In the recent ArcBest (NASDAQ:ARCB) Third Quarter 2024 Earnings Call, executives reported a consolidated revenue decrease of 6% to $1.1 billion, with adjusted earnings per share at $1.64, down from $2.31 in the same quarter of the previous year. Despite the revenue dip, the company is actively investing in growth and efficiency, with significant savings from personnel and training investments.
The asset-based segment's revenue was $710 million, with a non-GAAP operating ratio of 91%. A contract effective July 1 added approximately $8 million in costs for Q3, but the company managed to mitigate rising costs through productivity improvements and cost reductions. ArcBest (ticker symbol ARCB) maintains a strong financial position, with about $500 million in available liquidity, and continues to focus on operational efficiency and strategic growth amid a challenging economic environment.
Key Takeaways
- Consolidated revenue decreased by 6% to $1.1 billion, with adjusted earnings per share at $1.64.
- Significant investments in personnel and training have led to $7 million in savings.
- The asset-based segment's revenue was $710 million, with a non-GAAP operating ratio of 91%.
- Contract renewals and a general rate increase led to a 7% increase in revenue per hundredweight.
- The asset-light segment's revenue declined by 10% to $385 million, with a non-GAAP operating loss of $4 million for Q3.
- The company returned $65 million to shareholders year-to-date and revised the capital expenditure estimate to approximately $300 million.
- Strong customer relationships and managed transportation solutions saw double-digit growth.
Company Outlook
- ArcBest expects more savings in 2025 from ongoing investments in efficiency.
- The company plans to continue its facility expansions, including an upcoming expansion in San Bernardino, California.
- An anticipated non-GAAP operating loss of $5 million to $7 million for Q4 2024 is expected.
Bearish Highlights
- Challenges in the truckload market and a decline in shipment weight impacted revenue.
- The asset-light segment experienced a 10% revenue decline due to a soft freight market.
- Higher insurance costs and macroeconomic factors such as hurricanes and a port strike affected the company's performance.
Bullish Highlights
- Recognition for service quality, ranking highly in the 2024 Mastio survey.
- Average customer agreement size increased fivefold compared to five years ago.
- Investments in technology led to a 20% productivity improvement for asset-light operations.
Misses
- Adjusted earnings per share decreased from $2.31 in Q3 2023 to $1.64 in Q3 2024.
- The asset-light segment reported a non-GAAP operating loss of $4 million for Q3.
- The MOLO acquisition's earn-out consideration was reduced by $92 million due to market conditions.
Q&A Highlights
- Management is focused on optimizing the supply chain and improving profitability through pricing strategies.
- The company is enhancing profitability in the asset-light segment through improved account profitability analysis and shifting the business mix.
- Long-term pension contributions remain manageable through 2028, with the American Rescue Plan positively affecting distressed multi-employer pension funds.
- Service improvements include city route and pickup optimization, with a pilot for a new appointment optimization process set for later in 2023.
ArcBest's third-quarter performance reflects a company actively navigating a complex economic landscape with a strategic focus on growth and efficiency. The company's investments in personnel, technology, and customer relationships are designed to drive long-term profitability and service quality improvements. Despite facing headwinds such as a soft freight market and external economic challenges, ArcBest remains committed to its operational objectives and financial stability.
InvestingPro Insights
To complement ArcBest's third-quarter earnings report, InvestingPro data provides additional context for investors. Despite the reported revenue decrease, ArcBest (ARCB) maintains a solid market capitalization of $2.46 billion. The company's P/E ratio stands at 18.28, suggesting that investors are still willing to pay a premium for its earnings potential.
InvestingPro Tips highlight that ArcBest has been aggressively buying back shares, which aligns with the company's report of returning $65 million to shareholders year-to-date. This strategy may indicate management's confidence in the company's long-term value, despite current market challenges.
Another relevant InvestingPro Tip notes that ArcBest has maintained dividend payments for 22 consecutive years. This consistency in dividend payments, coupled with the company's strong financial position mentioned in the earnings call, underscores ArcBest's commitment to shareholder returns even in challenging economic environments.
The InvestingPro data shows a revenue of $4.33 billion for the last twelve months as of Q2 2024, with a revenue growth rate of -6.81%. This data point corroborates the 6% revenue decrease reported in the earnings call, providing investors with a broader perspective on the company's financial trajectory.
It's worth noting that while the company faces current headwinds, InvestingPro Tips indicate that analysts predict ArcBest will remain profitable this year. This forecast aligns with management's focus on operational efficiency and strategic growth initiatives discussed during the earnings call.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into ArcBest's financial health and market position. There are 10 more InvestingPro Tips available for ArcBest, which could offer valuable perspectives for those looking to make informed investment decisions in the transportation and logistics sector.
Full transcript - ArcBest Corp (ARCB) Q3 2024:
Operator: Good morning, and welcome to the ArcBest Third Quarter 2024 Earnings Call. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a question and answer session. To ask a question, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Amy Mendenhall, Vice President, Treasury and Investor Relations. Thank you. Please go ahead.
Amy Mendenhall: Good morning. I am here today with Judy McReynolds, Chairman and CEO; Seth Runser, President; and Matt Beasley, Chief Financial Officer. We also have other members of our executive leadership team available for the Q&A session. Before we begin, please note that the comments we will make today will be forward-looking statements. These statements are subject to uncertainties and risks which are detailed in the forward-looking section of our earnings release and SEC filings. To provide meaningful comparisons, we will discuss certain non-GAAP financial measures during this call. These measures are outlined and described in the tables of our earnings release. Reconciliations of GAAP measures to non-GAAP measures discussed in this call are also provided in the additional information section of the presentation slide. You can access the conference call slide deck on our website at arcbest.com, in our 8-K filed earlier this morning, or follow along on the webcast. And now I will turn the call over to Judy.
