ArcBest Corp (ARCB) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and thank you for standing by. Welcome to the ArcBest Second Quarter 2026 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this call is being recorded. I will now turn it over to Amy Mendenhall, vice president treasury and investor relations. Please go ahead.

Good morning. I am here today with Seth Runser, our president and CEO, and J. Matthew Beasley, our chief financial officer. Other members of our executive leadership team will also be available during the Q&A session. Before we begin, please note that some of the comments we make today will include forward-looking statements. These statements are subject to risks and uncertainties which are detailed in the forward-looking statements section of our earnings release and SEC filings. To provide meaningful comparisons, we will also discuss certain non-GAAP financial measures that are outlined and described in the tables of our earnings release. Reconciliations of GAAP to non-GAAP measures are provided in the additional information section of the presentation slide. You can access the conference call slide deck on our website at arcb.com and our 8-Ks filed earlier this morning or follow along on the webcast. And now I will turn the call over to Seth.

Thank you, Amy, and good morning, everyone. I am pleased to report a strong second quarter with meaningful improvement in both earnings and operating margin. These results demonstrate the progress we are making across ArcBest as we execute our strategy, improve the customer experience, and operate with greater efficiency and discipline. Our performance reflects disciplined pricing, growth in tonnage from a heavier freight profile, and efficiency gains. Just as important, we continue to advance the strategic priorities that will strengthen ArcBest for the long term, from simplifying how we go to market and operate to expanding our digital capabilities and investing in the service and expertise our customers value. Matthew will walk you through the financial results in a moment. But before he does, I want to provide you some perspective on the market environment and highlight the actions we are taking to build on this momentum. Industry capacity has continued to tighten as truckload supply exits the market. Truckload spillover into LTL contributed to modest volume gains and higher fuel prices increased revenue across the industry. We have not yet seen a broad-based inflection in industrial demand. However, recent manufacturing indicators have been encouraging with PMI readings remaining in expansion territory. Taken together, these dynamics point to an environment that is gradually improving. And while conditions can shift quickly, we are optimistic about the direction of the market while remaining disciplined in how we manage our business and allocate capital. Against this backdrop, we continue to prioritize growing profitably, maintaining yield discipline, improving productivity, enhancing the customer experience, and advancing our technology roadmap. These efforts are contributing to our results today and reinforcing our confidence in the long-term targets we outlined at Investor Day. None of this progress would be possible without the dedication of our employees. Throughout the quarter, our teams delivered the reliable service, responsiveness, and expertise our customers depend on. Their focus and consistent execution helped customers navigate an evolving environment and reinforced the trust ArcBest has earned over more than a century. I want to thank each of them for their continued commitment to our customers and to one another. That commitment to customer experience and execution is central to our strategy, and it shaped how we designed and built ArcBestView. Launched during the quarter, ArcBestView is our new digital logistics platform bringing quoting, booking, shipment visibility, and reporting together in one intuitive experience. The platform gives customers a streamlined modern way to manage their logistics needs, with access to our supply chain experts when those needs become more complex. Customer engagement continues to grow, reinforcing our belief that ArcBestView can improve the customer experience, increase digital adoption, and enhance productivity for both customers and our teams. The same focus on customer experience and execution is also shaping how we operate internally. Earlier this month, we announced organizational changes designed to simplify how we go to market, strengthen coordination across the company, and align our teams more closely around customer needs and operational effectiveness. As part of these changes, we are consolidating our brand structure, streamlining our organizational structure, and closing select service centers in smaller markets. The affected facilities represent approximately 1% of total doors in the ABF Freight network, and their operations will be consolidated into nearby locations. Collectively, the organizational changes are expected to generate approximately $40 million in annualized cost savings while improving our ability to serve customers, and scale for future growth. These were difficult decisions, particularly where employees and communities are affected. But they are necessary to create a simpler, more efficient, and more competitive ArcBest for the long term. Taken together, these changes strengthen how we go to market, how we operate, and how we serve our customers. Along with the launch of ArcBestView and the continued execution of our strategy, they position ArcBest to grow profitably, deliver premium experiences, and build on more than a century of trusted service. I want to emphasize that these actions do not represent a change in our strategy or our long-term financial targets. Rather, they reflect the next step in delivering on that. Now let me highlight the progress we made during the quarter against our key strategic priorities. In our Asset-Based business, we continue to execute with discipline, balancing service, freight selection, pricing, and network efficiency to support profitable growth. Improving market conditions contributed to tonnage growth while our teams remain focused on moving freight through the network more efficiently and delivering the reliable service our customers expect. Technology and data are strengthening that execution. The continued expansion of our dynamic quote pool gives greater visibility into demand, and enables faster, more informed pricing and shipment decisions. This capability helps us be more selective about the freight entering our network, improve freight mix, and align available capacity with the opportunities that create the most value. We also maintained strong pricing discipline during the quarter. Our general rate increase and negotiated customer renewals reflect the value of our service and our continued focus on revenue quality. Importantly, pricing remained resilient despite higher weight per shipment, which typically places pressure on revenue per hundredweight. Managed solutions delivered another exceptional quarter with daily shipments reaching a record high. Its performance reflects a strong pipeline, expanding customer relationships, and growing demand for tailored integrated logistics support. Managed solutions continues to differentiate ArcBest in the marketplace and represents an important source of growth across our portfolio. We are also making meaningful progress against our technology roadmap, with AI playing an increasingly important role in how we operate and serve customers. Our approach is deliberate, and closely aligned with our strategic priorities. We are focused on practical applications that create differentiation, improve the customer experience, and enable our people to accomplish more. Initiatives such as city route optimization, and AI enabled capacity sourcing are already delivering productivity benefits. As we expand these capabilities, we will continue to apply AI where it can strengthen our people and processes, improve decision making, and support profitable growth. As we move forward, we remain committed to making ArcBest simpler, faster, and easier to do business with. That means continuously reducing complexity, improving how our teams work together, and aligning resources around the priorities that will matter most to our customers. These actions are sharpening our execution today and enabling us to build a more agile, more scalable organization, one that is well positioned to deliver long-term shareholder value. With that, I will turn the call over to Matthew to walk through the financial results.

