David Humphrey - VP, IR Judy McReynolds - Chairman, President and CEO David Cobb - VP and CFO

[Starts Abruptly] [Operator Instructions] As a reminder, this conference is being recorded Wednesday, January 31, 2018. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead, sir.

Welcome to the ArcBest Fourth Quarter 2017 Earnings Conference Call. Our presentation this morning will be done by Ms. Judy R. McReynolds, Chairman, President and Chief Executive Officer of ArcBest and Mr. David R. Cobb, Vice President, Chief Financial Officer of ArcBest. As most of you know, we're approaching the end of ABF Freight's current labor contract with the Teamsters, which expires on March 31, 2018. We are currently in negotiations with the Teamsters on a new contract. Out of respect for this important process, we will give you an update on fourth quarter and full-year results during today's call, but not take any questions following our prepared commentary. We hope you can understand our reasons for doing things a little differently, while this process takes place. As always, following today's call, we will be available to speak with you to discuss the publicly disclosed information about our fourth quarter and full-year 2017 results. We thank you for joining us today. In order to help you better understand ArcBest and its results, some forward-looking statements could be made during this call. As we all know, forward-looking statements, by their very nature, are subject to uncertainties and risk. For a more complete discussion of factors that could affect the company's future results, please refer to the forward-looking statements section of the company's earnings press release and the company's most recent SEC public filings. In order to provide meaningful comparisons, certain information discussed in this conference call includes non-GAAP financial measures as outlined and described in the tables in our earnings press release. We will now begin with Ms. McReynolds.

Thank you, David, and good morning everyone. The fourth quarter capped off a year of significant efforts at ArcBest to approach the market in a more integrated fashion with a broad array of logistic solutions and guaranteed capacity options. We have made good progress on our mission to win a bigger piece of our customers' transportation spend, provide them a best-in-class customer experience, and ensure the value that we provide is appropriately compensated among many other things. I believe we made this progress because our people embrace the new market approach with a commitment to implement the organizational changes on behalf of our customers. Change of this magnitude is never easy, but the strides we made to work more collaboratively across the organization, in 2017, were significant. The improved economic environment provided a stable backdrop for us to continue executing this strategy. In contrast to 2016, with inconsistent and volatile tonnage swings in the industry, 2017 was marked by confidence in the economy and tighter capacity. To recap where we started, on January 1st, we realigned the company to offer most logistics services under the ArcBest brand. This included a range of activities such as unifying our sales organization and having a unified approach to pricing, customer service, marketing, and capacity sourcing. In late summer, we began implementing a new space-based pricing initiative for our asset-based offering. With this effort, we began applying appropriate cubic minimum charges for freight in which dimensions are the key factor to be considered. We are pleased with the results to date as this initiative has helped us reset our account base toward greater profitability. I am confident we have the right pricing foundation going forward. And now I'll discuss more details about our service offerings. In the asset-based business, 2017 yield management activities including…

Thank you, Judy, and good morning everyone. Let me begin with some consolidated information. Fourth quarter 2017 consolidated revenues were $711 million compared to $688 million in last year's fourth quarter, a per day increase of 2.4%. On a GAAP basis, we had fourth quarter 2017 net income of $1.37 per diluted share, compared to net income of $0.06 per diluted share last year. As detailed in the GAAP to non-GAAP reconciliation table in this morning's earnings press release, adjusted fourth quarter 2017 net income was $0.42 per diluted share, compared to $0.28 in the same period of 2016. Our net income in fourth quarter of 2017 included $1,600,000 pre-tax or $0.04 per share after-tax related to our non-union pension plan, including settlement expenses. Pension expense, including settlement charges for first quarter 2018 is currently estimated to be approximately $2 million to $2.5 million. As a reminder, we estimate cash funding of approximately $10 million and a settlement termination charge of approximately $20 million is expected to occur in the second-half of 2018 due to termination of this plan. Our net income included an adjustment of $200,000 pre-tax or $0.01 per share after-tax in fourth quarter of 2017 and a pre-tax charge of $10.3 million or $0.24 per share after-tax in fourth quarter of 2016 related to our enhanced market approach. We currently expect to incur approximately $1 million of additional restructuring cost in 2018 related to this realignment. In this year's fourth quarter, the loss reported in the other eliminations line was $6.5 million including restructuring and pension costs totaling $300,000. The increase from previous quarters reflects modifications to the allocation of shared services, and an increase in incentives associated with an improved total shareholder return relative to a comparable industry peer group. In the first quarter, we expect…

Thanks, David. Before we conclude, I would like to offer some additional highlights for the quarter. In October, our U-Pack business celebrated 20 years of residential moving having completed more than 1 million moves since it launched in October of 1997. We are very proud of the U-Pack team and the ABF people across the country who have helped make the moving business so successful. In November, ABF was recognized for the seventh time with the 2017 Excellence in Claims, Loss & Prevention Award by the American Trucking Associations' Transportation Security Council. This is a truly outstanding achievement as ABF is the only seven-time winner. It speaks to the commitment of our employees to deliver freight damage-free, and is the result of collaboration across many teams. In December, the Department of Defense Program called the Employer Support of the Guard and Reserve, honored ABF with Pro Patria and above and beyond awards for our support of employees who serve in the National Guard and Reserve. We are proud to support and thank all of our veterans and current reserves for their service. In conclusion, I will add that ArcBest leadership team is committed to profitable growth with a full recognition that the logistics marketplace continues to undergo rapid change. Our guarantee capacity options and asset-based and Asset-Light set us apart from many other providers and are valued by shippers whether they choose one service offering from us, two or more, or ask us to manage all of their transportation needs. The growth and cost control efforts we've undertaken in 2017 and continue to implement in 2018 underscore our commitment to ensure that we meet our customer's own evolving needs with the solutions they require, an excellent experience and the trust and advice they expect from us. And now, I'll turn it over to David for some closing comments.

We want to thank you for joining us this morning, and we appreciate your interest in ArcBest. That concludes our conference call. Thank you very much.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and ask that you please disconnect your lines.