Judy McReynolds: Thank you, Amy, and good morning, everyone. We remain steadfast in our commitment to our strategic pillars of growth, efficiency, and innovation, and continue to invest in our people, solutions, and technologies as we position ArcBest to capitalize on today's opportunities and those that arise as the freight cycle improves. Our people are at the heart of our success. By providing them with the right tools, training, and support, we enhance their ability to deliver exceptional value to our customers and shareholders. This year, our investments in training have not only enabled our workforce to succeed, but we have also seen significant cost savings. For example, the operations experts deployed to our largest ABF facilities have already saved $7 million this year, with more savings anticipated as we expand these efforts into 2025. It is crucial that we have the right people in the right roles, and investments in our leadership team and employees guarantee a deep bench of talent for the future. Last quarter, we promoted Seth to President of ArcBest, and Matt Godfrey to ABF President. Recently, we announced that upon Michael Newstead's retirement, Dennis Anderson will succeed him as Chief Strategy and Innovation Officer. Dennis is a forward-thinking leader with a deep understanding of our customers' and employees' challenges. He has been instrumental in driving significant improvement to our digital tools, contributing to our number one Mastio ranking for the most useful website. Speaking of Mastio, we are proud to receive external recognition for our hard work in the 2024 survey results, where ABF exceeded the industry benchmark standard for service and ranked number one or number two in half of the categories surveyed. These rankings affirm our status as a premium provider that customers trust and rely on. I am proud of how we listen and collaborate across our organization to be responsive to our customers' needs. As we navigate a dynamic landscape, our commitment to delivering shareholder value remains unwavering. Each and every day, we make decisions to enhance our capabilities and drive sustainable growth. And now I will turn it over to Seth, who will discuss some of the key initiatives that are propelling us forward.
Seth Runser: Thanks, Judy, and good morning to everyone. As I step into my new role, I have had the pleasure of meeting with teams across the organization to identify ways to unlock additional value and drive efficiency. I am inspired by our employees' engagement and dedication to our customers and our company. We remain committed to managing what is within our control, delivering industry-leading service, and operating our business efficiently. Despite the challenging macro environment, I am confident in our ability to grow and deliver on our strategic priorities. My confidence stems from our strong customer relationships, ongoing service improvements, and progress on facility expansions and investments in innovation. Our high customer retention underscores the effectiveness of our relationships and satisfaction of our customers. In addition, we have a strong pipeline that represents substantial opportunity for top-line growth. We carefully evaluate each opportunity to ensure we create value for customers while producing the returns that our shareholders expect. Our managed transportation solution is leading the way with double-digit shipment growth. This solution helps customers optimize their supply chains, and it is clear that efficiency-driving solutions are more valued than ever. I am encouraged to see the demand is growing, and the customer agreements we are securing now are more than five times larger on average than those from five years ago. Our revamped onboarding process is improving customer retention and lowering our cost to serve. As more customers opt for managed solutions, we grow both our top line and bottom lines. As we have mentioned before, ABF's LTL on-time service is the best it has been in five years. We have made significant improvements to shipment visibility, with approximately 30% better accuracy on our ETA calculations, reducing customer inquiries by 19%. As Judy commented on already, our focus on continuous improvement and serving our customers with excellence is reflected in the recent recognition by Mastio. Superior service drives future growth in a win-win outcome on pricing. While I am proud of the progress we have made, we are not sitting still. We have more work to do. We are progressing on our long-term ABF facility roadmap and strategically adding capacity. We opened three newly remodeled facilities from the Yellow (OTC:YELLQ) auction, which added nearly 80 doors and replaced current locations. We are wrapping up the addition of 66 doors in Chicago, and in early 2025, we plan to complete a facility expansion in San Bernardino, California, which will add another 40 doors of capacity in a growth market. These updated facilities and door additions will enable us to handle more freight with improved productivity and better service. In addition to our facility expansion, we are investing in equipment and technology to further improve our results. New equipment investments ensure our fleet remains one of the youngest and most efficient in the industry. In the third quarter of 2024, our repairs and maintenance costs were $5 million lower than last year's third quarter. A modern fleet reduces our total cost of ownership and underscores our dedication to operational excellence and long-term sustainability. New dock management software provides employee-level visibility into productivity. Having this tool in the hands of our frontline managers enables quicker action and provides consistency in our processes and service. We have also developed advanced labor planning tools which will enable us to forecast labor needs more accurately, ensuring we have the right people in the right places at the right times, driving productivity and supporting our growth objectives. You have heard us discuss our city route optimization project at ABF before, and we are expanding into the next two phases, which will use AI to predict daily demand and optimize our pickup routes. These have been in pilot for three months, with rollout plans to begin in the fourth quarter. For our truckload solution, we have developed a self-serve carrier portal with features like lane matching and auto-offer negotiation, which is resonating with our truckload carriers. We are already seeing a 13% adoption rate, which is ahead of our original targets, and we should grow as more features are added. I am pleased that we are wrapping up the implementation of TriumphPay, a third-party solution for carrier payments and invoice auditing. This technology will reduce manual tasks and fraud, improve our carrier partner experience, and allow for scalable growth. These investments in facilities, technology, equipment, and innovation are contributing to a year-over-year productivity improvement of 20% for asset-light and 6% for asset-based. Our company has evolved tremendously over the past several years, and as you can see, we are intelligently investing for the future to benefit our customers and shareholders. I will now turn it over to Matt to go through the financials in greater detail.
