ARCBEST CORP /DE/

Previous 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.

Current wording

Our consolidated revenues decreased 5.2% and 5.9% for the three and six months ended June 30, 2025, respectively, compared to the same prior year periods. 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, which resulted in decreases in our Asset-Light revenues of 13.6% and 11.9% for the three and six months ended June 30, 2025, respectively. The year‑over‑year decline in consolidated revenues for the six months ended June 30, 2025 also reflects a decrease in our Asset-Based revenues of 1.8%, compared to the same period of 2024, while consolidated revenues were positively impacted by an increase in Asset-Based revenues of 0.1% for the three months ended June 30, 2025. Asset-Based billed revenue per day decreased 0.7% for the six months ended June 30, 2025, primarily due to a decrease in billed revenue per hundredweight, including fuel surcharges. The elimination of revenues reported in the “Other and eliminations” line of consolidated revenues increased 10.4% and 13.7%, respectively, for the three and six months ended June 30, 2025, compared to the same periods of 2024, 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 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.

Current wording

The decrease in revenues of our Asset-Light segment for the three and six months ended June 30, 2025, compared to the same prior year periods, 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 periods. Our Asset-Light segment generated approximately 32% and 34% of our total revenues before other revenues and intercompany eliminations for the three and six months ended June 30, 2025, respectively, compared to 36% for both of the same periods of 2024.

Previous 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.

Current wording

Consolidated operating income declined year-over-year for both the three and six months ended June 30, 2025, reflecting the decreases in revenues, partially offset by decreases in operating expenses from lower purchased transportation expense and lower employee costs in our Asset-Light segment. The year-over-year comparisons of consolidated operating income were also impacted by the prior year increase in the contingent earnout consideration, associated with the MoLo acquisition, while the contingent earnout consideration liability decreased in the first half 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 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.

Current wording

Innovative technology costs impacted our consolidated operating results for the three and six months ended June 30, 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. Certain costs related to a 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 $7.1 million (pre-tax), or $5.4 million (after-tax) and $0.24 per diluted share, for second quarter 2025, compared to $8.3 million (pre-tax), or $6.4 million (after‑tax) and $0.27 per diluted share, for second quarter 2024. For the six months ended June 30, 2025, these costs decreased consolidated results by a total of $14.6 million (pre-tax), or $11.2 million (after-tax) and $0.48 per diluted share, compared to $18.0 million (pre-tax), or $13.8 million (after-tax) and $0.58 per diluted share, for the same period of 2024.

Previous 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.

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. The quarterly remeasurement increased consolidated operating results by $2.7 million (pre-tax), or $2.0 million (after-tax) and $0.09 per diluted share, for the three and six months ended June 30, 2025, as the liability was reduced to zero reflecting the probability of no earnout payments based on projections of adjusted earnings before interest, taxes, depreciation, and amortization for 2025. The quarterly remeasurement decreased operating results by $3.9 million (pre-tax), or $2.9 million (after-tax) and $0.12 per diluted share for second quarter 2024 and $11.2 million (pre-tax), or $8.4 million (after-tax) and $0.35 per diluted share for the six months ended June 30, 2024 due to a higher liability measurement of the contingent earnout consideration at the time. 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 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.

Current wording

For the six months ended June 30, 2024, consolidated net income 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 (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.

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 affects 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 $1.4 million, or $0.06 per diluted share, for the second quarter 2025, compared to an increase in net income of $0.4 million, or $0.02 per diluted share, for the same prior year period. For the six months ended June 30, 2025, these costs increased consolidated net income by $0.7 million, or $0.03 per diluted share, compared to $1.7 million, or $0.07 per

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, 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.

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, 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.

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. We are also committed to our deepening customer relationships to navigate challenges now and in the future.

Current wording

The Asset-Based segment consists of ABF Freight System, Inc., one of North America’s largest less-than-truckload (“LTL”) carriers and a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries. 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

Previous 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.

Current 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 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 a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the three and six months ended June 30, 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, operating cash flow, net income (loss), 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, or earnings per share, as determined under GAAP.

Previous 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.

