Good morning and thank you for standing by. Welcome to the ArcFest Fourth Quarter 2025 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'm here today with Seth Renzer, our president and CEO, and Matt 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 be 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 ARCV.com in our 8K 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. ArcBest delivered solid fourth quarter and full year results, and I want to begin by recognizing the outstanding execution of our entire team. Over the past year, we navigated a prolonged freight recession and ongoing market volatility. Through it all, our people stayed focused and committed to our long term strategy built around our three pillars, growth, efficiency, and innovation. Throughout the year, we leaned into our strengths, made disciplined decisions, and continued investing in initiatives that set our best apart. As a result, we delivered premium service to our customers, grew daily LTL shipment volumes, restored asset-like profitability, achieved record revenue and shipments in our managed solution, and advance strategic priorities through technology and optimization projects. These accomplishments demonstrate the resilience and dedication of our team, and we're confident that the strong foundation we've built positions us for continued success. We are also advancing the initiatives we outlined at our investor day in September, which are designed to help us achieve our long-term targets and deliver greater value to shareholders. As always, our customer-first mindset remains core to our strategy. We will continue listening to our customers' evolving needs in delivering flexible, efficient, and fully integrated solutions that keep them coming back to ArcBest. With our unique focus on innovation and operational excellence, ArcBest remains a trusted partner ready to help customers navigate whatever comes next. We're excited to officially welcome Mack Pinkerton as Chief Operating Officer of our AssetLite business. Mack brings deep industry expertise and proven leadership. He will help us build on our momentum, drive value for our customers and shareholders, and further strengthen our competitive position in this important part of our business. And as part of our ongoing assessment of board size and composition and the skills and capabilities needed for effective oversight we're also pleased to welcome ann bordelon and bobby george as independent directors they bring financial expertise and proven leadership in digital transformation that will further strengthen our board we also want to thank kathy mcgilligot and frederick eliason for their many years of dedicated service their guidance and contributions have been invaluable to our best now let's review our results for the quarter in the fourth quarter asset-based LTL shipments increased 2% year-over-year, averaging about 20,000 shipments per day. While seasonal softness and an unusually weak October across the industry impacted volumes, this year-over-year improvement demonstrates the effectiveness of our refined go-to-market strategy and our intentional focus on expanding our core LTL business. By sharpening our approach, we're capturing new opportunities while continuing to deliver strong service and greater value to customers. Maintaining solid yield performance remains central to our approach. In the fourth quarter, deferred price increases averaged 5%, up from 4.5 in the third quarter. This improvement reflects the strength of our disciplined pricing approach. We take a rigorous, data-driven look at every accountant lane making adjustments to ensure we're fairly compensated for the service and value we deliver this discipline supports our long-term financial health and mutually beneficial customer relationships shifting to manage solutions demand remains high and we deliver double-digit growth in shipments per day again this quarter the sustained momentum highlights the value our managed offering brings to our customers navigating today's complex logistics landscape. Truckload performance was another bright spot. Throughout the quarter, we demonstrated strong pricing discipline. Revenue per shipment increased 11% year-over-year and gross margins on a per shipment basis improved by 17% over the same period. In addition, we grew our business from SMB customers, which diversifies our portfolio and positions ARC-Best for additional growth and profitability. Throughout 2025, we made meaningful progress on efficiency and innovation, two pillars of our long-term strategy. Our continuous improvement training program has now been successfully implemented across approximately 60% of the network. Our dedicated team trains employees on process and safety best practices, deploys new technologies, and ensures adoption of new tools. These efforts have delivered $24 million in annual cost savings. In addition, we are actively rolling out Phases 2 and 3 of City Route Optimization, which uses AI to reduce manual tasks, improve route planning, and maximize asset utilization. Phase 2 and 3 delivered $2 million in savings last year, bringing the total savings from the project to $15 million in 2025. These initiatives reflect our commitment to building a more efficient, innovative ARC vest and help offset cost inflation. 2025 was also a pivotal year for accelerating AI across our organization and advancing on our technology roadmap. Here are just a few highlights. In truckload, AI-powered process improvements are helping us make better decisions when covering freight and improving buy rates, delivering $2.5 million in operating income benefit last year. Our truckload carrier portal adoption has reached 32%, and more than half of our truckload shipments are digitally augmented. Over 30 AI agents now support document processing, automated quoting, and shipment booking across multiple channels. Ava, our AI-powered virtual agent, is transforming customer service by routing inquiries, resolving common issues instantly, and freeing our people to focus on more complex, value-added support. Our quote augmentation project streamlines load building and automated 120,000 email quotes in 2025, enabling faster and more efficient customer responses. Automated phone options for carriers have cut abandonment rates in half and boosted productivity. Last year, more than 23,000 carriers used our AI phone agent to cover over 7,000 shipments. Through targeted training, 15-20% of our office employees now consistently use AI tools in their daily work. And through AI-driven automations, we've eliminated millions of unnecessary emails, signals, giving teams more time to focus on what matters most. These efficiency and innovation efforts are delivering tangible results, elevating performance across the organization and helping us counter inflationary pressures. Prioritizing these projects will allow us to grow when the market turns without adding the same level of incremental cost. And while technology is unlocking new levels of productivity, it's our talented people who make these advancements real. Their expertise, creativity, and commitment continue to drive our success. As I step into the CEO role, my priorities are clear. Sharpen our customer focus, raise the bar on operational excellence, leverage technology to amplify productivity, and maintain cost discipline that drives profitable growth. I'm excited about the opportunities ahead and honored to lead our team as we continue creating lasting value for our customers our shareholders and our employees before closing i want to acknowledge the recent severe winter weather that affected much of the country these conditions disrupted transportation networks across the industry and created challenging circumstances for many of our teams i'm extremely proud of our people They acted quickly and continue to work tirelessly to restore full network operations. Safety is our highest priority and the team has responded. Their dedication ensured we continued serving customers with the reliability they expect from our best, even in difficult conditions. I want to extend my sincere thanks to every team member involved in that effort. I'll now turn it over to Matt to walk through the financial results for the quarter.

