) for the three and nine months ended September 30, 2024 and 2023.

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 Item 1 (Business) and in Item 1A (Risk Factors) of Part I of our 2024 Annual Report on Form 10-K. See Note I to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating loss for the three months ended March 31, 2025 and 2024.

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, 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, operating cash flow, net income (loss), or earnings per share, as determined under GAAP.

Previous wording

Asset-Light segment revenues decreased 8.1% to $385.3 million and decreased 7.1% to $1,177.5 million for the three and nine months ended September 30, 2024, respectively, compared to $419.3 million and $1,267.2 million for the same respective periods of 2023. Current year results have been impacted by lower average revenue per shipment associated with a soft market environment and changes in business mix and, for the three months ended September 30, 2024, a slight decrease in average daily shipments. 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 nine months ending September 30, 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 in 2023.

Current wording

Asset-Light segment revenues decreased 10.2% to $356.0 million for the three months ended March 31, 2025, compared to $396.4 million for the same respective period of 2024. Current year results have been impacted by lower average revenue per shipment associated with a soft market environment, a higher mix of managed transportation business which has smaller shipment sizes and lower revenue per shipment metrics, and a decrease in average daily shipments due to a strategic reduction in less profitable truckload volumes, for the three months ended March 31, 2025. Many of our Asset-Light service lines achieved a year-over-year increase in market pricing during the three months ended March 31, 2025, compared to the same period 2024, despite the continued soft freight environment and excess capacity in the truckload market which continues to impact spot market rates resulting in an overall lower revenue per shipment for our Asset-Light segment.

Previous wording

Operating expenses decreased $122.5 million and $154.4 million during the three and nine months ended September 30, 2024, compared to the same prior-year periods, and decreased as a percentage of revenue by 22.9 percentage points and 5.5 percentage points in the same respective periods, due primarily to the change in fair value of the contingent consideration, the lease-related impairment charge taken in 2023, and the effect of lower revenues in the three and nine months ended September 30, 2024.

Current wording

Operating expenses decreased $51.2 million during the three months ended March 31, 2025, compared to the same prior-year period, and decreased as a percentage of revenue by 2.6 percentage points in the same respective period.

Previous wording

Purchased transportation costs as a percentage of revenue decreased by 1.2 percentage points for the three months ended September 30, 2024, compared to the same period of 2023, due to an increase in available truckload capacity, which resulted in a year-over-year decline in capacity pricing. Purchased transportation costs increased 1.1 percentage point for the nine months ended September 30, 2024, compared to the same prior-year period, reflecting lower revenue outpacing the reduction in purchased transportation costs of $64.0 million for the nine months ended September 30, 2024. Changes in market capacity impact the cost of purchased transportation and may not correspond to the timing of revisions to customer pricing and 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 capacity.

Current wording

Purchased transportation costs as a percentage of revenue decreased 1.2 percentage points for the three months ended March 31, 2025, compared to the same prior-year period, reflecting a $39.5 million reduction of purchased transportation costs during the first quarter of 2025. Changes in market capacity impact the cost of purchased transportation and may not correspond to the timing of revisions to customer pricing and 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 capacity.

Previous wording

Contingent earnout consideration, as previously described, decreased as a percentage of revenue by 19.6 percentage points and 5.9 percentage points for the three and nine months ended September 30, 2024, respectively, compared to the same prior-year periods. The contingent earnout consideration is discussed further in Note B to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Contingent earnout consideration, as previously described in the Consolidated Results section of Results of Operations, decreased as a percentage of revenue by 1.8 percentage points for the three months ended March 31, 2025, compared to the same prior-year period. The contingent earnout consideration is discussed further in Note B to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Shared services as a percentage of revenue increased 0.6 percentage point and 0.4 percentage point for the three and nine months ended September 30, 2024, respectively, compared to the same prior-year periods, primarily reflecting the impact of lower revenues during the three-month and nine-month periods ended September 30, 2024.

Current wording

Shared services as a percentage of revenue increased 0.9 percentage point for the three months ended March 31, 2025, compared to the same prior-year period, primarily reflecting the impact of lower revenues during the first quarter of 2025.

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. These measures provide 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, and lease impairment charges, 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.

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 and changes in the fair value of contingent earnout consideration, 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 loss, as determined under GAAP.

Previous wording

Although we implemented a general rate increase and secured increases on deferred pricing agreements and annually negotiated contracts during the three and nine months ended September 30, 2024, the Asset-Based segment has seen lower tonnage levels as a result of the soft market environment and lower shipment levels as a result of changes in the Asset-Based business mix. There can be no assurance that the economic environment, including the impact of interest rates on consumer demand, will be favorable for our freight services in future periods and that the impact of recent market disruptions will continue to positively impact demand for our Asset-Based and Asset-Light services.

Current wording

Although we implemented a general rate increase and secured increases on deferred pricing agreements and annually negotiated contracts during the three months ended March 31, 2025, the Asset-Based segment has seen lower tonnage levels as a result of the soft market environment and lower shipment levels as a result of changes in the Asset-Based business mix. There can be no assurance that the economic environment, including the impact of interest rates on consumer demand, will be favorable for our freight services in future periods.