Current wording

Asset-Based segment revenues for the three and six months ended June 30, 2025, totaled $713.3 million and $1,359.6 million, respectively, compared to $712.7 million and $1,384.2 million, for the same periods of 2024. The revenue increase for the three months ended June 30, 2025, compared to the prior year period, was driven by higher daily tonnage and shipment levels, which more than offset the impact of the lower billed revenue and weight per shipment. Billed revenue increased 1.1% on a per-day basis for the three months ended June 30, 2025, compared to the same period of 2024, due to a 4.3% increase in tonnage per day, offset partially by 3.1% decrease in billed revenue per hundredweight, including fuel surcharges. The decrease in revenue for the six months ended June 30, 2025, compared to the prior year period, primarily reflects lower weight per shipment and lower billed revenue per shipment. Billed revenue decreased 0.7% on a per-day basis year-over-year, primarily reflecting a decrease in billed revenue per hundredweight, including fuel surcharges, due to changes in business mix as discussed further below, despite increases in daily tonnage and shipment levels. The number of workdays was fewer by half of a day in the second quarter of 2025, versus the second quarter of 2024, and fewer by one day in the first half of 2025, versus the first half of 2024.

Previous 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.

Current wording

The increase in tonnage per day for the three- and six-month periods ended June 30, 2025, compared to the same prior year periods, was driven by higher daily shipment levels – up 5.6% and 2.6%, respectively – impacted by changes in the Asset-Based business mix. However, tonnage per day continues to be challenged by the soft market environment and evolving freight dynamics, including the shift of some heavier LTL shipments to the truckload market due to lower rates and excess capacity, which has resulted in lower average weight per shipment levels year-over-year.

Previous 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.

Current wording

The decreases in billed revenue per hundredweight, including fuel surcharges, for the three and six months ended June 30, 2025, compared to the same periods of 2024, were driven by lower fuel surcharge revenue associated with lower fuel prices and a shift in freight profile offset partially by lower weight per shipment, which generally increases revenue per hundredweight, and pricing increases. The pricing environment continues to be rational. Excluding the impact of fuel surcharges, billed revenue per hundredweight decreased in the low single digits for the three months ended June 30, 2025 while increasing in the low single digits for the six months ended June 30, 2025, compared to the same periods of 2024. Prices on accounts subject to deferred pricing agreements and annually negotiated contracts which were renewed during the three and six months ended June 30, 2025, increased an average of 4.0% and 4.4%, respectively, compared to the same periods 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. A nominal general rate increase on Asset-Based LTL base rate tariffs of 5.9% will take effect August 4, 2025.

Previous 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.

Current wording

The Asset-Based segment’s average nominal fuel surcharge rate decreased by approximately 1 percentage point and 2 percentage points, respectively, in the three- and six-month periods ended June 30, 2025, compared to the same periods 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 rate 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

The Asset-Based segment generated operating income of $26.4 million for the three months ended March 31, 2025, compared to $53.5 million, for the same period of 2024. Compared to the prior-year period, the Asset-Based segment’s operating ratio was impacted by the decline in revenues while total operating expenses remained fairly consistent between periods.

Current wording

The Asset-Based segment generated operating income of $51.0 million and $77.4 million for the three and six months ended June 30, 2025, respectively, compared to $72.8 million and $126.2 million, for the same periods of 2024. Compared to the prior year periods, the Asset-Based segment’s operating ratio was impacted by the decline in billed revenue per shipment and the increase in shipments which resulted in an increase in operating expenses between periods.

Previous 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.

Current wording

Labor costs, which are reported in operating expenses as salaries, wages, and benefits, amounted to 51.3% and 52.2%, respectively, of Asset-Based segment revenues for the three- and six-month periods ended June 30, 2025, compared to 49.5% and 50.4%, for the same periods of 2024. Salaries, wages, and benefits increased $13.3 million and $12.4 million, respectively, for the three and six months ended June 30, 2025, compared to the same periods of 2024, primarily reflecting contract rate increases under the 2023 ABF NMFA, 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, and an increase in headcount to align with higher shipment levels and increased tonnage. Workers’ compensation expenses also increased year-over-year for each period due to higher claims costs and increased retention levels. The increase in labor costs during the three- and six-month periods ending June 30, 2025, compared to the same periods of 2024, was partially offset by lower accruals of annual incentives due to higher operating ratios in both periods, improved productivity, as measured by shipments per DSY hour, and by higher utilization of purchased transportation as discussed later in this section.

Previous 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.