Thanks, Seth, and good morning, everyone. Our second quarter results reflect an improving operating environment and disciplined execution of our strategy. Stronger pricing, higher weight per shipment, continued growth in managed solutions, and efficiency gains drove meaningful sequential improvement in operating performance and reinforced our confidence in the long-term financial targets outlined at Investor Day. Higher fuel prices also benefited the quarter, although we view that as a near-term factor rather than a contributor to our long-term targets. Before reviewing our operating results, I want to provide additional financial context on the actions Seth outlined to simplify our organization, improve our cost structure, and strengthen our operating model. These actions include organizational and facility changes, consolidation of our brands, and the discontinuation of the U-Pack freight movement system. Collectively, we expect the actions to generate $40 million in annualized run-rate cost savings. In connection with these actions, our second quarter GAAP results include $76.5 million of noncash impairment charges related to the Panther trade name and U-Pack equipment and other assets. Separately, GAAP results included an $8.8 million noncash impairment related to office space in our Asset-Light segment. We also expect to incur approximately $6 million to $7 million of cash costs primarily for severance and employee benefits and the disposal of U-Pack equipment, with most of that expected to be recognized in the third quarter. These impairment charges and other related costs are excluded from the non-GAAP results I will discuss today. Turning to our consolidated results. Second quarter revenue was $1.2 billion, up 16% year-over-year. Non-GAAP operating income was $74 million, compared to $45 million in the prior year period. And adjusted earnings per share were $2.38, compared to $1.36 in the second quarter of 2025. At the segment level, Asset-Based non-GAAP operating income improved by $21 million year-over-year while Asset-Light generated non-GAAP operating income of $6 million, a $5 million improvement from last year. In the Asset-Based segment, second quarter revenue was $784 million, up 10% on a per day basis. ABF's adjusted operating ratio improved to 90.8%, 200 basis points better than the prior year period and 650 basis points better sequentially. Daily tonnage increased 5% year-over-year, reflecting an 8% increase in weight per shipment, offset in part by a 3% decrease in shipments per day. As Seth mentioned, the continued expansion of our digital quote pool is enabling greater selectivity in the freight we bring into our network supporting higher weight, operationally efficient shipments that contribute meaningfully to profitability. We are also seeing a modest increase in truckload rated shipments, which is further contributing to the higher weight per shipment during the quarter. Billed revenue per shipment increased 13% year-over-year, supported by the heavier freight profile and a 4% increase in revenue per hundredweight, which primarily reflects higher fuel surcharge revenue. On the cost side, operating expenses increased for several reasons, including annual contract increases in union wage rates, higher fuel prices and purchase transportation expense, and increased depreciation expense associated with our equipment investments. In July, Asset-Based daily tonnage increased 8% year-over-year, driven by an 11% increase in weight per shipment and partially offset by a 3% decrease in shipments per day. The higher weight per shipment continues to reflect changes in freight profile. Billed revenue per shipment increased 10% year-over-year, primarily reflecting the heavier freight profile, partially offset by a 1% decrease in billed revenue per hundredweight. Excluding fuel surcharge, revenue per hundredweight declined in the low single digits primarily due to changes in freight profile. Historically, ABF's adjusted operating ratio has, on average, remained relatively consistent from the second quarter to the third quarter, excluding periods affected by the COVID-19 pandemic and the bankruptcy of a large LTL competitor. Based on current trends, we expect ABF's third quarter 2026 adjusted operating ratio to be generally in line with the second quarter. Our outlook assumes lower fuel surcharge revenue, partially offset by expected savings from the restructuring actions. Turning to Asset-Light. Second quarter revenue was $439 million, up 28% on a daily basis year-over-year. Shipments per day increased 15% as strong growth in managed solutions continued. Revenue per shipment improved 12% reflecting higher rates associated with tightening capacity and increased fuel costs. We also made meaningful progress on productivity and cost. Selling, general, and administrative expense per shipment declined 12% driven by productivity initiatives and the higher mix of managed business, which carries a lower cost to serve. Employee productivity reached another record with shipments per person per day increasing 35%. Together, the improvements in revenue, yield, and productivity resulted in Asset-Light non-GAAP operating income of $6 million for the quarter, a $5 million improvement from the prior year period. In July, Asset-Light daily revenue increased approximately 28% year-over-year, driven by a 19% increase in revenue per shipment and a 7% increase in shipments per day. Higher revenue per shipment reflects a stronger pricing environment, including the effects of higher fuel surcharge revenue and tightening truckload market capacity. Shipment growth was led by the managed solutions business. Looking ahead, we expect third quarter non-GAAP operating income of approximately $6 million to $8 million. This outlook reflects continued pricing discipline, productivity improvements, and anticipated cost savings from our restructuring actions. Turning to capital allocation. Our priorities remain unchanged. We will continue to invest selectively in opportunities that support profitable growth and attractive long-term returns while maintaining a strong balance sheet and financial flexibility. Returning capital to shareholders remains an important part of our balanced approach. Overall, our second quarter performance demonstrates the progress we can make as market conditions improve and we execute with greater efficiency and discipline. We are encouraged by the improvement in the industry fundamentals, the progress across both operating segments, and the actions underway to improve our cost structure. Combined with our strong balance sheet, these factors reinforce our confidence in our ability to drive profitable growth and make continued progress towards the financial targets outlined at Investor Day. With that, operator, we are ready to open the call for questions.

Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, simply press the star one again. When you are called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. So your first question comes from the line of Brian Ossenbeck of JPMorgan. Please go ahead.

Hey, good morning, everybody. Thanks for taking the question. Good morning. Just a quick clarification first for Matthew. I know the fuel impact is transitory, but was the impact in the quarter for ABF's OR and sort of what do you expect that to be in third quarter? Does that sort of wash itself out? And then just stepping back looking at the trends into July, seems like they are accelerating across the board for ABF. So does not sound like you are seeing or expecting a big inflection or getting a lot of truckload spillover just yet. So what do you think is causing that, and how do you feel about your ability and capacity to continue to grow here while maintaining service? Or even improving it? Thanks very much.

Yep. Yeah. Thanks, Brian. I will get started on your second question then turn it over to Matthew on fuel to answer some of that. So the way I think about, July and just our third quarter outlook is really we look at our historical trends and tonnage generally sequentially from June to July decreases about 4.6%. We are down only about 1%. Shipments generally decrease less than half a percent, right around a half percent. We are in line with that. Weight per shipment generally goes down about 4.1% in our history, and we are down about 1%. So that is all good signs that we are seeing, improvement in the sequential trends versus history. When we look at our dynamic shipments, they are trending a little heavier which is contributing to that stronger tonnage. A lot of that has to do with the mix that we have seen as we have expanded that quote pool. Like we talked about at Investor Day. So we really expect ABF third quarter adjusted OR to be generally in line with the second quarter, which aligns with history. And like we said in our prepared remarks, that outlook really reflects lower fuel surcharge revenue. We have unionized wage increases in HWP in July. We have some nonunion increases going in as well. But it also reflects the savings from those restructuring changes that we talked about. Really, the reason that we did the restructuring changes is to simplify how we operate, make it easier for customers to do business with, and ultimately accelerate that profitable growth and the cross-sell opportunities that we have. When I look at our pipeline, it continues to be strong. When we see PMI in the different indexes, it is showing some underlying positive things, but we just have not seen that demand show up yet. But, really, the way I look at it is we focus on things in our control, and we are positioned to take advantage in any environment. So turn it over to Matthew to talk about fuel.

Yeah. Hey, Brian. So, you know, just thinking about the first quarter to the second quarter sequential change, you know, just looking back at the 10-year history, we always see meaningful improvement from the first quarter to the second quarter, about a 350-basis-point improvement on average. Certainly, with the dramatic rise in diesel prices during the quarter, that did have an impact on our revenue, but certainly also had an impact on our cost structure as well. And it does impact items even above and beyond the cost of fuel, and certainly carries over to purchase transportation, other maintenance costs that we are seeing. You know, there were also other nice drivers for the quarter, including the improvement in weight per shipment that we talked about on the call. Certainly pleased to see that trend. The nice pricing performance that we saw for the quarter was also an impact. And then just saw continued improvements on the productivity side if you look on a sequential basis from the first quarter to the second quarter, which is generally what you see just as we move out of weather impacts in the first quarter and see just more shipment density in the second quarter. So a number of different contributions, for the quarter that I would highlight, but you know, fuel was definitely one of them.

