ARCBEST CORP /DE/

ArcBest Corporation is a multibillion-dollar integrated logistics company that leverages technology and a full suite of solutions across multiple modes of transportation to meet customers' supply chain needs. The Company serves as a single end-to-end logistics partner with global reach. According to management's estimates and market studies by Armstrong & Associates, Inc. and the U.S. Department of Commerce during 2025, the total market potential in the industry segments the Company serves is approximately $400 billion ¹. The LTL industry has significant capital and operational barriers to entry and is highly competitive. Although the Company's Asset-Light market share currently represents a small portion of the total addressable market, it presents a significant growth opportunity.

The Asset-Based segment competes most directly with nonunion and union LTL carriers, including FedEx Freight Corporation, the LTL reporting segment of FedEx Corporation; the LTL segment of Knight-Swift Transportation Holdings Inc.; Old Dominion Freight Line, Inc.; Saia, Inc.; the U.S. LTL operating segment of TFI International Inc.; and the North American LTL segment of XPO, Inc. The Asset-Light segment competes most directly with logistics companies, including the North American Surface Transportation segment of C.H. Robinson Worldwide, Inc.; Covenant Logistics Group, Inc.; Hub Group, Inc.; the Integrated Capacity Solutions segment of J.B. Hunt Transport Services, Inc.; the Logistics segment of Knight-Swift Transportation Holdings Inc.; Landstar System, Inc.; the truck brokerage and complementary service offerings of RXO, Inc.; the Freight segment of Uber Technologies, Inc.; and the truckload service offering of Total Quality Logistics. The Company's competitive advantages include its integrated logistics approach, innovative technology, and unique access to assured transportation capacity, which includes more than 40,000 owned and operated assets ².

The Company generates revenue through two reportable operating segments: Asset-Based, which provides LTL services through ABF Freight, and Asset-Light, which includes truckload, managed transportation, expedite, international, moving, and other logistics services. Revenue is recognized when control of promised services is transferred to customers, primarily upon final delivery of freight. The Company's revenue mix includes both transactional and recurring income, with customer relationships generally not subject to long-term contractual obligations or minimum volume commitments. For the year ended December 31, 2025, no single customer accounted for more than 3% of consolidated revenues ³, and the ten largest customers, on a combined basis, accounted for approximately 14% of consolidated revenues ⁴.

The Asset-Based segment provides LTL services through ABF Freight, one of North America's largest LTL motor carriers, providing direct service to more than 99% of U.S. cities with a population of 30,000 or more ⁵. ABF Freight offers interstate and intrastate services to approximately 51,000 communities ⁶ in all 50 states, Canada, and Puerto Rico through 239 service centers ⁷. Asset-Based revenues accounted for approximately 66% of total revenues before other revenues and intercompany eliminations in 2025 ⁸. Labor costs amounted to 52.2% of Asset-Based revenues for 2025 ⁹. As of December 2025, approximately 81% of the Asset-Based segment's employees were covered under a collective bargaining agreement ¹⁰. The segment's operating ratio was 93.7% in 2025 ¹¹.

The Asset-Light segment includes MoLo, Panther, and certain other subsidiaries, and its revenues accounted for approximately 34% of total revenues before other revenues and intercompany eliminations in 2025 ¹². The segment provides truckload services through a network of more than 70,000 approved contract carriers ¹³, with service to all 50 states, Canada, and Mexico. The segment also offers managed transportation solutions, expedite freight transportation services through the Panther fleet, international ocean and air shipping solutions covering approximately 90% of the total ocean international less-than-container load market ¹⁴ and approximately 80% of the full container load import market ¹⁵, household moving services under the U-Pack brand, and other logistics services. The Asset-Light segment generated an operating loss of $15.3 million in 2025 ¹⁶.

During 2025, the Company made additional technology investments including City Route Optimization technology, beta testing of ArcBest View, continued investment in the Vaux suite, and feature enhancements to the carrier-facing portal. The Company purchased 1,025,524 shares of its common stock for an aggregate cost of $75.6 million ¹⁷, including excise taxes. In September 2025, the Board of Directors reauthorized the share repurchase program and increased the total amount available to $125.0 million ¹⁸. The Company also paid quarterly dividends totaling $11.0 million during 2025 ¹⁹. The Company recognized noncash asset impairment charges during fourth quarter 2025 related to the indefinite-lived Panther trade name and the write-off of certain obsolete assets utilized in the Vaux suite, which reduced operating results by $12.0 million (pre-tax) ²⁰. The Company also recognized a net gain of $15.7 million (pre-tax) from the sale of certain properties during the third quarter of 2025 ²¹.

Consolidated revenues totaled $4,010,158 thousand ²² for 2025, a decrease of 4.0% compared to 2024. Consolidated operating income was $90,309 thousand ²³ in 2025, compared to $244,434 thousand ²⁴ in 2024. Net income from continuing operations was $60,098 thousand ²⁵ in 2025, compared to $173,361 thousand ²⁶ in 2024. Diluted earnings per share from continuing operations were $2.62 ²⁷ in 2025, compared to $7.28 ²⁸ in 2024. Cash provided by operating activities was $228,953 thousand ²⁹ in 2025, compared to $285,846 thousand ³⁰ in 2024.