Matt Beasley: Thank you, Seth, and good morning, everyone. The third quarter presented another period of softer demand for our industry. The truckload market continues to face challenges, and we are comparing to a strong third quarter 2023. For our asset-based segment, we saw higher business levels as we help customers navigate market disruptions. Consolidated revenue decreased by 6% from last year's third quarter to $1.1 billion. Non-GAAP operating income from continuing operations was $55 million compared to $75 million in the prior year. Our Asset-Based segment saw a $19 million decrease in non-GAAP operating income, while the Asset-Light segment's non-GAAP operating loss of $4 million was unchanged. Adjusted earnings per share were $1.64, down from $2.31 in the third quarter of 2023. Now let's discuss our two segments in more detail. Starting with our asset-based business, second quarter revenue was $710 million, a per-day decrease of 6%. ABF's non-GAAP operating ratio was 91%, an increase of 220 basis points year over year and 120 basis points sequentially. Our August 8-Ks highlighted expected sequential operating ratio performance, a flat to a 50 basis point increase. September weight per shipment was lower than expected and was the largest contributor to the higher-than-expected operating ratio. In addition, higher insurance costs added 40 basis points to the operating ratio sequentially. In the third quarter, daily shipments saw a slight decline of less than 1% on a year-over-year basis. However, weight per shipment decreased by 11%, resulting in an 11% decrease in tons per day compared to the previous year. This decline is primarily due to broad industrial weakness as customers are producing less in the current economic environment. Additionally, higher interest rates and low housing inventory have led to fewer household goods moves, which typically involve heavier shipments. Some higher-weight LTL shipments have also shifted to the truckload market, with its continued low rates and excess capacity. It is also worth noting that some of our shipments related to Yellow's bankruptcy in the third quarter of 2023 were project-related, while others shifted to other providers over the past year. Revenue per hundredweight increased by 7% in the third quarter. On September 9, we implemented a 5.9% general rate increase, and we secured an average increase of 4.6% on our contract renewals and deferred pricing agreements during the quarter. Price improvements were partially offset by declining fuel costs. Excluding fuel surcharges, revenue per hundredweight increased in the high single digits year over year. The pricing environment remains rational, and we are focused on using pricing and operational efficiency improvements to outpace rising costs and enhance our margins. Changes in the wage rate under our union contract took effect on July 1, and benefits increased August 1 for a combined increase of approximately 2.7%. This equates to approximately $8 million in additional cost for the third quarter. Despite lower ton levels, the volume of shipments remained relatively stable, which meant that labor costs did not scale proportionally to tonnage declines. However, improved productivity through technology and training helped mitigate increased contract costs while maintaining high service standards. Costs for fuel, repairs, and purchased transportation were all lower on a year-over-year basis, but insurance costs increased by $6 million, adding 100 basis points to our operating ratio year over year. On page 15 of our slide deck, you will see that our trailing twelve-month non-GAAP operating ratio stands at 90.1. This marks a 780 basis point improvement since 2016, highlighting the success of our strategic initiatives. In October 2024, ArcBest's Asset-Based segment experienced lower shipment and tonnage levels compared to the same period last year. This decrease is primarily attributed to the exceptionally strong performance in October 2023, which was driven by additional business at higher prices following a cyber attack on a competitor that tightened capacity. As we served our customers during this market disruption, in October of last year, we achieved an 8.1% year-over-year increase in billed revenue per hundredweight. This October, our results were impacted by weak industrial production, disruptions from hurricanes, and a port strike. Despite these challenges, pricing remains rational. The decrease in revenue per hundredweight is also influenced by lower fuel prices. Excluding fuel surcharges, revenue per hundredweight remained flat year over year. From September to October, per day remained flat. We expect the year-over-year decrease in revenue that we saw in October to moderate throughout the rest of the quarter, resulting in a total expected year-over-year decrease in revenue per day for the quarter in the mid-single digits. Historically, the average sequential change in the asset-based operating ratio from the third quarter to the fourth quarter has ranged from a 100 basis point to a 200 basis point increase. With continued softness in the manufacturing environment and truckload markets, we currently expect to be on the high end of the historical range. Moving on to the asset-light segment, third quarter revenue was $385 million, a day-to-day decrease of 10% year over year. Shipments per day were down less than 1%, and revenue per shipment decreased by 9% due to the soft freight market and growth in our managed business, which has smaller shipment sizes and lower revenue per shipment levels. Our managed solutions set a record in September for both volumes and margins, as we onboarded new customers and grew with existing accounts. We maintain our focus on reducing operating expenses and improved employee productivity. However, the non-GAAP operating loss of $4 million shows that our business continues to be impacted by current market conditions. Our MOLO acquisition contained an earn-out feature based on EBITDA targets through 2025. Due to current market conditions, the estimated contingent consideration liability for the earnout was reduced by $92 million in the third quarter. This is reflected as a reduction to expense in our GAAP operating income results but has been excluded from non-GAAP results to better represent normal operations. In October, we saw a 3% year-over-year decline in shipments per day and a 10% decrease in revenue per shipment. Sequentially, from September to October, shipments per day decreased by 6%, and revenue per shipment rose by 4% as we implemented strategic pricing adjustments. Given the current market conditions, we anticipate a non-GAAP operating loss between $5 million and $7 million for the fourth quarter. Our asset-light offerings play an important role in our overall strategy. As customers seek long-term logistics partners for all their transportation needs, we continue to reduce costs and better align resources to match business levels. We are maintaining our pricing discipline and strategically reducing less profitable freight when appropriate. These initiatives are a top priority as we focus on returning the asset-light segment to profitability. Turning to capital allocation, year to date through September, we returned $65 million to shareholders through share buybacks and dividends. We ended the third quarter with a net cash position of roughly $500 million in available liquidity. The capital expenditure estimate for the year has been revised downward to approximately $300 million, primarily due to lower expected spending on real estate. Our strong financial position and strategic investments in technology have significantly enhanced our operational efficiencies. We plan to build on this success as we continue to innovate and position ourselves for sustained growth. I will now hand it back to Judy.
Judy McReynolds: Our team continues to show incredible resilience and adaptability. Their hard work and dedication have been pivotal in driving significant improvement. I want to extend my heartfelt thanks to our customers, employees, and shareholders for their continued support and trust. We are committed to building on this momentum and delivering even greater value in the future. That concludes our prepared remarks. I will turn it over to the operator for questions.
Operator: Thank you. Our first question comes from Jason Seidl from TD Cowen. Please go ahead. Your line is open.
Jason Seidl: Thank you, operator, and for taking the question, Judy and team. You talked about a rational pricing environment, and it seems like you are still doing pretty well about getting that 4.6%. Has it trended lower throughout the quarter? Has it trended higher or sort of stayed the same, that 4.6%? Can you just give us some perspective on that?
Chris Warner: Hey, Jason. Good morning. This is Chris Warner. I would say there was not necessarily a trend up or down. It was pretty consistent by month throughout the quarter. And I know we already talked about it. We took a 5.9% general rate increase on September 9. Had really good retention of that customer base that impacts around 20% of our revenue. So good results there. The 4.6% in the third quarter, really pleased with that result. I think year to date we are right at about 5%, which at that rate we are outpacing just the inflationary cost that we are experiencing in the business. So really just continue to work on that, making sure that our price is in a good place for the value that we are providing our customers.
Jason Seidl: That makes sense. And you said you had really good retention. Would you describe the retention as normal?
Chris Warner: I think we have seen some positive trends in retention with our customers. Our customers are challenged just with the environment that they are in. But we are able to position ourselves as a logistics company to serve them and to improve their efficiency. Our managed business, we see really strong customer retention there as we are able to serve them, not just through our asset-based solution, but also through other solutions as well to help them optimize their supply chains.
Jason Seidl: Appreciate the time. That was my one.
Chris Warner: Sure. Thank you.