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 soft freight environment, which we continued to experience during the first nine months of 2024, resulted in a year-over-year decline in market pricing for many of our Asset-Light services, as compared to the first nine months of 2023. There can be no assurance that we will be able to secure adequate prices from 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 in the near term 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 and increased mix of managed transportation shipments contributed to a year-over-year decline in revenue per shipment for our Asset-Light segment during the three months ended March 31, 2025, compared to the first quarter of 2024. There can be no assurance that we will be able to secure adequate prices from 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 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 programs and monetary policy, have elevated costs higher across a broad array of consumer goods. The consumer price index (“CPI”) increased 2.4%, before seasonal adjustment, year-over-year in September 2024 and increased 0.2% from August 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 moderated in recent months while remaining elevated. 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.

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 2.4%, before seasonal adjustment, year-over-year in March 2025 despite decreasing 0.1% from February 2025. 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; and insurance services, which have decreased in recent months. Inflation is also impacted by housing prices, which as previously noted remain elevated while showing signs of slowing growth. 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 operating costs related to our Asset-Light operations have historically been offset through price increases. The pricing environment, however, generally becomes more competitive during economic downturns, which may, as it has in the past, affect the ability to obtain price increases from customers both during and following such periods. The pricing environment remains competitive, and we believe that Asset-Light pricing has stabilized at the bottom of the truckload market cycle.

Current wording

Generally, inflationary increases in labor and operating costs related to our Asset-Light operations have historically been offset through price increases. The pricing environment, however, generally becomes more competitive during economic downturns, which may, as it has in the past, affect the ability to obtain price increases from customers both during and following such periods. The pricing environment remains competitive, and we believe that Asset-Light pricing has stabilized at the bottom of the truckload market cycle. The impact of excess capacity in the truckload market continued in early 2025, however, carriers are slowly exiting the market.

Previous wording

The impact of supply chain disruptions and component shortages has limited the availability and production of certain revenue equipment and certain other equipment used in our business operations. Consequently, the prices for these items have also increased. Partly as a result of inflationary pressures, our revenue equipment (tractors and trailers) has been and very likely will continue to be replaced at higher per-unit costs, which could result in higher depreciation charges on a per-unit basis. We consider these costs in setting our pricing policies, although the overall freight rate structure is governed by market forces. In addition to general effects of inflation, the motor carrier freight transportation industry faces rising costs related to insurance and compliance with government regulations on safety, equipment design and maintenance, driver utilization, emissions, and fuel economy.

Current wording

The market continues to adjust to the impact of supply chain disruptions and recent trade and tariff policy changes. The prices for our revenue equipment (tractors and trailers) used in our business operations have increased partly as a result of inflationary pressures, and will likely continue to be replaced at higher per-unit costs, which could result in higher depreciation charges on a per-unit basis. We consider these costs in setting our pricing policies, although the overall freight rate structure is governed by market forces. In addition to general effects of inflation, the motor carrier freight transportation industry faces rising costs related to insurance claims, compliance with government regulations on safety, equipment design and maintenance, driver utilization, emissions, and fuel economy.

Previous wording

We are subject to federal, state, and local environmental laws and regulations relating to, among other things: emissions control, transportation or handling of hazardous materials, underground and aboveground storage tanks, stormwater pollution prevention, contingency planning for spills of petroleum products, and disposal of waste oil. We may transport or arrange for the transportation of hazardous materials and explosives, and we operate in industrial areas where truck service centers and other industrial activities are located and where groundwater or other forms of environmental contamination could occur. See Note K to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion of the environmental matters to which we are subject, including additional detail on ABF Freight’s Consent Decree with the EPA.

Current wording

We are subject to federal, state, and local environmental laws and regulations relating to, among other things: emissions control, transportation or handling of hazardous materials, underground and aboveground storage tanks, stormwater pollution prevention, contingency planning for spills of petroleum products, and disposal of waste oil. We may transport or arrange for the transportation of hazardous materials and explosives, and we operate in industrial areas where truck service centers and other industrial activities are located and where groundwater or other forms of environmental contamination could occur.

Previous wording

We are involved in various legal actions, the majority of which arise in the ordinary course of business. We maintain liability insurance against certain risks arising out of the normal course of our business, subject to certain self-insured retention limits. We routinely establish and review the adequacy of reserves for estimated legal, environmental, and self-insurance exposures. While management believes that amounts accrued in the consolidated financial statements are adequate, estimates of these liabilities may change as circumstances develop. Considering amounts recorded, routine legal matters are not expected to have a material adverse effect on our financial condition, results of operations, or cash flows.

Current wording

We are involved in various legal actions, the majority of which arise in the ordinary course of business. We maintain liability insurance against certain risks arising out of the normal course of our business, subject to certain self-insured retention limits. We routinely establish and review the adequacy of reserves for estimated legal, environmental, and self-insurance exposures. While management believes that amounts accrued in the consolidated financial statements are adequate, estimates of these liabilities may change as circumstances develop. Considering amounts recorded, routine legal matters are not expected to have a material adverse effect on our financial condition, results of operations, or cash flows. See Note J to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q for further discussion of the legal matters in which we are currently involved.