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 three and six months ended June 30, 2025, compared to the same periods of 2024, primarily due to continued investments in technology and the Asset-Based 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 and six months ended June 30, 2025, the year-over-year

Previous 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.

Current wording

Rents and purchased transportation as a percentage of revenue increased 0.8 percentage point for both the three and six months ended June 30, 2025, compared to the same periods of 2024, primarily due to increased rent expense for new service centers, and higher utilization of rail, local delivery agents and linehaul purchased transportation, partially offset by rail fuel surcharge cost per mile. Rail miles increased approximately 7% and 6%, respectively, for the three and six months ended June 30, 2025, compared to the same prior year periods.

Previous wording

Depreciation and amortization as a percentage of revenue increased 0.7 percentage point for the three months ended March 31, 2025, compared to the same period of 2024, primarily due to increases in revenue equipment depreciation expense per unit as a result of increased equipment costs and due to recent service center renovations.

Current wording

Depreciation and amortization as a percentage of revenue increased 0.6 percentage point and 0.7 percentage point for the three and six months ended June 30, 2025, respectively, compared to the same periods of 2024, primarily due to increases in revenue equipment depreciation expense per unit as a result of increased equipment costs and due to recent service center renovations.

Previous 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.

Current wording

As supply chains become more complex, most shippers use a mix of modes to keep their supply chains moving, and our managed transportation solutions seamlessly connect these modes to build better supply chains. 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 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 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.

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 income (loss) for the three and six months ended June 30, 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, operating cash flow, net income (loss), 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, or earnings per share, as determined under GAAP.

Previous wording

The following table sets forth a summary of operating expenses and operating loss as a percentage of revenue for the Asset-Light segment:

Current wording

The following table sets forth a summary of operating expenses and operating income (loss) as a percentage of revenue for the Asset-Light segment:

Previous 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.

Current wording

Asset-Light segment revenues decreased 13.6% to $341.9 million and 11.9% to $697.9 million for the three and six months ended June 30, 2025, respectively, compared to $395.8 million and $792.2 million for the same respective periods 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 and six months ended June 30, 2025. Certain of our Asset-Light service lines achieved a year-over-year increase in market pricing during the three and six months ended June 30, 2025, compared to the same periods 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

The Asset-Light segment operating loss totaled $4.4 million for the three months ended March 31, 2025, compared to an operating loss of $15.3 million for the same period of 2024. The year-over-year improvement in operating results reflects decreases in operating expenses, discussed in the paragraphs below, including the impact of the prior year increase in the contingent earnout consideration liability with no such quarterly remeasurement adjustment in first quarter 2025, partially offset by lower revenues.

Current wording

The Asset-Light segment operating income totaled $0.6 million compared to an operating loss of $9.5 million for the same period of 2024. The Asset-Light segment operating loss totaled $3.8 million for the six months ended June 30, 2025, compared to an operating loss of $24.8 million for the same prior year period. The year-over-year improvement in operating results reflects decreases in operating expenses, discussed in the paragraphs below, including the impact of the prior year increases in the contingent earnout consideration liability while the liability was adjusted down $2.7 million during the three and six months ended June 30, 2025, partially offset by lower revenues.

Previous 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.

Current wording

Operating expenses decreased $64.0 million and $115.2 million, during the three and six months ended June 30, 2025, respectively, compared to the same prior year periods. As a percentage of revenue, operating expenses declined by 2.6 percentage points in both periods of 2025, compared to the same prior year periods of 2024.

Previous 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.

Current wording

Purchased transportation costs as a percentage of revenue decreased 1.3 percentage points for both the three and six months ended June 30, 2025, compared to the same prior year period, reflecting a $50.7 million and $90.2 million reduction of purchased transportation costs during the three and six months ended June 30, 2025, respectively and an overall improvement in purchased transportation costs as a percentage of revenue year-over-year. 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 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.

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 both the three and six months ended June 30, 2025, 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.

Previous wording

Salaries, wages, and benefits decreased $4.8 million, and as a percentage of revenue, decreased 0.4 percentage point, for the three months ended March 31, 2025, compared to the same prior-year period, as the segment continued efforts to align resources with business levels. Shipments per employee per day improved 23.6% for the three months ended March 31, 2025, compared to the same prior-year period, as a result of these efforts, combined with changes in business mix and technology advancements from the digital roadmap initiatives.