Operator: Our next question comes from Ravi Shanker from Morgan Stanley. Please go ahead. Your line is open.
Ravi Shanker: Thanks. Good morning. Great to see the traction in Mastio. But the question is, is some of the service improvement, you know, probably coming at too high a cost or kind of how long does it take to get recognition for your service improvement both in the form of price and share?
Matt Dodd: Yes. Good morning, Ravi. This is Matt Dodd. Appreciate you calling out the success we have seen around the Mastio. When we think about that success, it really speaks to that high level of execution by our teams in the field and our DSY employees to serve our customers with a high level of excellence. It also speaks to our teams here as we listen to our customers and understand our customer needs, spending time on the right investments to give our leaders in the field the right tools to serve our customers well and reduce our cost. So not only have we increased our efficiency, we have seen continued improvements in our productivity. When you think about that and where we fell on the Mastio, falling on that fair value line, I think it really speaks to that we have been able to increase the service level to our customers and do it efficiently so that we are keeping our cost in line. I expect those trends to continue to move as we move forward because what excites me the most is while we have rolled out a lot of initiatives aimed at our service and productivity levels, we have a lot still to do. Seth mentioned what we are rolling out additional phases of our city route optimization here as we get into the fourth quarter. We have several initiatives in 2025 that will continue to impact our results positively.
Ravi Shanker: Great. Thank you.
Operator: Our next question comes from Jordan Alliger from Goldman Sachs. Please go ahead. Your line is open.
Jordan Alliger: Yeah. Hi. Morning. So I think you indicated revenue per day will get less negative as we move through the quarter and settle in down mid-single digits. Is this more volume-driven? Is it yield-driven? And what does it imply as we move through the balance of the quarter from a volume perspective? Thanks.
Matt Beasley: Sure. Yeah. So, Jordan, thanks for the question. This is Matt. It really is the impacts, and we highlighted this a little bit. Certainly, we did see, just in October of last year, an increase in volumes and an increase in pricing that was somewhat contained in October as we served customers through the cyber attack that happened on a competitor last year. I would say it is in all of those categories that you mentioned. Certainly, overall, when we are looking at revenue per day, we do expect that to moderate and improve as we move into November and December. I would say in some of the other, at least on a year-over-year basis, the comps get easier really across the board. So both on a pricing and a volume perspective, we expect both of those to improve as we move through November and December.
Jordan Alliger: Thank you.
Operator: Our next question comes from Daniel Imbro from Stephens. Please go ahead. Your line is open.
Daniel Imbro: Hey. Good morning, guys. Thanks for your questions. Judy, maybe we can unpack the ABF results a little bit more, that would be great. I think you talked about in your prepared remarks that mid-quarter, you expected OR kind of flat to 50 basis points. It came in 120 basis points sequentially. You mentioned September weight per shipment, I guess, are the biggest drivers. Can we unpack maybe that weight per shipment move lower? What is driving that big of a step down? Obviously, it was more than you expected. When do you think we start to see that stabilize? What are you hearing out there? Yeah. When would you expect it to stabilize, I guess, as we look forward on weight per shipment?
Christopher Adkins: Hey. Good morning, Daniel. This is Christopher. That weight per shipment difference that we are seeing from a year-over-year standpoint is related to a couple of things that we commented on. One was just the truckload environment. As that continues to be suppressed, the prices are low in that area, you do see just some LTL business that historically is LTL and it is moving on truckload. The other thing that we are just seeing in our managed business is that we are able to help optimize our customer supply chain by bundling some LTL shipments into truckload. There is some mode optimization going on in the network or in really the industry. I think, as the market turns, you could see some of that business transition back from truckload to LTL. That is one area, and I know that we commented earlier on in the script just that the household goods moving business just is not as strong as it historically has been given just the higher interest rates. So homeowner mobility is not as strong as we have historically seen, and that business tends to be heavier weight per shipment as well. Those are two kind of key areas that are pushing our weight per shipment lower than what we would historically see there.
Matt Beasley: Yeah. And Daniel, this is Matt. I would just say it also was just kind of a difference versus our expectations, particularly for September when we were calibrating that mid-quarter update. We were just expecting to see a little bit of improvement in weight per shipment that just did not come through, I think, likely just given the macro backdrop that we are looking at now.
Daniel Imbro: Thanks.
Operator: Our next question comes from Ken Hoexter from Bank of America. Please go ahead. Your line is open.
Ken Hoexter: Hey, great. Good morning. I guess sticking on that weight per shipment, do not know if this is for Seth or Judy, but it seems like a larger decline versus peers or just at kind of run right now a much lower level than you have historically done. I think you used to run around twelve, thirteen hundred pounds. Is there a, you know, is that just economic? Is there something changing in the mix? We did not really hear much about the mix of transactional versus core this quarter. Can you describe what is going on within the network now and where does that stand?
Seth Runser: Yeah. So hey. This is Seth. When we look at weight per shipment, what is going on, really what we were trying to highlight with revenue and weight per shipment in our 8-K is October is unusually from a comp standpoint. We think that is going to normalize on the front side as we move through the rest of the quarter. But really where we are focused right now is on revenue growth both across the question, and we have seen our pipeline increase pretty decently. But what we are focused on in the pipeline is making sure that those opportunities are profitable for our business. Our retention rates have been in a really good spot. Growth really comes down to that service you provide your customers. We were happy to see the results there on the Mastio side. Our claims numbers continue to be in a good spot, so we think we are bringing value to our customers. The second piece is the more efficient we are, the better our service is to our customers, obviously. We feel like that also impacts the price we deliver to our customers. The more we can reduce our cost to serve. So I feel like as we move forward, there is not something structurally changing. There is the macro impact and things that are going on, but we are focused on things in our control. We feel pretty good about the pipeline that is coming in and the growth that we are going to see as we move past this strange comp period.
Matt Beasley: Yeah. And Ken, this is Matt. I just highlight, retention remains high. We can really see this across the business. But particularly when we are looking in our managed business and our asset-light segment where we are managing the entirety of some of our customers' logistics spend, we are just seeing weight per shipment levels be down. When we are stopping by to make pickups, we might be picking up two pallets now instead of three pallets. Again, it is high retention on the customer side, just a little bit smaller shipment sizes when we are coming to pick them up.