The Company is focused on expanding revenue opportunities through deepening existing customer and carrier relationships and securing new ones. The Asset-Light segment is a key component of the strategy to offer customers a single source of integrated logistics solutions, particularly through growing managed transportation solutions. The Company expects to benefit from strategic initiatives as it continues to deliver innovative solutions to customers. The Company is also investing in technology, including the Vaux suite, City Route Optimization, ArcBest View, and ArcBest Virtual Agent, to improve customer experience and carrier capacity experience while optimizing costs. The Company is currently beta testing ArcBest View, its new digital platform and proprietary transportation management system, which is expected to launch with the ViewPoint tool in the first half of 2026 ³¹.

The Company is focused on optimizing its cost structure with technology by streamlining business processes and delivering insights and analytics. The Company is focused on profitable growth, which requires continually reviewing costs and investment decisions. The Company's Asset-Based segment manages costs with shipment levels, and factors impacting DSY productivity include the effect of freight profile and mix changes, utilization of local delivery agents, and efficiency of personnel. The Company's Asset-Light segment continues efforts to align resources with business levels and advance employee productivity, with shipments per employee per day improving 16.9% for 2025 compared to 2024 ³².

For 2026, total capital expenditures, including amounts financed, are estimated to range from $150.0 million to $170.0 million ³³, net of proceeds from asset sales. These estimated net capital expenditures include revenue equipment purchases of $75.0 million to $80.0 million ³⁴, primarily for Asset-Based operations, and $35.0 million to $45.0 million ³⁵ of investments in real estate and facility upgrades. Depreciation and amortization expense, excluding amortization of intangibles, is estimated to be approximately $180.0 million in 2026 ³⁶. The amortization of intangible assets is estimated to be approximately $9.0 million in 2026 ³⁷, primarily related to purchase accounting amortization associated with the MoLo acquisition.

The Company continues to return capital to shareholders with quarterly dividend payments and treasury stock purchases. On January 27, 2026, the Board of Directors declared a dividend of $0.12 per share ³⁸ payable to stockholders of record as of February 10, 2026. As of December 31, 2025, $104.7 million ³⁹ remained available for repurchase under the share repurchase program. The Company expects to continue to pay quarterly dividends in the foreseeable future, although future dividends will be at the discretion of the Board of Directors.

Economic conditions in 2025 reflected slowing but continued growth, shifting trade and tariff policies, persistent but cooling inflation, elevated interest rates, ongoing supply chain disruptions, and a slowing labor market. The manufacturing sector, as measured by the Purchasing Managers' Index, expanded in January 2026 after a period of nearly continuous contraction since November 2023. This prolonged period of weakness in manufacturing has contributed to a decrease in freight volumes. The soft freight environment and increased mix of managed transportation shipments contributed to a year-over-year decline in revenue per shipment for the Asset-Light segment. There can be no assurance that the Company will be able to secure adequate prices from new business or from existing customers to maintain or improve operating results.

The Company faces structural headwinds including the highly competitive nature of the transportation industry, with nonunion competitors having a lower fringe benefit cost structure and less stringent labor work rules. The Company's Asset-Based segment pays some of the highest benefit contribution rates in the industry. The pricing environment generally becomes more competitive during periods of slow economic growth and economic recessions. The Company also faces risks related to the loss of or reduction in business from multiple large customers, difficulty attracting and retaining employees, and the potential for additional significant contributions to multiemployer pension plans.

The Company faces material risks including the potential for data breaches, cybersecurity incidents, and interruptions or failures of information technology systems that the Company depends on, including software programs and applications provided by third parties. The Company has experienced incidents involving attempted denial of service attacks, malware attacks, and other events intended to disrupt information systems. The Company also faces risks related to the loss of or reduction in business from multiple large customers, as customer relationships are generally not subject to long-term contractual obligations or minimum volume commitments. The Company's Asset-Based segment operates in a highly competitive industry comprised primarily of nonunion motor carriers, which have a lower fringe benefit cost structure and less stringent labor work rules. The Company could be obligated to make additional significant contributions to multiemployer pension plans, as ABF Freight contributes to multiemployer pension and health and welfare plans. If ABF Freight were to completely withdraw from certain multiemployer pension plans, under current law, the Company would have material liabilities for its share of the unfunded vested liabilities of each such plan. The Company is also subject to risks related to the cost, integration, and performance of future acquisitions, and the inability to realize anticipated benefits.

Management's message emphasizes the Company's customer-led strategy to drive long-term value by delivering a premium experience and growing informed, trusted, and innovative relationships. The three key components of the strategy are accelerating profitable growth, increasing efficiency, and driving innovation. Management highlights the Company's focus on expanding revenue opportunities through deepening existing customer and carrier relationships, optimizing the cost structure with technology, and building a resilient business differentiated from competition through full-service logistics solutions. Management notes that the Company is focused on profitable growth, which requires continually reviewing costs and investment decisions. The Company's mission is to connect and positively impact the world through solving logistics challenges, and its vision is to be the leading logistics partner and innovator.