Thank you, Seth, and good morning, everyone. Despite continued softness across the freight market, ArtVest delivered solid fourth-quarter financial results. Our disciplined approach, operational excellence, and strong execution helped us navigate a challenging environment while continuing to create long-term value for our shareholders. Let's take a closer look at our fourth-quarter performance. Consolidated revenue was $973 million, down 3% year-over-year. Non-GAAP operating income from continuing operations was $14 million, compared to $41 million last year. In our asset-based segment, non-GAAP operating income decreased $28 million, while AssetLite achieved break-even non-GAAP operating results, an improvement of $6 million over last year. Adjusted or non-GAAP earnings per share were $0.36, down from $1.33 in the fourth quarter of 2024. Turning to our asset-based segment, fourth quarter revenue was $649 million, which was flat on a per-day basis. ABF's operating ratio was 96.2%, a year-over-year increase of 420 basis points. Sequentially, the non-GAAP operating ratio increased 370 basis points, due in part to three fewer revenue days. Daily shipments increased by 2% year-over-year, and weight per shipment increased slightly, resulting in nearly a 3% increase in tons per day. This growth was driven in part by onboarding new core LTL business through the commercial efforts Seth mentioned earlier. Revenue per hundredweight declined approximately 3% year-over-year, both including and excluding fuel surcharges. This decline was primarily driven by reduced shipment activity in the manufacturing vertical, which continues to experience softness. On the expense side, additional labor to support shipment growth, annual increases in contracted union labor rates, and higher equipment depreciation contributed to increased operating costs. In January, daily shipments increased 3% year-over-year, weight per shipment increased 5%, and daily tonnage increased 8%. Both the current year and prior year periods were affected by winter weather. January 2025 saw lower weight per shipment, due in part to a reduced mix of truckload-rated shipments. This mixed shift contributed to the year-over-year increase in tonnage and the associated decline in revenue per hundred waste. Sequentially, from December to January, wait per shipment remained consistent, while shipments per day declined 3% and tonnage per day decreased 4%, largely due to winter weather impacts. Historically, ABF's non-GAAP operating ratio increases by about 260 basis points from the fourth quarter to the first quarter. We currently expect our first quarter operating ratio to increase by approximately 100 to 200 basis points sequentially, an improvement relative to typical seasonality, due in part to a softer than normal fourth quarter, though still reflective of the current industry environment. Now turning to the asset-like segment. Fourth quarter revenue was $354 million, a daily decrease of 5% year-over-year. Shipments per day were up slightly as growth in managed solutions offset a strategic reduction in less profitable truckload volumes. Revenue per shipment decreased 6%, reflecting both the soft-rate market and the higher mix of managed business, which typically has smaller shipment sizes and lower revenue per shipment. On the cost side, SG&A cost per shipment decreased 15%, driven by productivity initiatives and the higher mix of managed business, which carries a lower cost to serve. Employee productivity also improved significantly, with shipments per person per day up 19%. And non-GAAP operating results were breakeven for the quarter. For the full year, Asset Light delivered over $1 million in non-GAAP operating profit, achieved record high employee productivity, and reached a historic low in SG&A costs per shipment, marking a strong turnaround from 2024's $17 million loss. In January, asset-like daily revenue increased 6% year-over-year. Shipment growth of 13% was led by our managed business. However, its smaller average shipment size resulted in a lower overall revenue per shipment. For the first quarter, we expect an operating loss of up to $1 million, reflecting typical seasonality in current market conditions. Despite these near-term pressures, we remain committed to maintaining yield discipline, managing costs and positioning the segment for sustainable long-term profitability. Looking ahead, we remain confident in our strategic direction and in our ability to deliver on the long-term 2028 targets we shared at Investor Day. When we set those targets, we did not anticipate a significant freight market recovery in 2026. Our focus remains on what we can control, driving productivity, maintaining cost discipline, and positioning our best for sustainable success regardless of external market conditions turning to capital allocation we continue to take a balanced long-term approach that supports both growth and operational efficiency from 2022 through 2025 art best made targeted real estate investments as part of our network facility roadmap strengthening the foundation for profitable growth these investments improve productivity enhance service quality and expanded our capacity to meet evolving customer needs. We closed 2025 with $198 million in net capital expenditures, which included $25 million in property sales. Looking ahead, we expect capital expenditures to be below 5% of revenue, with 2026 net capex anticipated in the range of $150 to $170 million. This reduced spend level reflects fewer real estate purchases and remodels following several years of targeted investments and optimization projects that have made our network more efficient. We also anticipate lower spending on revenue equipment in 2026. Our equipment purchases continue to be guided by a robust total cost of ownership model that evaluates equipment pricing and lifecycle economics to determine optimal replacement cycles. With equipment cost trending higher, our analysis points to adjusting the timing of certain replacements as the most cost-effective use of capital while still ensuring reliability. Importantly, our younger fleet and proactive maintenance program supports performance over an extended horizon even as we optimize investment level. Returning capital to shareholders remains an important priority. In 2025, we return more than $86 million through share repurchases and dividends. We'll remain opportunistic with repurchases based on share price while continuing to prioritize high return organic investments and maintaining prudent leverage. ArtVest balance sheet remains strong with approximately $400 million in available liquidity and a net debt to EBITDA ratio well below the S&P 500 average. This financial strength allows us to navigate uncertainty and capitalize on opportunities as they arrive. As our industry continues to evolve, ArtVest is well positioned to lead. Our discipline execution, strong financial foundation, and focus on innovation give us confidence in our ability to achieve the long-term targets we set. And our people are at the heart of our success. Their expertise, resilience, and dedication to our customers consistently set ArtVest With that, operator, we're ready to open the call for questions.