And sorry. How should we think about that in third quarter? Just kind of the similar factor just going the opposite direction where fuel may become a bit of a headwind, but you still have all these other tailwinds. So just think of it more holistically.

Yeah. So we are we are always looking at the outlook for fuel prices. So we look at the short-term energy outlook from the Department of Energy. We also look at futures prices just to get an idea of where the market is headed. Certainly, that has moved back and forth here over the last couple of months. Know, just based on our latest read as we were setting guidance, it looked like that we are going to be down a little bit in the third quarter on prices versus what versus what we realized in the second quarter. You know, we did bake that into our outlook. But even when you take that into account, we still feel comfortable with the flat guide that we gave for flat sequential OR performance for the Asset-Based business.

Your next question comes from the line of Ravi Shanker. Please go ahead.

Great. Thanks. Good morning. Maybe a two-part question as well. Seth, first for you, can you just unpack the trigger for the action, the restructuring actions right now on the cuts for the cycle and especially focus on the U-Pack retirement because I know that was a big initiative for you guys. And kind of Matthew as a follow-up, just with the LTLs talking about the potential for getting the biggest rate increases ever, what do you think is the opportunity for you guys to kind of push on yield? Do you think you can get, you know, maybe pushing double-digit rate increases kind of going in the next big mid cycle? Thanks.

Hey, Ravi. Thanks for the question. This is Seth. So the, the organizational changes that we announced a few weeks ago, really, they were designed to simplify our best improve efficiency, enhance the customer experience, really allow us to deliver on long-term profitable growth. So I said it in my prepared remarks, it is not a change in strategy. it is really an acceleration of what we outlined in Investor Day, and really reflects that next phase in building a more integrated, scalable, and efficient company. So over our history and throughout this entire freight recession, we have continued to invest in technology, process improvement, commercial transformation, and our people alike. So these acts these recent actions really allow us to capture the full value of those investments by simplifying how we go to market, and we believe it is also going to improve the customer experience. We are bringing the brands together like we talked about. We are also streamlining portions of our organizational structure really to reduce duplication, improve decision making, standardize some of those best practices. And really better align our resources around the highest value opportunities. So when you when you look at the, act that we took, we think it is going to improve customer experience and efficiency, like I said. And then the action on the ABF side where we reduced about 1% of total doors we still have 8% more doors than we had in 2021. So we believe we are still positioned for growth as the as the market starts to inflect positively. So we really believe these actions are about just creating a simpler ArcBest improving customer experience, increasing efficiency, and really positioning the company to deliver long-term sustainable growth and long-term shareholder value creation It really enhances what we outlined at our 2028 Investor Day target.

So then, Ravi, I will turn it So, Ravi, you know, looking on the truckload rate side, I would say, you know, your comment about double-digit increases. I would say that is generally in line with our near-term expectations. Low double-digit increases. You know, certainly, we are very pleased with the Asset-Light performance that we saw for the quarter with over 6 million of operating income, the 5 million year-over-year improvement. You know, we are seeing some of those benefits from higher truckload rates. Occurring to the benefit of expedite, you know, certainly, that tightening capacity is really helping demand for expedite services, the margins that we are seeing in that business. You know, we are seeing those prices coming up in our truckload business. And seeing some of the impacts there, particularly as it relates to our contractual business. And then just the continued growth in managed solutions has been a big help in that business as well.

Your next question comes from the line of Chris Wetherbee of Wells Fargo. Please go ahead.

Hey, great. Good morning, guys. Maybe if you could touch on the pricing environment a little bit. I know guess, ex fuel are down a bit, but clearly, different freight profile, weight per ship and up significantly. And we are seeing some of the volume dynamics may be coming a bit better than seasonality. You noted for the month of July. So can you talk about sort of pricing and how you think about the direction here? Are we seeing a degree of improvement? I know contractual rate increases is 1 measure to look at. So how do you think about broadly pricing Yeah.

Hi, Christopher. This is Eddie. Yeah. I mean, we are we are really happy with where we are from a pricing standpoint. If you think about where we were last year and how we really started to focus on improving our LTL margins. We started seeing that show up in the first quarter as we went into the second quarter, really excited to see you know, that 5.8%, annual negotiation, increase number. We also implemented a general rate increase on June 22 of 5.9%. And that is holding very well. You know, you did point out that when you look at revenue per hundredweight, it shows slightly down, and that is really just a story of business mix and a heavier profile that is showing up in our system. Obviously, you know, we do feel like we can continue the momentum that we have right now that is really our expectation as we go into the third quarter.