Seth Runser: And Ken, you also mentioned, this is Seth again, you mentioned the mix of dynamic. The majority of our business is core, and transactional or dynamic business really helps us just maintain consistency in the network, fill empty capacity. Our core business continues to increase, and that is where we are seeing the growth in our pipeline. So you will see that continue to normalize as we move past this unusual comp in October.
Ken Hoexter: Thank you.
Operator: Our next question comes from Tom Wadewitz from UBS. Please go ahead. Your line is open.
Tom Wadewitz: Yes. Good morning. I appreciate that. I guess this is a little bit of a follow-up on Ken's on the dynamic pricing. So I think you do not like to give us precisely what the mix of dynamic pricing is versus core LTL, but can you give us kind of a ballpark of what that looks like? Is it, you know, ten percent dynamic and ninety percent LTL or just so we kind of have a sense of how that looks? It sounds like maybe that has been stable, but wanted to see if you could give any further comments on that.
Seth Runser: Yeah. Tom, this is Seth. Again, the majority of our business is core. We do not disclose that specific mix between transactional and core. Really, what that does, like I said, was position us to maintain consistency in the network, especially during this lower times, and we have seen the core continue to improve. When you look at weight per shipment, our transactional or dynamic shipments, they are generally heavier, and that contributes to some of the weight per shipment changes that you see. But really what we are focused on is the profitable growth, mix management, making sure that we are delivering excellent service to our customers. What is important to understand is we optimize our mix on a daily basis, and it is based on profit maximization based on the market prices and available capacity, and that is a daily. You have seen the improved results, you know, if you look over the longer term, that these tools have given us some flexibility in the network that we have not had before.
Tom Wadewitz: Okay. And real, I guess, related to that, can you give a little more perspective on, like, how much of the shift to truckload is affecting? It sounded like that might be having an effect on the mix as well. Like, how big of a move is that? You know, is it seems like is that a couple points shift of volume to truck or what is the magnitude of that?
Christopher Adkins: Yeah. Tom, this is Christopher. I do not know that we have a clear line of thought exactly how much that is. I will just say again through our managed business, we see that that is having an impact. I would say just that we are prepared to manage the business regardless of how much that shift is. Just through our daily management of pricing and through the mix of our business and through the large pipeline that we have discussed, we are prepared in any environment but do not have really a clear plan as far as how much that impact is. We know it is having an impact because we see it. We actually helped our customers to do it. But do not have a specific number there.
Tom Wadewitz: Yep. Okay. Thank you.
Operator: Thanks, Tom. Our next question comes from Brian Ossenbeck from JPMorgan. Please go ahead. Your line is open.
Brian Ossenbeck: Hey, good morning. Thanks for taking the question. So you mentioned that there is an impact in the quarter from hurricanes and port strikes and other disruptions. Wanted to see if you could put a little bit more context around that. And then maybe just as a quick follow-up, can you just talk a little bit more about the labor shipment and yield dynamics in October? I know you have the tougher comp that is skidding it a little bit, but I would not have thought to see yields ex-fuel flat with weight per shipment still down six percent. So is that going to normalize as you go forward? And maybe get a little more context around that as well. Thanks.
Christopher Adkins: Sure. So just to comment on the hurricane and port strikes, we saw some impact in late September from those events. September started off stronger and then weakened beyond what we would normally see in September, just thinking about it being end of quarter month. So it was not as strong as we would like to see. Then you saw some impact from hurricanes in October as well, just from some service areas being closed, and then when they reopen, we saw some of that demand pull back, but I do not know that it recovered to the level that we would like to see. And then just from a weight per shipment perspective in October, I would just encourage you to look at more sequential trends rather than year over year. There are just some abnormalities that we have already discussed in October of last year. So if you look September to October, it is more normal trends. And I think as we get into November and December, you are going to see some normalization there. But just we had an odd month last October as it relates to a cyber event last year that we discussed.
Brian Ossenbeck: Right. Even from a yield perspective, though, I guess, it is still down three percent sequentially. Is that on an inclusive of fuel perspective or is that excluding fuel?
Christopher Adkins: Yeah. I think it was so we I think we commented that it was minus three percent September to October that was with fuel, and then without fuel, I think we said it was flat.
Brian Ossenbeck: So go catch the link. Thank you.
Christopher Adkins: But we also commented that it was profile related. That is right. Yeah. I mean, and I think that it just is there is just a different mix as we enter the month of October. But I feel like that when we are looking across what we have seen in third quarter and into fourth quarter, we are not seeing a dramatic change in the yield environment. In fact, we feel like it is still in a good place and rational. I think we have seen some of the competition continue to raise rates and announce that publicly, and that is all really good as far as we are concerned.
Brian Ossenbeck: Sorry. I think correctly. The minus three, I think that with and without fuel sequentially.
Christopher Adkins: Yeah.
Brian Ossenbeck: Right.
Christopher Adkins: Right. Okay. Okay. Thank you. Thanks.
Operator: Our next question comes from Chris Wetherbee from Wells Fargo. Please go ahead. Your line is open.
Chris Wetherbee: Hey, Greg. Thanks. Good morning. Maybe you want to pick up on some of those truckload comments. I guess I am curious as you think about sort of significant differences in the pricing environment in both truckload and LTL if the sort of normal back and forth that we have seen through previous cycles will hold this time. In particular, what do you need to see on the truckload side to be able to have some of that volume come back? And then if I could squeeze in kind of an unrelated follow-up just on the asset-light side. I guess, obviously, it looks like the fourth quarter is maybe looking at another operating loss. I guess, can we get a sense of what needs to happen to kind of get that business moving in the right direction? Is it, at this point, just simply an improvement in the cycle, or are there other levers that you can pull particularly on the cost side that can improve profitability there?