As a reminder to ask a question, please press star followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourself to one question and rejoin the queue for any additional questions. Thank you. Our first question comes from Ken Hexter from Bank of America. Please go ahead. Your line is open.

Hey, great. Matt, maybe just to follow up on some of the outlook that you set there or maybe even the January targets you set this morning, you know, tonnage up 8 percent, revenue budget weight down 8 percent. If you talk about what's going on in the mixed change there, you mentioned some of the truckload shipments are disappearing, but yet weight was staying the That was a little surprise. So maybe just thoughts on how that's adjusting and the impact to first quarter OR that you set.

Hey, Ken. This is Seth. So obviously this past week was impacted by the strong winter storms throughout the country. And when you think sequentially from December to January, we normally see a step down sequentially, but on a year-over-year basis, we are trending slightly ahead of the historical seasonality. So last year, we had a lower mix of the truckload shipments, which really contributed to the year-over-year increase in tonnage and then the associated changes in revenue per hundred weight. Last January, we had kind of rough weather as well, if you remember, but it was more spaced out throughout the month versus one big storm like we just experienced earlier this week. So our dynamic shipments have been trending a little bit heavier, which has contributed to that stronger tonnage level. We're not targeting any more dynamic than we did in the fourth quarter, but it just continued to trend heavier with that mix there. So that kind of aligns with what we talked about in investor days. As that cool pool grows, we expected the mix to change. So our OR normally increases about 260 basis points sequentially from 4Q to 1Q. We're expecting them at 100 to 200 range that we outlined in our prepared comments. That's better than history, but also reflective of just the weakness that we see in the macro. So we continue to look at our costs and take action to adjust where we can. We want to improve efficiency without inhibiting growth when the market does turn. That's something we've done throughout our entire history. We've invested in labor planning tools that allows us to be very agile. And we're focused on the longer term and believe in the strategy and initiatives we outlined in Investor Day. Our pipeline has continued to strengthen. We've got to make sure that the business we bring on is profitable. So we're working through those opportunities where we provide the value at the right price. And really, when I think about our company, we're built for any environment because we stay close to our customers. And that's the way we've built this company is to be responsive and say yes, regardless of the market condition. So our customers continue to come to us with challenges, and we're really focused on what's in our control. And we have good momentum with our initiatives pipeline, and we're ensuring we're positioned for growth now and in the future.

Our next question comes from Jason Seidel from TD Cowan. Please go ahead. Your line is open.

Hey, thanks, operator.

Good morning, guys. Appreciate the time. Okay. Talk a little bit about the mix that you guys always seem to have going on.

When can we expect that to sort of normalize so it's more of an apples-to-apples comparison?