And your next question comes from the line of Jason Seidl of TD Cowen. Please go ahead. The operator.

Yeah. Good morning, guys. I want to go back to the spillover business, from the truckload side. If we look back how much in terms of tonnage growth do you think you lost over the last couple of years? So we can sort of try to conceptualize what there is to gain going forward. And then the other question I have is related to sort of the historical MoLo business. What changes have you guys made sort of post the Miller v. C.H. Robinson decision? And how should we think about insurance cost going forward? Thank you.

Hey, Jason. This is Seth. I will take both of those questions. When we think about the truckload migration to LTL, we are seeing modest, improvement there where that freight's coming over. it is hard to give you an exact gauge of what the total or historically what that is going to be. Generally, we look in the shipments that weigh heavier than 10 thousand pounds, and That is where we are seeing some improvement in that. That space. But as truckload capacity continues to exit the market, as, you know, carriers continue to be pressured by margins, the Miller case, elevated fuel prices, all the things that you just mentioned we believe a lot of those certain heavier, more complex shipments that historically have moved in an LTL network will start to shift back. And we are seeing the early signs of that When you think about truckload multi stops, that is just not in their wheelhouse, especially when freight rates improve. So I am really pleased that we have continued to invest in our network, our fleet, our service capabilities throughout this entire cycle, which I think really positions us great for when the freight patterns start to normalize and those opportunities really do start to shift back to us. So while it is still early, we believe the combination of that tightening truckload capacity and just improving freight fundamentals overall is going to, make it so it is going to shift that freight back over to us. In terms of the Miller case and everything that is going on there, there is it is obviously an evolving situation. Really, to me, the Supreme Court decision provides just that additional clarity around the legal framework. For broker carrier selection and claims and reinforces the importance of strong safety great compliance, carrier oversight practices across the industry, We think that is going to take some time to develop as insurance providers and shippers and carriers and brokers. Everybody just evaluates the ruling and determines, whether any changes to requirements, contracts, things like that are necessary. But safety and disciplined carrier selection's always been a part of ArcBest in how we operate. We maintain really a structured risk based approach to third party carrier onboarding and qualifications. We have ongoing monitoring to make sure that everything's on the up and up. We believe those are important capabilities when we partner with our customers in managing our risk and their risk. So when you think about over time, it is really going to favor organizations that have well established processes like our Best. Have scale, have technology, and dedicated risk management teams, which we have all of those things. So there is going to be continuing discussions around insurance costs and litigation trends, and I think we are still a little early there. But we have been doing it right the right way for a long time. With strict processes around carrier vetting, at this time, we do not expect any, change in our outlook in what we are doing. We are going to continue to monitor as the landscape evolves.

Your next question comes from the line of Jordan Alliger of Goldman Sachs. Please go ahead.

Yeah. Hi. Morning. Not sure if-- Morning. You discussed this fully, but, on the restructuring plan, can you talk about the expected pacing of the realization timing Is there a spread of that 40 million between light and the less than truckload that you could talk about? And then is this augmentative to your longer term targets from the Investor Day? Thanks.

Hey, Jordan. Good morning. it is Matthew. So, yes, I will walk you through that at a high level. So in terms of the realization, we realized about $2 million of that cost savings in the second quarter We expect to recognize about 6 million of that in the third quarter, and then we expect to be at that full run-rate of $10 million a quarter or 40 million a year by the first quarter of 27. And then just thinking about how that breaks down across the business of the 40 million, about 75% of that is associated with our Asset-Based business. Then on that remaining 25%, about 80% of that is associated with the Asset-Light business, and then a small amount around $2 million is associated with our U-Pack operation. And as you probably recall, you know, those are expenses that we have historically removed from earnings on a non-GAAP basis. And so just thinking about non-GAAP impact, the non-GAAP impacts full impact is going to be around $38 million with the majority of that again, concentrated in the Asset-Based business. And then when you think about our long-term targets, you know, I would say these actions that we are taking really just further our view on the achievability of those targets, and they are really more in support of them than something that we are viewing as incremental to them. Thank you.

Thanks. Thanks, Ravi.

Your next question comes from the line of Scott Group. Of Wolfe Research. Please go ahead.

Hey. Thanks. Good morning. So I wanted to get your perspective on the revenue trend So April was up 11%, and then plus 9%, plus 8%, July up 7%. So decelerating a little bit. Is dynamic at play? Maybe, like, can you talk to this, like, revenue per day trend ex fuel? I do not know. Just any color or thoughts on the trend.