Current wording

Salaries, wages, and benefits decreased $5.4 million and $10.2 million, respectively, and as a percentage of revenue, decreased 0.3 percentage point and 0.4 percentage point for the three and six months ended June 30, 2025, respectively, compared to the same prior year period, as the segment continued efforts to align staffing levels with business levels. Shipments per employee per day improved 14.8% and 19.2%, respectively, for the three and six months ended June 30, 2025, compared to the same prior year periods, as a result of these efforts, combined with changes in business mix and technology advancements from digital roadmap initiatives.

Previous 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.

Current wording

Shared services as a percentage of revenue increased 1.0 percentage point and 1.1 percentage points, respectively, for the three and six months ended June 30, 2025, compared to the same prior year periods, primarily reflecting the impact of lower revenues during the three and six months ended June 30, 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 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.

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 income (loss), as determined under GAAP.

Previous wording

Recent trade and tariff policies have increased market uncertainty during the first quarter of 2025, as trade and tariff disputes have weighed heavily on business confidence. Geopolitical instability continues to negatively impact the global economy and threaten the availability of raw materials. Macroeconomic conditions continue to be challenged by higher interest rates, above target-level inflation, supply chain disruptions and a slowing labor market, contributing to stock market volatility. Recession risk is considered to have increased during the first quarter of 2025. Although the housing market, which is another near-term recession indicator, has stabilized, it remains at low levels. Dramatic swings in the 10‑year treasury yield due to elevated economic uncertainty have limited the predictability of near-term mortgage rates, one of the biggest factors influencing the housing market.

Current wording

Shifting trade and tariff policies; geopolitical tensions; and macroeconomic conditions, challenged by higher interest rates, above target-level inflation, supply chain disruptions, and a slowing labor market, have affected business confidence, slowed consumer spending, and contributed to stock market volatility during the first half of 2025. While recession risk remains for the second half of 2025, certain economic factors, including those discussed below have shown improvement. The housing market, as measured by housing cost growth, which is another near-term recession indicator, has stabilized, but housing inventory remains constrained. Changes in the 10‑year treasury yield due to elevated economic uncertainty have limited the predictability of near‑term mortgage rates, one of the biggest factors influencing the housing market.

Previous wording

Although inflation is easing, the manufacturing sector, as measured by the Purchasing Managers’ Index (“PMI”), contracted in March 2025. The contraction follows two months of growth after a period of continuous contraction since November 2023, except for a brief expansion in March 2024. This trend has contributed to a decrease in freight volumes. In the first quarter of 2025, the economy contracted as measured by U.S. real gross domestic product (“real GDP”), with the first quarter 2025 annual real GDP rate decrease being primarily driven by decreased government spending.

Current wording

The manufacturing sector, as measured by the Purchasing Managers’ Index (“PMI”), contracted in June 2025 for the fourth consecutive month. The contractionary period follows two months of growth after a period of nearly continuous contraction since November 2023. This trend has contributed to a decrease in freight volumes. In the second quarter of 2025, the

Previous 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.

Current wording

Although we secured increases on deferred pricing agreements and annually negotiated contracts during the three and six months ended June 30, 2025, 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 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.

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 and six months ended June 30, 2025, compared to the same periods 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 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.

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 2.7%, before seasonal adjustment, year-over-year in June 2025 after rising 0.1% from May 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 costs, which have risen in the first half of 2025. Inflation is also impacted by housing prices, which remain elevated while showing signs of slowing growth. Most of our expenses are affected by inflation. While an increase in inflation generally results in increased operating costs, there can be no assurances of the 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. The impact of excess capacity in the truckload market continued in early 2025, however, carriers are slowly exiting the market.

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 first half of 2025, however, carriers are slowly exiting the market driven by prolonged economic pressures as demand remains weak and margins have thinned.

Previous 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.

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

Previous wording

Our primary sources of liquidity are cash, cash equivalents and short-term investments; cash generated by continuing operations; and borrowing capacity under our revolving credit facility or our accounts receivable securitization program.

Current wording

Our primary sources of liquidity are cash, cash equivalents and short-term investments; cash generated by continuing operations; and borrowing capacity under our revolving credit facility (“Credit Facility”) or our accounts receivable securitization program (“A/R Securitization Program”).