Or is this the new norm for you guys where you move around more than the typical LTL carrier in terms of your mix? Yeah. Hey, Jason, this is Eddie. Mix has really been something, and you pointed it out, has been something that's been driving our business for, you know, several quarters. Now, really it started, when you think about the freight recession, we're in our fourth year of that recession. And, you know, our business is predominantly manufacturing, industrial production, tied to the housing markets. And those three verticals have really been impacted. So, you know, what we're seeing from, you know, an opportunity set is that business, you know, does have some softness to it, and that trade out of that business for new business is really what's driving our mix. You know, we have a very disciplined pricing approach when it comes to really any opportunity. We look at each account one at a time, make the best decision we can for each account. We try to manage the mix to the best we can to produce the most profit for our company, but some of it is really just back to the macro and what we're experiencing in that macro environment. It's hard to predict when that will stabilize, but we're very committed to get the most out of every opportunity and every piece of business that we have to produce the profit that we want that supports our long-term targets.

Jason, I would add to that that our retention has been in a great place, but our customers are just simply producing less because of what? what Eddie mentioned there. So, we feel great about our retention staff, but we don't want to lose any customers. So, we invested in an onboarding team and a retention team who's focused on keeping these customers on board because the longer-term relationships we have with customers, generally, the better pricing we achieve with those customers. And also, the housing market continues to be challenged with our UPAC business, and that impacts wait for shipment.

No changes there on a year-over-year basis, but just something we're going to continue to watch if housing improves our next next question comes from ravi shanker from morgan's family please go ahead your line is open uh great thanks uh maybe some clarification up top kind of uh when you talk about the jan trends are you saying that they're relatively idiosyncratic to you guys just given your comps or do you think they're fairly industry-wide uh and also maybe kind of broadly for the industry have you noticed any change in the comparative dynamic uh especially with uh kind of speculation that Amazon is going to potentially open up as a third-party LTO carrier later this year. Thank you.

Robby, hey, it's Matt. So on the January dynamic, you know, what I would say certainly, you know, we're feeling the weather impacts that the rest of the industry is feeling. Maybe something that's maybe a little bit more specific to us is just that comp for January 2025 where, as Seth mentioned, we had a little bit less of a mix of truckload-rated business in that month. Those tend to be heavier shipments that carry a lower revenue per hundred rate, but obviously a higher revenue per shipment. And that was really just specific to some dynamics that were in play in January of 2025, and we're at a more normalized level. In January 2026, don't really expect any changes on a go-forward basis, but it does influence the year-over-year comp. And then, Seth, Randy, I don't know if you want to comment on the group.

Yeah, on the competitor side of things, we're keeping an eye on what's going on, but really, we focus on what's in our control. And what we continue to hear from customers is they're still facing that general uncertainty around the impacts with tariffs and interest rates and just everything that's going on. So the sentiment out there kind of remains cautious. But what we focus on is what we can control, as I said, and that's our go-to-market approaches. An integrated logistics company aligns well with what customers are talking to us about now. And that's why we've seen that double-digit growth and managed solutions. And so we have a lot of opportunities because of the markets we operate in. We have a great potential to expand with our current loyal customer base. So we're paying attention to what's going on in the market, but we have a lot of opportunity within our control that we're focused on.

Our next question comes from Reed CA from Stevens. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my question this morning.

Hey, Reed.

I know Mac has only been in there for about 25 days at this point, but I'm sure they've been a busy 25 days. I wasn't sure if he shared any insights and maybe some priorities for him coming into Asset Light, given this is a big part of your guidance that you gave at the investor day. So just any early insights he has there.

Yeah, Mac officially started a few weeks ago, as you mentioned, and he's at the ground running. He's actually in the room with us today, So I'll let him turn it over to him and give his thoughts on his first few weeks here at Hey, thanks, Seth, and thanks for the question, Reed.

Only a few weeks here, in here, and I would tell you right now I'm more excited today than I was three weeks ago. I've had the great pleasure to work for a couple of companies that have been around over 100 years, and I think we all know how special that is. And what it takes is a company grounded in a fantastic culture, focused on our customers, our employees, founded in innovation and creativity, and that's something that has been absolutely reaffirmed over the last few weeks. The urgency that this team has relative to improving our TSR is palpable, so excited to be a part of that. We've got competitive services and a really strong team. I think we all believe the market's going to improve. Regardless of that, we've got to continue to perform and grow our business. I'm more confident after the three weeks I've been here that we'll meet our investor day target, and I'm looking forward to making the asset-like business more meaningful in these discussions.

Our next question comes from Jordan Allager from Goldman Sachs. Please go ahead. Your line is open.