Hey, Scott. Sorry about that. Yeah. When I look at, you know, revenue per day, I really try to go back to my customer conversations that I have had and what we are hearing from them. And really, we are not hearing as much about, you know, tariff action or all that different stuff. it is really around oil and diesel prices manufacturing, inflationary impacts, housing construction continues to be weak. So we are seeing customers who are increasing, you know, very strong revenue and then some that are declining. So it is kind of a mixed bag as we go out. Overall, freight demand continues to be kind of muted, like we said, but we do have a very healthy pipeline which makes me feel great. As that truckload capacity comes out of the market, we have had more and more customers come to us and talk about our supply chain solutions which is why we saw, incredible growth within our managed solutions segment. And that really feeds all of our service lines, whether it be Asset-Based, truckload, expedite, all those different areas. So there is no change in the dynamic philosophy and what we have what we have gone to market. The percentages are about similar to what we saw in the first and second quarter. But as we have expanded that quote pool, we have ended up having better freight selection. As that quote pool gets bigger, we need the same amount of shipments that ultimately allows us to select the best shipment for the network that is not only the best shipment to fill empty miles, for example, but also the most profitable. That is where that mix and the heavier weight's coming from. But as we talk to our customers, and as I see the pipeline results, continues to strengthen. That is why I was really happy about the ArcBestView launch. Because that is going to improve the customer experience. Digital engagements, all those different things. So really, the way I look at this is we have built the company for any environment. We have invested through the cycle. We continue to invest, and that positions us to say yes when the market does inflect. But I hope that, yeah.

And, Scott, maybe I would just add, you know, really not a significant change when you look at the year-over-year from June to July. We were up, you know, revenue per day around 7.9% in June, and we were there right at 7% in July. And, you know, there are some dynamics that are moving in different directions. Certainly, fuel is one where we saw that move lower a little bit particularly earlier in the month, but, you know, we are pleased to see that weight per shipment has continued to strengthen. So we were at 8% year-over-year in June. Now we are at 11% year-over-year in July, and so it is nice to see that, you know, both on the core business and through the transactional business, some of those heavier weight shipments coming back in, which certainly has been helping our revenue per shipment metrics. Okay.

And your next question comes from the line of Bruce Chan of Stifel. Please go ahead.

Yes. Thanks, operator, and good morning, everybody. Just wanted to get at some of the mix impact questions from a different angle here. I do not know if you can just remind us of what the dynamic mix looks like versus the core LTL volume. And, you know, whether there is any target that you want to manage to. And then, you know, I do not know if you can share it, but any differences maybe in the volume or pricing trends that you are seeing between those two kind of segments of the market? Thanks, Bruce.

This is Seth. Yeah. When I look at our percent mix, we do not disclose the exact percentage of what we do you know, dynamic or transactional and then versus core. But the vast majority of our business is core LTL, business. And when we look at retention around those customers, it still remains very strong. They just continue to ship a little bit less because of the weaker demand environment. But as the demand environment starts to improve, we believe that is going to create some outsized operating leverage for us because we still have all those customers at great prices. When you think about the transactional business, our dynamic business, all those different markets, it is really about helping maintain consistency in the network. We have spent a lot of time making sure that our service levels are at a great place. And we have executed on that the second quarter. Our service is in an amazing place, and we hear feedback from our customers, our internal NPS continues to improve. So it is really about maintaining that consistency in the network with dynamic. But what is really important to understand, and we have said this before, is we optimize our mix on a daily basis and it is based on profit maximization. Based on what the current market is giving us and also available capacity there. So as we expand that quote pool, we can be more selective in real time, which in turn improves profitability like we have talked about. So you have seen the improvements that we have made over the long-term. And these investments in our tools really give us greater flexibility, especially as the market turns. But we have some of the best visibility into our network that we have ever had in our network with all the tech investments we have made. And I expect further improvements as we continue to expand those capabilities. All right. Thank you. Thanks.

Your next question comes from the line of Kenneth Hoexter of Bank of America. Please go ahead.

Great. Good morning. Good morning. So I understand you are closing 10 LTL facilities as part of the restructuring. I get it is 1%, so I think you said you are still up 8%. Maybe thoughts on where you think excess capacity is today? How should we see your ability to flex up into the upcycle both across not just doors, but labor, physical doors, and equipment. And then it seems that tonnage is up at the same time, but tons per day are outpacing seasonal norms into July. Maybe thoughts on why that should not support an above seasonal Asset-Based margin? Is it simply fuel? Or is there anything else in there? Thanks.

Hey, Kenneth. This is Seth. I will start with that the capacity questions that you had, and then if Matt Godfrey has anything to chime in, he can. But we have said in the past that we really bucket capacity into three different areas, people, equipment, and facilities. So the people side, we feel like we are in a great spot there. We can add people as needed. We have the most attractive wage and benefit, package in the entire industry. So we have not seen really any recruiting challenges on the equipment. We have invested over the long-term.