Seth Runser: Hey, Chris. This is Seth. I will answer your first question on the truckload migrating and how it goes back and forth between channels. The truckload market still has too much capacity, and that is driven rates down as we are all aware. That has caused some of those shipments on the fringe in that kind of 7,500 to 20,000 range to shift to truckload. I think that freight probably works better in an LTL environment. That is going to shift back when the market normalizes. That shift is really maybe more pronounced this time versus previous cycles because we have just never seen the level of truckload capacity enter the market as we did in 2021 and 2022 throughout the pandemic. Truckload carriers really do not like to do multi-stop loads. So I think that freight is ultimately going to shift back to the LTL market when the market does turn. What gives me a lot of confidence and positivity is we have continued to invest in our fleet during this time that we can handle those heavier loads as they make their way back into the LTL market. On the asset-light side, I feel like we can get asset-light profitability to a better spot, and part of my confidence is we, as I have moved into this new role, we have really focused on different ways we can do that, and we started evaluating it closely. The first is really we need to improve the profitability of our account base. We have been challenged by the macro, as you know, but we have developed some tools recently within the last quarter that allows us to take a deep dive into account-level profitability and also to the lane level. So we started to take those actions, and you heard Matt in his prepared comments talk about some of those price actions, but we have more work to do, and we think we have a lot of runway there. The second is the mix of our business within truckload is more heavily weighted towards Enterprise. We are trying to get the mix more to focus on SMB middle market as much to kind of increase that amount of business simply because it is more profitable. We have invested in a team of about fifty people that are focused on growing middle market and SMB, and we are seeing early signs of success there to get our mix in a better spot. The third is really around cost control. We took some additional actions in mid to late third quarter. We expect to see those kind of bake themselves in, but we are constantly looking at cost in a way we can control based off the revenue levels that we are given because we do not want to impact future growth opportunities. So it is a delicate balance, but I feel like we are really focused in that area. The fourth is really around managed solutions. That service has resonated with our customers. We have seen double-digit growth. It is contributing positive operating income to our results. So we feel like we are going to continue to grow there. And then the last is really around efficiency. We saw productivity increase 20% in asset-light. We have a really good roadmap of future improvements. The carrier portal, load board automation, all the AI tools we are working on, we feel like efficiency is going to be in a really good spot. And really we continue to focus on our people. We feel like we have the best people, and getting them the training and tools they need to execute on the business will get Asset Light to a better spot.
Chris Wetherbee: Okay. Appreciate the comments. Thank you.
Operator: Our next question comes from Scott Group from Wolfe Research. Please go ahead. Your line is open.
Scott Group: Hey. Thanks. Good morning. So I want to come back to the yield backdrop. I am just not sure I am fully understanding because I totally get there is a tougher comp in October, but to go from high single-digit yield growth to flat, and maybe November, December up a little bit, but weight per shipment is down, which should be helping yield. You have talked about the GRI, the renewals. I guess I am just not sure why the reported yield trends are just ex-fuel or slowing so much.
Matt Beasley: Scott, this is Matt. Certainly, we have talked about some of the year-over-year dynamics on the sequential dynamics from September to October. There just are some profile impacts. Actually, weight per shipment was not from September to October. We saw a little bit of a decrease in length of haul. Again, I think that is not really indicative of any broader trends related to pricing. It is just more some of the freight mix that we saw in October and its impacts on pricing.
Scott Group: And maybe just bigger picture. Right? So we have got tonnage down, yield maybe flattening out, margins, I think your guidance implies down, like, five hundred basis points or something year over year. Do we just need to wait for, like, the truckload market to tighten and ISM, and we are sort of stuck with this for the time being? Or is there stuff we can do to start seeing margin improvement again in 2025, irrespective of just the cycle turning better?
Seth Runser: Hey, Scott. This is Seth. We believe we can improve OR on the asset-based side, and it really comes down to a few areas that we are focused on. Revenue growth obviously will help. That has been a headwind, and that becomes a tailwind, that will be great. But what gives me a lot of encouragement is the growth in our pipeline. We have seen our core business continue to improve with our service levels improving. Our retention rates are in a good place. Our customers are just shipping less. Instead of giving us three, they are giving us two skids, and that is why you are seeing that weight per shipment piece. But growth really comes down to that service you provide, and we have made some great strides over the past year to get to a better spot, get back to where we have historically been. We hear from our customers that that is what they are feeling as well, and that really helps us continue to grow. The next is efficiency. We have talked about city optimization. We are getting ready to roll out those next two phases. The new dock software rollout is going well as well. That is giving us visibility that we have the team of experts that we deployed that we mentioned in our opening comments. They are really just getting started. We have only done a few facilities. We still have the whole network to go, and we have a very detailed roadmap of efficiency gains we can make. So that is a large cost basis. So we think we can, although we have hit a multi-year high on efficiency, we feel like we have a lot of runway there. Real estate investments, they are really centered around where we see opportunities for growth, efficiency, and service. In each case where we have opened a new facility or added capacity, we have seen efficiency gains in the double digits, and we have also seen growth opportunities where we would not be investing in those areas. So that has been a great win for us. We have added about eight hundred doors this year, but these are not one-year decisions. These are multiyear decisions, which is why we invest in these types of cycles so we can be positioned when things turn around. The fourth is around equipment. We really have made sure to maintain a new fleet, keep the uptime in a good spot, and it also is helping us from a cost perspective. We saw about a $4.7 million reduction in our fleet cost. Really, I mentioned our people when I was speaking earlier, but we have spent an enormous amount of time with our people in the field, bringing them into our corporate headquarters, training them up, and we have seen those results directly impacted in our efficiency numbers, our service numbers. That is why I feel like we will get asset-based OR to a better spot as well.
Scott Group: Thank you, guys.
Seth Runser: Thanks, Scott.
Operator: Our next question comes from Bruce Chan from Stifel. Please go ahead. Your line is open.
Bruce Chan: Hey, thanks, operator, and good morning, everyone. Just want to follow up on some of the asset-light commentary. If you can maybe help us to parse the results by service. I know we do not have the same reporting granularity that we used to. So any color on whether some of the non-brokerage businesses are contributing positively or those also loss-making? And then, just a quick follow-up here. I do not know if I missed it, but I think you talked about some of the pricing actions in brokerage. Does that imply that we need to wait for that contract repricing cycle to see maybe some positive contribution from that segment?
Matt Beasley: Hey, Bruce. It is Matt. On the asset-light side, you are right. We do not provide service line level details. But certainly, I would say the biggest two contributors, one is just the truckload brokerage pricing environment that we talked about, but on the positive side, we certainly are seeing strong contributions from our managed service line, which is contributing positively to the overall operating income result. As it relates to pricing, I do not know, Steven, if you want to comment at all on just maybe what we might expect to see or what that timing might look like.
Steven Leonard: Yeah. I think as market conditions improve, you will obviously see opportunities for prices to improve. But prior to that, we are, as Seth mentioned, looking at lane level, customer level pricing. We want to make sure that we are compensated for the value we provide. So we are doing that on a regular basis. We will continue to focus on any area to improve net revenue as we work towards an improved macro environment.