So I understand that, you know, things are still soft in the manufacturing economy, but, you know, as you think ahead for this year, do you see any signposts, whether it be from customers, your own internal thoughts, that, you know, perhaps we could be at least on a stable and maybe a footing from an inventory standpoint, et cetera, that, you know, could lead to a little bit of freight movement on an industry level, not an idiosyncratic arc best issue, what you're doing, but just a broader improved health in the demand environment as we move through the year.

Thanks, Jordan. This is Seth. I'll get us started and let Eddie chime in with any additional thoughts. But I've met with a lot of customers on the back half of last year, and then also I'll be meeting with quite a bit next week as well. So in the conversations I've had, our customers still are focused on, you know, cost reduction, operational efficiency, process improvement, and many customers are taking proactive steps to manage the uncertainty, including inventory repositioning, supplier renegotiations, moving their supply chain around. So some of the bright spots that we've seen in the LTL space, there's been some discretionary retail sectors, food and beverage, recreational equipment. We've seen some bright spots there in truckload. We've seen that SMB growth that we talked about, and we continue to see some promise Expedite Life Science continues to be strong for us and a growth opportunity. And then when you think about just information technology and everything that's going on around data centers, that's been another part of strength. So we haven't heard much from a demand standpoint. And in Matt's prepared remarks, he mentioned how our 2026 investor day targets didn't expect a great macro standpoint. But that's why we go to market the way we do as an integrated logistics company. is so we can say yes to our customers, and that's what's allowed our pipeline to be in a great spot, and that allows us to be selective about the freight we bring into the network. Our core business is growing. Managed solutions is up double digits, and really the opportunities are right in front of us, and to some of what Max said in his previous comments, customers trust us. They look to us to navigate these uncertainties, and that's why we've continued to see that growth that we've talked about. Eddie, I don't know if you have anything to add.

No, Seth, you covered this really well. I would probably just emphasize that, you know, I don't know if it's really an industrial, you know, signpost that's out there, but our success with managed solutions just gives us a lot of confidence that we're going to be able to continue to navigate through whatever the market ends up being this year. We're having great conversations. our opportunity set is robust, and we're being successful helping our customers meet the demands of their supply chains.

Our next question comes from Chris Weatherby from Wells Fargo. Please go ahead. Your line is open.

Hey, thanks. Good morning, guys. Maybe a two-part question here. So I guess first, maybe broader comments on the competitive pricing environment and how you guys are seeing things shaping out here as we're moving into early 2026. Obviously, industry volumes have been under pressure for a period of time. And then maybe specifically to kind of what you guys are doing from a strategy perspective around mix and volume growth. So, you know, 8% increase on the, you know, in January in terms of volume, you know, I think the guide for the OR in LTL is probably about 200 basis points or so worse on a year-over-year basis. So I guess, is there a level of volume at this mix that starts to become more accretive from a margin perspective, I guess, how do you think about kind of refilling up the network after a couple of years of volume decline to get to the point where we're actually seeing positive incremental margins on that business?

Yeah, hey, Chris, this is Seth. I'll start on the pricing comment and then have Eddie chime in on the volume side of things. But when I look at our deferred contract renewals in the fourth quarter being up 5%, when you think about the third quarter, we're at 4.5 and the Second quarter, we are at 4%. We've continued to strengthen our yield metrics. So as we continue to see success in growing core business from those new customers that we talked about all last year, we see how it reacts operationally in our network. And then we make adjustments. So our pricing has continued to strengthen as we've made those adjustments. And that's why you've seen the deferred numbers continue to improve throughout the quarter. And we expect that to continue throughout this year. So we remain disciplined and focused on profitable growth and making sure that we're getting paid for the value that we deliver to our customers. So we're going to continue to stay focused on disciplined pricing. That's what we're seeing in the market right now as well as discipline among our competitors. But I want to point you back to the longer-term goals, and that is that we want to achieve our revenue per shipment growth, outpacing cost per shipment growth by 80 basis points per year, and that's what we're striving to do. So we're making strategic investments to improve the value that we deliver to customers to be able to command those increases. And I'm really excited about ArcBestView launching in the middle of the year because I think that's going to be industry leading in terms of visibility and ways to navigate your supply chain from that new customer platform. So we're very focused on it and make sure that we want to continue to get that value that we provide. And then, Eddie, on the growth side.

Yeah, really on the mix, again, we actively manage our business mix and profile to, you know, achieve the best results. You know, we haven't really changed our strategy on the amount of larger LTL shipments or transactional shipments. In fact, it's been very, you know, very consistent from fourth quarter into the start of January. You know, we did have the issue or really the lower volume shipments in January 2025. And I think that's really what you're seeing when you do a comparison to this January and why that really jumps out. But no strategy change, and really it's our jobs and yield to get the most out of whatever profile business mix that we have. and we're seeing improvements in that as we go early this year and into 2026.

Our next question comes from Bruce Chan from Steeple. Please go ahead. Your line is open.