Throughout this cycle, we have one of the youngest fleets on the road and that allows us to flex the fleet up or down based off of demand and what the customer demand is. So on the real estate side, we worked on a long-term plan that we have discussed over the last four or five years. Starting around 2020, 2021, and we have added over 800 doors to the network. We continuously optimize that network day in and day out. And we did a full review of the network and determined that these 10 facilities were not needed because we could service them at nearby facilities and not actually change the service that we are delivering to our customers. So we still added, about 8% doors in strategic markets where we see growth service or efficiency opportunities. So I would estimate our capacity is around 15% to 20% excess capacity. And that allows us to flex, up or down based off of what the demand is given to us. So, Matthew, I do not know if you have anything to add there.

Thanks, Seth. And, yeah, as you said, there is there is three legs to capacity. We look at it from an equipment a door, and a people perspective. We have invested in modeling around each of those areas. So we continue to leverage our total cost of ownership model, and we understand all of our needs from an equipment basis by equipment type and by location. And so we have great relationships with our OEM partners and feel really good about where our equipment is at, our ability to secure our equipment that we desire and keep that within our projected CapEx guidance. In a similar way, we have invested in manpower planning models that enable us to forecast our labor needs at the system and location level. And Seth already talked about what we have done with real estate, but it is a continuous daily evaluation of our network. And, really, when you roll all those things up, the reason we invest in those so heavily, is that it enables us to service our customers with excellence, provide that premium experience, give us opportunities for profitable growth as we work towards achieving our long-term targets.

Hey, Kenneth. This is J. Matthew Beasley. Maybe just a follow-up on question about the sequential OR in the Asset-Based business. So, you know, like we highlighted, we are expecting performance generally in line with what we have seen in history. If you exclude the 2023 quarter where we had just a significant impact from the LTL competitor bankruptcy and you exclude the COVID-impacted third quarter in 2020. So, you know, we are generally in line. There certainly are going to be some puts and takes there. You know, as we looked at fuel, like I said, just kind of looking at the short-term energy outlook, looking at futures prices, look like that was going to step down a little bit so we baked that into our guide. You know, we also we are going to have some offsets expecting some continued strong performance on the productivity side as we move to the third quarter. And then, you know, we did see the continued strength in weight per shipment in July. We see that moderating a little bit as we move through the balance of the quarter, but certainly, you know, I would say some potential for upside if for some reason fuel came in above you know, kind of where we have been seeing it over the last few days, or we did see just continued strengthening in those weight per shipment trends.

And your next question comes from the line of Stephanie Moore of Jefferies. Please go ahead.

Hi. Good morning. Appreciate the time. I guess I did want to circle back to a prior question and commentary on the Asset-Light side of the business. I do think we kind of lumped both and expedited together. But maybe as we think about what is just evolving over time in the brokerage industry and certainly from a liability standpoint, that might be coming post the SCOTUS ruling. Is there anything we should be thinking about as we think about maybe the different components within your Asset-Light business? And especially as you kind of address vetting or what processes you already have in place. So wanted to follow-up there. And then I do have a follow-up to that. Thank you.

Hey, Stephanie. This is Seth. I will start on that, then if anyone on the team has anything to add. They can chime in after I get done talking. But I am really proud of the team for delivering, $6.3 million in non-GAAP operating income in the second quarter, especially when you consider we had $1.5 million in all of 2025. So that is a meaningful change, and it reflects a lot of that strategic action that we have been taking. So as you mentioned, we are really encouraged by the continued truckload capacity tightening. We did hear from a lot of our customers, enterprise shippers, have been responding to us positively because we have great service within the truckload side. So we continue to see a shift towards kind of shorter term rate increases, mini bids, things like that. So that has been interesting, but a lot of customers are really trying to mitigate their spot exposure while protecting that strong service that they are used to. So demand has still been relatively stable. So that has been a good thing, but tender rejections continue to be up quite a bit. So we are encouraged by all those things, but we also saw strong shipment growth really led by like we talked about. And a lot of that really comes from all the disruption that we have experienced really over the last 5 years, but that business had another record quarter. And when Managed ends up doing what they did, it improves productivity at Asset-Light, but I would say that improvement in Asset-Light was across the board, whether it is our truckload solution, our expedite solution, or managed. Productivity was up 35% year-over-year, which is just such a meaningful change. So I am also really excited about a lot of the things we have coming up in the future around Asset-Light. The organizational changes that we already discussed is really going to simplify how we operate, improve productivity, and improve our growth. We continue to improve productivity amongst our employees across each solution but also making sure that we are looking at the profitability of our account base. So we have been really strategic about what we do there. And then the tech roadmap that we have been executing on I feel like we are probably in the second or third inning of that. We got a long way to go. And adding Mac to the team has been just a tremendous asset to us. He has a wealth of knowledge and experience. I think he is going to continue to help us accelerate our results.

And your next question comes from the line of Ari Rosa of Citigroup. Please go ahead.