Bruce Chan: Okay. So just, not to harp on it too much, but it sounds like that would probably be a later in 2025 kind of time frame that split of profitability there. Is that fair?
Seth Runser: Well, you know, the other thing that Seth mentioned is the mix of business. We think about segments, and we are seeing growth outside of maybe the contract area. So we have opportunities to improve there as well. We can do that ahead of the cycle. So again, the cycle helps, as the macro gets better, that helps us, but we have opportunities to improve outside of just a macro improvement. We are focused on those areas. We have got our people focused there, and we are making progress.
Bruce Chan: Okay. Fair enough. Thank you.
Operator: Our next question comes from Ari Rosa from Citi. Please go ahead. Your line is open.
Ben Moore: Hi. Great. Thanks. Good morning. This is Ben Moore on for Ari here at Citi. Following up on Scott's question on margin outlook, looking to 2025 for your LTL, wanted to get your thoughts on your historical average sequential seasonality for OR based on what we estimate looking at your last ten years. Q1 on average, up a hundred to two hundred basis points. Q2 down four hundred basis points, Q3 down one hundred basis points, Q4 up one hundred to two hundred basis points, and your business has changed over time with your space-based pricing, your service and culture initiative you mentioned, your city route optimization. I want to get your sense. Is this reasonable? Can you give us better ranges, or what are puts or takes on beating those in 2025?
Matt Beasley: Yeah. So, Ben, appreciate the question. I think we have hit on a lot of the key themes, and I think Seth has done a good job just highlighting the focus in the ABF business. We feel like we are focusing on what we can control. We are in a great spot from a service perspective, on-time perspective, productivity perspective, feel great about our pipeline and how that is developing for next year. Certainly, we can talk about just kind of what we have experienced historically, quarter to quarter over the last ten years, and certainly, we have that history available. We can talk through it in some more detail later if that is helpful. But certainly, we continue to be focused on just continuing to achieve pricing outcomes that are, one, just reflective of the great value that we are providing to our customers. Again, a lot of that is being reflected in the results that you are seeing from Mastio this year. Really achieving some great improvement over the cost items that we are seeing in those increases on a year-over-year basis. We feel good about where that is headed.
Ben Moore: Great. Thank you very much for the color.
Matt Beasley: Okay.
Operator: Our next question comes from Stephanie Moore from Jefferies. Please go ahead. Your line is open.
Stephanie Moore: Hi. Good morning. Thank you.
Matt Beasley: Morning.
Stephanie Moore: Maybe sticking on the margin front, if you could just talk about the puts and takes of the 3Q to 4Q margin guide. Clearly called out the weaker top-line environment, but maybe if you could kind of talk through whether it is wage inflation, insurance, but also what productivity initiatives you have underway that maybe offset some of that pressure. And then just kind of taking it a step further, to come in a little bit better than your expectations, what would we need to see? Thanks.
Matt Beasley: Yeah. So thanks, Stephanie. Certainly, there are not the items in the quarter like we had in the third quarter. We had our annual increase for our union wage and benefits. I think we have done a good job just highlighting today how we are focused on the cost side, and we are going to continue that focus and finish out the year strong there. I do think that just in terms of where the expectation is for the quarter, that is just based on where we see the macro backdrop developing here over the next couple of months. To the extent that that ends up in a stronger place than what we are seeing right now, we could see some improvement. Again, I think we are going to continue to see dividends paid on all the projects that we have been talking about on the productivity and efficiency side, both as we exit the year and as we head into 2025.
Judy McReynolds: Hi, Stephanie. Understood. I just want to be sure that we are thinking about the way that we are going to market and the opportunity set that we have. We have talked a lot today about our pipeline. We have also talked about the macro and various initiatives that we have to try to gain ground both in growth and efficiencies. I just think it is really important for us to be able to relay to you the confidence level that we have in our ability to engage with customers in constructive ways even in a weaker environment. We do not take our foot off the gas pedal because of a weakness in the economy. In fact, the positioning that we have really helps, especially our customers, to navigate through these things. When we are talking about all the insights we have, it is because we are doing business with customers in different ways, whether it is in our managed offering or somewhere else in the business. What I love is our ability to navigate into the solutions that are going to work best for customers in this kind of environment. We are seeing a lot of success there. The pipeline that we have in managed, LTL, and truckload are all really strong and growing in momentum. We have a lot of that in late stage. As we close out this year and into next year, I feel like we are really strongly positioned to say yes and to help our customers navigate to the best solutions they can possibly have to help their business.
Stephanie Moore: Thanks, Judy. Really appreciate it.
Operator: Our next question comes from Jason Seidl from TD Cowen. Please go ahead. Your line is open.
Jason Seidl: Thanks, operator. Appreciate you guys squeezing me back in here. Look, I hate to beat a dead horse, but I am going to have to break out the crop here. Can you help me with a little bit of the details behind your increase sequentially in your weight per shipment that you mentioned and the decrease in your length of haul? Because I am just trying to sort of level set where you are at because, you know, you push through that nice GRI at 5.9%, and then you are getting 4.6% on your contractual business. So I would have assumed ex-fuel even on a sequential move that you would have been a lot better with those yield numbers. I would love to hear sort of what was the big shift in your freight on a sequential basis?
Christopher Adkins: Yes. Hey, Jason. It is Christopher again. Sequential to October, one thing that we have not talked a lot about is just the weather effect that happened in September. There are some underlying trends that having a weekly close the service center down for a few days and once you reopen it, it is something that we have just observed is that those customers, you know, they may have had some freight that they were about to ship one pallet. Now that they have reopened, now they ship two pallets. So just some profile dynamics that the external factors influence on those areas. Sequentially September to October, you think about those impacted areas had a higher weight per shipment. So you just have some mix changes that I would say were abnormal sequentially September to October. That is influencing that revenue per hundredweight stat. Again, we just are managing our business day to day to make sure we are getting the best results really regardless of the profile that we have. Revenue per hundredweight is one yield stat, but obviously, we are looking at the core profitability of the business. That is not really the end all be all of the profitability of our business.
Jason Seidl: No. I understand that. I was just trying for you guys to put some numbers around the weight per shipment increase and your length of haul decline. Do you have any sequential numbers for us so we can sort of get a sense of how bad the mix was?