Thanks, Operator, and good morning, everyone. A lot of conversation here about mix, you know, especially the core business versus the dynamic now. Maybe just wondering if you can give us a sense for, you know, what the mix or what the balance looks like between those two products in the network right now? And then maybe just a bit more generally, I don't think we've ever seen the transactional pricing tool as a dynamic pricing tool at work in an upcycle. You know, just thinking through that scenario, maybe in a hotter market, you know, is there an opportunity to see a pricing tailwind for that business or even prioritize it over core?

Hey, Bruce, this is Seth. So our business is primarily core. We don't disclose the specific mix between transactional and core. It fluctuates from time to time. But as Eddie said, there's no strategy change, especially when we look at our sequential numbers there. So transactional business really helps us maintain consistency in the network and allows us to be positioned when the market turns. So our core business continues to increase. We feel great about our pipeline, and we have multiple wins throughout the business. So we're going to continue to focus on that profitable growth and mix management. But what Eddie said, we optimize our mix on a daily basis, and it's based on profit maximization, based on the market prices and what available capacity is. So since launching Dynamic, our price per shipment has increased by 50%. We outlined that at Investor Day. So as that quote pool grows and you need the same amount of shipments in your network, generally what happens is the price improves. Now, to your point, we have not had dynamic pricing in a good market environment, but what we expect is our core business that we have good retention on, the price will continue to improve on that business as customers just ship more, and then we're able to have the dynamic, actually, because the market is better, improve the pricing on that side as well. So majority of our shipments are published. The dynamic mix has been consistent, and we think as the market improves, both sides are going to benefit us.

Yeah, the only thing I would add, and this is Eddie, you know, in an upcycle, we do believe that our core business, you know, we would see growth in it, and that growth could come, you know, a little choppy at times. It could be big in certain markets, especially driven by certain customers who are experiencing an upcycle faster or harder than others. But, you know, the great thing about dynamic is that's going to allow us to really fill in our network what we need, smooth out that choppiness, and allow it to really optimize our profit even more. So we would love to have an upcycle with the amount of dynamic quotes that we have today. It would really lead to a more profitable situation for us.

Our next question comes from Brian Ostenbeck from J.P. Morgan. Please go ahead. Your line is open.

Hey, good morning. Thanks for taking the question. I just wanted to see, I guess, Seth, maybe how the operations are right now after the big storm, and I guess maybe another one coming. But how has the recoverability been just operationally, and do you feel like there's some volume that's lost that's not coming back, or have you seen that start to come through after the disruptions? And then just maybe as well just a comment for the full year and maybe the next couple years, what do you think about the footprint you have now? Obviously the CapEx is coming down. It seemed like that's more or less equipment, but I wanted to see how you're feeling about the door count, the positions you have in different markets, and how that might change for this year. Thanks.

Yeah, thanks, Brian. I'll start with the weather question, and then I'll turn it over to Matt to talk about door count, where we're at from a real estate standpoint. But we always have weather every year or natural disasters, and our focus is on our people and making sure that they're safe. We communicate with our customers. We work through any potential disruption that we have. We did see more weather events in December than historically, and that challenged productivity a little bit. But we navigated those events well and serviced our customers with excellence. So the first three weeks of January, we were trending actually much better than last year because of the weather events last year. But the storm we saw this week was a very large one. In terms of service center impact, we think it's going to be one of our worst Januaries in terms of service center closures, and the FMCSA actually issued a 40-state waiver that waived hours of service regulations, which speaks to just the size of this storm. So we dynamically adjust our network to optimize freight movement as part of just regular operations, and we lean into those abilities during this time of disruption. We talked a lot about the tools we've invested in, and the past two winters we've been able to use those tools to navigate it better than any point in our history. So, the investments we've made in recent years in expanding capacity in the network, optimizing our equipment and our fleet, that allows us to navigate these storms much more better. So, we continue to communicate with customers to make sure that they know where we stand in terms of restoring full network operations. The OR impact, it's baked into our guidance that we provided, the cost from that. We still have some potential costs as we're still kind of early stages on the cleanup, but we get winter weather every year. It's in our historical numbers, and we feel like we can outperform it with the tools we've invested in. I'll turn it over to Matt to talk about the real estate investments and where we sit from a capacity standpoint.

Thanks, Seth. And just before I talk about on the real estate side, I want to echo Seth's comments from earlier and really thank our people for their dedication and efforts during these significant times of disruption As Seth said, we really prioritize safety, and our teams have done a tremendous job over the last week at keeping our people safe, communicating with our customers, and working to restore normal operations so we can deliver a premium and efficient service for our customers. So as we've talked about over the last year, we've added nearly 800 doors to our real estate network, and we feel really good about where we're at from a capacity standpoint. I'm excited that we have a couple projects that are wrapping up here as we move throughout the first quarter, specifically in Denver, that will add significant capacity in that market for growth and provide us a better operational standpoint to operate with efficiency in that market. So we've been able to be very strategic over the last few years with our investments, and And those have been a mix of organic builds and new builds in our network and also taking advantage of real estate opportunities in the market. And so just to kind of come back to that, we feel really good about the capacity. We feel really good about what that's done to provide opportunities for growth with our customers, allow us to be more efficient. And we'll continue to evaluate opportunities as they arise and be strategic with the investments that we make so that we can put ourselves in position for further growth.