Hey, good morning, guys. Thank you for taking our question. This is Ari dialing in for Ariel. Your prepared remarks, you mentioned that you are not yet seeing a broad-based inflection in industrial demand. Can you just help unpack that a little bit? Are you seeing strength in certain regions relative to like weakness in others? Maybe some end markets outperforming others. And when you look at the back half of the year, how do you see these dynamics playing out? Thank you.

Hey, Ariel. This is Seth again. Yeah. I mentioned some of those comments. When we look across our customers, you know, health care manufacturing type customers, they operate on a multibid, multiyear bid cycle. So we are currently working with them to work through that as truckload capacity tightens. When you look at apparel and consumer brands, for example, we are just not seeing too much, demand there. But, construction seems to seems to be one of the areas, and a lot of that probably relates to the AI buildout. Not so much around, housing. So when you look at, you know, recreational vehicles, we have some customers in that space. Their demand remains healthy. So it is kind of a mixed bag when you go across the board. So across all these customer conversations, a lot of the conversation has been around how do we navigate this volatility, how can we mitigate cost with the rapid rise in fuel, what can you do to partner with us because we trust you with 103 years of experience to mitigate all those things. So tariffs really have not been much of the conversation. But when I think about how all of that translates into 2026 and the remainder of the year, I continue to have confidence in our long-term outlook and targets we outlined at Investor Day. We do not really operate on one month or one quarter. We are really focused on our long-term success. And you do that by partnering with customers, building that trust, and delivering a premium service to them. But at the same time, we recognize there is a lot going on around, you know, supply side of the market, fuel volatility, inflation, all the different things. But at the end of the day, we are focused on things in our control. We are executing our strategy. We are simplifying the organization, accelerating decision making, expanding our technology capabilities to improve productivity, and strengthening our integrated approach, which we think is going to deliver long-term shareholder value as well as long-term customer value.

And your next question comes from the line of Jeff Kauffman of Citizens Bank. Please go ahead.

Thank you very much. I just want to go back to Jordan's question. On the Asset-Light, when you gave the original 2028 guidance of $40 million to $70 million in adjusted operating income. Were these actions that you are taking now to consolidate the business, consolidate cost, anticipated in that number? Is it incremental to the number? And just to follow-up, I guess, one of the other questions, you know, an 8% change in average weight per shipment is pretty significant. What does that look like? Is that just pallets are getting heavier? Because of freight mix or because demand is increasing, or are we moving a different kind of freight that just weighs more?

Hey, Jeff, it is Matthew. So thinking about the 2028 target, Hey. Great to have you back covering stock. Thank you. Thank you. Yeah. When we think about 2028 targets, particularly around the Asset-Light business, so when we laid those targets out, we did anticipate that we were going to be working on efficiency or cost structure. We knew we had progress to make there, so that was anticipated. You know, just kind of looking at the $40 million in savings, you know, about $8 million of that is attributable to the Asset-Light business. $30 million attributable to the Asset-Based business. And then $2 million attributable to the Vox business. And the $8 million there, you know, that is what we would consider to be baked into the 2028 targets at this point. And, really, feel good about the progress that we have been making in the Asset-Light business, just kind of thinking about where we are year to date there. You know, we are up over $9 million for the year in operating income. Again, kind of a similar quarter expected for the third quarter and with our outlook of $6 million to $8 million. And then, you know, if trends continue, we could see something similar to that in the fourth quarter as well, which certainly makes for a very nice year for the Asset-Light business and certainly continued improvement and strengthening there.

Yeah. I would add to that too. When we look at each of the segments that we mentioned, whether truckload, managed, expedite, all of those areas are on track with what we anticipated in the 2028 targets. And then you had a question about weight per shipment and what is going on with everything. And a lot of that when we look at weight per shipment, it really is broken down into a few different categories. Our core business which is the bulk of our LTL shipments, those customers continue to just ship a little bit less. Now we are seeing some good things there, some early signs, but it is still too early to say, hey. Demand has flipped on us, but we are seeing some encouraging things. So the bulk of our business is just down because customers shipping less. But like I have said earlier, retention's in a good spot. Now dynamic shipments, as we have expanded that quote pool, those shipments do look a little bit different because we have more optionality to optimize the network and maximize the profit that we that we can achieve. So those shipments do look a little bit different. And then something that is different, versus history with our business versus others is our U-Pack business is just down. Because housing continues to be down. Those are generally smaller number of shipments, but heavier shipments. So that continues. No real change sequentially there. But just when you are looking at historical figures, that is having an impact. So I would say dynamic mix is changing slightly, but we believe it is a better outcome. But the core business continues to remain pretty consistent.

Okay. Thank you.

And there are no further questions at this time. I will now turn it back to Amy Mendenhall for closing remarks.

Thank you to everyone who joined us today. We certainly appreciate your interest in ArcBest. Hope everyone has a great day.

Ladies and gentlemen, that concludes today's call. Thank you everyone for joining. You may now disconnect.