Matt Beasley: Yeah. I think we can talk about it in a little more detail. Those numbers are not significant. We are talking about a low single-digit increase in weight per shipment and a low single-digit decrease in length of haul. Again, I think there are some of these dynamics that Christopher has talked about that we think probably contributed to that. But no big trend or we threw it as it relates to pricing, just with the sequential September to October move.
Jason Seidl: Okay. I appreciate that. That is helpful. Take care.
Christopher Adkins: Okay. Thanks.
Operator: Our next question comes from Brian Ossenbeck from JPMorgan. Please go ahead. Your line is open.
Brian Ossenbeck: Hey. Thanks for taking the follow-up question. Maybe if you can just walk through sort of the changes in the CapEx spend, I think, real estate went down a little bit as well as equipment. Is that sort of just normal true-ups through the end of the year? Are you taking a different sort of approach there? And then, I guess, on the back of that, obviously, the rest of the facilities are still up for auction. So anything there that we should expect you to at or potentially pick up here in the next round?
Matt Beasley: Yeah, Brian. So as it relates to CapEx, I would say, on the equipment side, we expect spend consistent with what we had laid out for the year. On the real estate side, there were some opportunistic purchases that we were considering and that we thought might come to market. Those have been delayed a little bit. We are still looking at opportunistically making some purchases in some markets where it makes sense. As it relates to the yellow process, I will let Matt Godfrey maybe just comment a little bit on that and what we might be hoping to see there.
Matt Godfrey: Yeah. Thanks, Matt. So as Seth mentioned, we acquired four Yellow facilities in the previous auction. We have opened three of those already, and we will bring the last one online in the fourth quarter. Those facilities have been positive contributors to our efficiency, our service, and capacity in those markets, and we really appreciate what our people have done to transition facilities and not have any disruptions for our customers. As you mentioned, the second phase of the auction is about to kick off, indications of interest were due last month. We have submitted our interest in a few locations, and these are locations that we were interested in previously, and we are just really awaiting the next steps in the auction process on how that will move forward.
Brian Ossenbeck: Okay. Thank you.
Operator: Thanks. Our next question comes from Ari Rosa from Citi. Please go ahead. Your line is open.
Ben Moore: Hey. Yeah. This is Ben again for Ari. Just going back to LTL margin and touching on what Ravi asked about on your Mastio survey. You are showing tremendous, really fantastic improvement across the board: damage, shortage, on-time pickups, deliveries, and especially billing accuracy, where you are better than a number of your peers, which is very important for all of these for volume and pricing in upcoming quarters. Wanted to ask how much do you attribute these to your various initiatives, your training, your culture, service, your route optimization, others, and then more importantly, how much runway is there left? You mentioned on a lot of these you are done with the first phase out of three phases, so there are two more phases. Does this mean roughly about 66% more runway for all or most of these initiatives for service improvement which could get you more volume, more margin?
Seth Runser: Yeah, Ben. This is Seth. I will start, and then I will let Matt Godfrey chime in as well. We think all of the things that you mentioned around efficiency ultimately improve service. When we look, we feel like we do have quite a bit of runway there. We went back to our historical position on the Mastio. We always exceeded industry benchmarks. For nineteen of the last twenty years in 2023, we hired a lot of new people. We got a lot of new processes. Just a lot of things happened. So we listened to our customers. We responded very quickly to get back on track and move back into the position where we have historically been. Most of the initiatives that we did, I would say, improved service on a tactical side. Now, we are focused on kind of holistically, like website, ETA, visibility into customer supply chain. A lot of the work around efficiency, which Matt will mention, is also going to improve that. So I feel like we still have quite a bit of runway to go because even though we are in a great position, ultimately our goal is to be number one on the Mastio because we think that translates to better growth and better price from our customers.
Matt Godfrey: Yeah. It is a follow-up there. Appreciate your question on city route optimization and trying to understand the percentage of runway. I think the way to think about that is the first phase of city route optimization had the largest impact. It is going to have the bulk of the impact. But we are excited about phase two and phase three, and really phase three around pickup optimization. Not only is there an efficient runway there, but when you think about the most important things as it relates to the Mastio survey and pickups being high on that list, we think it will have a really positive impact for our customers on the pickup process. So we are pretty excited about that. Some other things that we are working on that we are going to begin piloting here later this year are around appointments and optimizing that process. That is something our people spend a lot of time on. It is something our customers rely on us for. It is a service that they find value in our offering, and we really want to make that process easier for our people and our customers. Another thing we are working on is around line haul optimization, again, another project focused on service and efficiency. We have made some gains this year kind of in the early stages on that. We are really excited about what is to come on that as well. We think we have a pretty significant runway not only to improve our service but to increase our efficiency at the same time.
Ben Moore: Great. Thanks so much for the color.
Operator: Our last question today will come from Scott Group from Wolfe Research. Please go ahead. Your line is open.
Scott Group: Hey. Thanks for the follow-up. I just had a longer-term question on the pension side. I know no immediate impact, and it is still, you know, the final ruling still to be determined. But does the outcome of the yellow pension withdrawal liability, how does that do you think that impacts your long-term pension contributions in any way? If they have to pay bigger withdrawal liabilities, does that help? Or how do you think about that?
Judy McReynolds: Scott, you know, we have watched these issues and monitored them for decades. Our obligation is just to pay in the hourly rate that we negotiate based on the hours worked. We have that negotiated through 2028. A larger impact here was the American Rescue Plan. That has put in place a lot of funding and really has positively impacted the most distressed multi-employer pension funds. I do not know what the dollars are going to be related to this other settlement. My feeling is that those will not be significant to the overall situation that we are in today. I feel like that every five years, we negotiate the rates here. The fact that the American Rescue Plan better funded the most stressed funds puts us in a place that is better than we were before that law was enacted. I think that is the way to think about it because we are just planning to continue to do the same things that we have always done, and it has continued to put us in a more reasonable place. Large increases in pension, we have not seen anything like that since 2013, so more than a decade. We have been in a position where the hourly rates we pay are more than adequate to address our situation. What I think about it is just something that we obviously have to stay close to and monitor, but it is not a negative for us as we see it.
Scott Group: Makes sense. Thank you, guys. Appreciate it.
Operator: Thanks, Scott. We have no further questions. I would like to turn the call back over to Amy Mendenhall for closing remarks.
Amy Mendenhall: Thank you for joining us today. We appreciate your interest in ArcBest. Hope everyone has a great day.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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