Our next question comes from Stephanie Moore from Jefferies. Go ahead. Your line is open.

Maybe touching a little bit on the AI initiatives and other productivity investments that you've made over the last several years, I just wanted to think about it on both an asset-based and asset-light side, how you're thinking about leveraging those investments in a recovery, and are you approaching an upcycle differently based on those actions?

Thanks, Stephanie. This is Seth here. I want to start with mentioning how we have a very talented internal tech team who spend dedicated time researching innovations, testing them to see what's going to have the biggest impact on our business. And customers need us to run our business efficiently, and we see AI as an option to make that happen. And so we see tremendous potential around automated processes with human-assisted interactions. And although technology is important, and we're going to talk about it quite a bit, we've always been a tech-forward company, people are who make it happen. So having our people at the center of everything is really important to me. I mentioned a lot of examples in my prepared remarks of projects that we're working on and potential benefits. We're early stage in a lot of that. I view 2025 more as a foundational year for us from an AI perspective, and we're going to continue to evaluate where AI makes the most sense, as well as any technology. Ultimately, first you have to understand the processes, and then if the processes are right, you use AI to improve them, and you also have to make sure your data is in a good spot. So we invested in our data team back in 2018, and having good data is a strategic advantage for us, And that's why we outlined what we did on our technology roadmap at Investor Day. And all of our AI initiatives aren't managed separately. They're part of every single initiative that we have. So when you think about everything that we've done for asset light, asset-based from an AI perspective, I think that's only going to accelerate. Ultimately, what that does is it allows us to scale without adding the incremental cost when the market does come back. So I feel like we continue to make progress there, but we're still literally stages on a lot of this. Many of the examples I gave in my prepared remarks were in the pilot stage, and we're looking forward to a full rollout as we move into 2026.

Our next question comes from Tom Wadowitz from UBS. Please go ahead. Your line is open.

Yeah, good morning. So I guess I'll maybe just give you two questions. So one would just be on pricing dynamic in the market. I think you talked about the pricing that you're realizing that's gotten a little bit better the last couple quarters, which is great. But do you think competitive environment in LTL is pretty stable, maybe similar to where it was a year ago? Or do you think it's getting a little bit tougher as you're later into a downturn?

And then maybe just, if it's okay, I'll maybe ask another one of Mac just whether he has any kind of high-level thoughts on, you know, kind of how asset light you know competes how you fit in the market how you know what might be good leverage for growth thank you hey tom this is eddie um yeah i mean the from a comparison standpoint i wouldn't characterize you know really what we're seeing right now really any different over the last year i mean pricing discipline remains rational within the market um you know we actually have seen a little less bid activity from customers uh which actually to me is a good You know, I think last year that was pretty robust, and every time a customer went to bid, it did kind of create an open market, which allowed new carriers to come in to go after some business, which usually they're more aggressive than incumbents who are looking to, you know, improve price to cover, you know, cost increases. But recent bid data tells us that it's actually slowing down. So that's an encouraging part to me. You know, obviously, you know, what we try to do from our perspective is, you know, really be disciplined with all of our decisions. We evaluate every opportunity on its own merits, and we're looking to get the right price for the value that we're offering our customers. So from a market standpoint, feel good like the market's still rational and nothing's really changed there. And I'll let Mac talk about the asset light side.

Hey. Good morning, Tom. What I would say just from the outside looking in and three-week perspective of being here is that one of the things I've recognized is that when you think about our asset-like business, specifically our managed solutions, is on a growth trend that's far outpacing the marketplace. And I think this team has done a really nice job over the last number of years to build a strong foundation in this space. So when I think about our managed solutions, which is really a fully integrated approach to third-party services in the marketplace, we're outpacing a lot of our competitors. I feel really good about that. From a services perspective, when I think about LCL brokerage, truckload brokerage, our intermodal business, our global hoarding business, we're at different points of journey within each one of those services. Each one of them approaches the market a little bit differently, so it's hard for me to say we're going to have a singular approach to that. But I feel really good about how we're positioned in the market. Over the last year, this team has invested fairly significantly within the SMB space. And year to date, we're exceeding our expectations from a per-person perspective, from a productivity standpoint and certainly across the team so when i think about our managed business outpacing in that mid-market area and then the investment of smb and how that's facing you know to achieve breakeven in 2025 gives us a really strong foundation to build upon as we move forward for any additional questions please press star followed by one our next question comes from ari rosa from city group please go ahead your line is open Yeah.

Hi. Good morning. So I'm curious about the longer term outlook. In the slide deck, you mentioned reaffirming the 2028 financial targets, specifically the EPS of $12 to $15. You mentioned also that 2026 doesn't really anticipate much improvement in the market. So I'm just hoping, obviously, as we look to the back end of 2026, we're going to be closer to 2028, right, only two years out. Help us understand, like, where that inflection comes and where that really real acceleration in EPS growth kind of hits and how you see that playing out. Like, what is it that drives that inflection? How much of that is dependent on the macro? How much of it can be achieved kind of through self-help initiatives and kind of what's the timeline for us to start to see that flow through to EPS? Thank you.

Thanks, Ari. This is Seth. We have confidence in our long-term view and the targets we outlined in Investor Day. As we mentioned in 2026, we don't see a lot of improvement from a macro standpoint, but we didn't expect that in our targets that we set out. So now lower interest rates could potentially help us, clarity over tariffs, the tax bill. There's a lot of different things going on from the demand standpoint. But also on the supply side, we could see some changes there as well. So we saw sequential increases in PT during the fourth quarter. You've seen all the stories about enforcement actions around ELP and also just what's going on with non-domicile drivers. But I would say despite the environment, we're going to continue to focus on what we can control. And the initiatives we outlined in Investor Day around our three strategic pillars of growth, efficiency, innovation, we expect to continue to accelerate on those initiatives as we move through. In Investor Day, we outlined some potential upside if the macro does improve, and Matt can chime in on those next after me. But we see a lot of areas of opportunity ahead of us. Growth, we continue to see our pipeline improve, and we think that's going to translate. Matt just mentioned the double-digit increase in managed. If you remember what we talked about, managed feeds are other service lines as well. So as managed grows, we grow LTL. We grow our truckload offering. And we grow Expedite. And then as we improve the value we deliver to our customers, that generally allows us to improve price, which speaks to that, revenue per shipment, outpacing cost per shipment by 80 basis points. And then the productivity initiatives that we've mentioned throughout this call and in our prepared remarks, we continue to see benefits, asset light at an all-time high in productivity and a low in SG&A cost per shipment. So we expect to continue to make advancements on our strategy, and we believe in the long term. and when we're going to end up to achieve these targets.

Yeah, Ari, Matt, I think Seth covered it well. As we laid out at Investor Day, a lot of our targets were built on things that were in our control, cost, productivity, yield. Certainly you see the results in 2025 on all of those fronts. Like we talked about when we were contemplating our 2028 targets, we weren't really looking at a significant macro improvement in 2026 as we were building those models. And we continue to feel good about how we're positioned for 2028. Certainly a lot of momentum across the business, excited about how we're leveraging technology, exciting about continuing to accelerate on the asset light side. Certainly very pleased with the result that we saw in the year-over-year improvement in the asset-like business in 2025. A lot of projects ongoing around the asset-based business that are continuing to show great results. And so, again, really feel good about executing on everything that's within our control, which was the biggest driver of 2028. And, you know, we do expect some macro improvement as we exit 2026 and move forward towards 2028.

Our last question comes from Cole Cousins from Wolf Research. Please go ahead. your line is open.

Hey, guys. Thanks for taking my questions. Just to hit on 1Q guidance, given the comp dynamic through the quarter, what are the embedded tonnage and yield assumptions in the 100 to 200 basis points of OR deterioration? And maybe just remind us what your typical OR seasonality is into 2Q. And given the storm dynamic, is it fair to think that we might be able to outperform that this year. Thanks.

Hey, Cole, it's Matt. So, you know, as we look at the first quarter and just where we see the projection going, certainly, like we talked about, there's some dynamics that have been in play in January. And so, overall, you know, we would expect the tonnage, you know, the tonnage was up 8% in January. I think you're going to see that moderate as we look at the full quarter. Still up and still up relative to history, but, you know, something lower than 8%, probably more in, like, the 4% to 5% range. You know, overall, we expect to continue to see shipment per day growth on a year-over-year basis as we continue to move through the quarter. Again, just some of the costs back to the fourth quarter are helpful as we're thinking about, you know, being able to achieve the 100, 200 basis points guide of OR increase versus the historical, you know, around 250, 260 basis points. As we look forward from the first quarter to the second quarter, you know, we feel good about how we're positioned all the yield and productivity initiatives continuing to come to bear across the business, but probably too early to be specific about what we're expecting at this point in time.

We have no further questions. I would like to turn the call back over to Amy Mendenhall for closing remarks.

Thanks to everyone for joining us today. We certainly appreciate your interest in our best. Hope everyone has a great day. Thanks. This concludes today's conference call.

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