see meaningful improvement from the first quarter to the second quarter about a 350 basis point improvement on average certainly with the dramatic rise in diesel prices during the second quarter that did have an impact on our revenue but certainly also had an impact on our cost structure as well and it does impact items even above and beyond the just the cost of fuel certainly carries over to purchase transportation other maintenance costs that we're seeing you know there were also other nice drivers for the quarter including the improvement in weight per shipment that we talked about on the call certainly pleased to see that trend the nice pricing performance that we saw for the quarter was also an impact and then just saw continued improvements on the productivity side if you look on a sequential basis from the first quarter to the second quarter which is is generally what you see just as we move out of weather impacts in the first quarter and see just more shipment density in the second quarter so a number of different contributions for the quarter that i would highlight but you know fuel was definitely one of them and sorry how should we think about that in in 3q just kind of a similar factor just going the opposite direction where uh fuel may becomes a bit of a headwind but you still have all these other tailwinds so just think of it more holistically yes so we are we're always looking at the outlook for fuel prices so we look at the short-term energy outlook from the department of energy we also look at futures prices just to get an idea of where the market is headed certainly that has moved back and forth uh here over the last couple of months you know just based on our latest read as we were setting guidance, it looked like we were going to be down a little bit in the third quarter on prices versus what we realized in the second quarter. We did bake that into our outlook, but even when you take that into account, we still feel comfortable with the flat guide that we gave for flat sequential OR performance for the asset-based business.

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

Great. Thanks, morning. This may be a two-parter as well. Seth, first for you, can you just unpack the trigger for the action, the restructuring actions right now on the cusp of the cycle, and especially focus on the Vox retirement, because I know that was a big initiative for you guys. And kind of Matt, as a follow-up, just with the PLs talking about the potential for getting the biggest rate increases ever, what do you think is the opportunity uh for you guys to kind of push on yield uh do you think you can get uh you know maybe pushing double digit uh uh rate increases kind of going in the next bid cycle thanks hey robbie uh thanks for the question this is seth so the uh the organizational changes that we announced a few weeks ago really they were designed to simplify arc best uh improve efficiency enhance the customer experience and really uh allow us to deliver on long-term profitable growth So I said it in my prepared remarks, it's not a change in strategy.

It's really an acceleration of what we outlined in Investor Day and really reflects that next phase in building a more integrated, scalable, and efficient company. So over our history and throughout this entire freight recession, we've continued to invest in technology, process improvement, commercial transformation, and our people alike. So these recent actions really allow us to capture the full value of those investments by simplifying how we go to market, and we believe it's also going to improve the customer experience. We're bringing the brands together like we talked about. We're also streamlining portions of our organizational structure really to reduce duplication, improve decision making, standardize some of those best practices, and really better align our resources around the highest value opportunities. So when you look at the actions that we took, we think it's going to improve customer experience and efficiency, like I said. And then the action on the ABF side, where we reduced about 1% of total doors, we still have 8% more doors than we had in 2021. So we believe we're still positioned for growth as the market starts to inflect positively. So, we really believe these actions are about just creating a simpler arc best, improving customer experience, increasing efficiency, and really positioning the company to deliver long-term sustainable growth and long-term shareholder value creation. And it really enhances what we outlined at our 2028 Investor Day target. So, then Matt, I'll turn it over to you.

Yeah, so, Robbie, you know, looking on the truckload rate side, I would say, you know, your comment about double-digit increases, I'd say that's generally in line with our near-term expectations, low double-digit increases. You know, certainly we're very pleased with the asset-like performance that we saw for the quarter with over $6 million of operating income, the $5 million year-over-year improvement. we are seeing some of those benefits from higher truckload rates accruing to the benefit of expedite. Certainly that tightening capacity is really helping demand for expedite services, the margins that we're seeing in that business. We are seeing those prices coming up in our truckload business and seeing some of the impacts there, particularly as it relates to our contractual business. And then just the continued growth in managed solutions has been a big help in that business as well.

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

Yay, great. Good morning, guys. Maybe if you could touch on the pricing environment a little bit. I know, I guess, yields, ex-fuel are down a bit, but clearly different freight profile, vapor shipping up significantly, and we're seeing some of the volume dynamics maybe come in a bit better than seasonality, as you noted, for the month of July.

So can you talk about sort of pricing and and how you think about the you know the direction here are we seeing a degree of improvement i know contractual rate increases is one measure to look at so how do you think about broadly you know pricing yeah hey chris this is eddie um yeah i mean we're we're really happy with where we are from a pricing standpoint uh if you think about where we were last year and how we really started to focus on improving our LTL margins, we started seeing that show up in the first quarter. And as we went into the second quarter, really excited to see that 5.8% annual negotiation increase number. We also implemented a general rate increase It's June 22nd of 5.9, and that's holding very well. You know, you did point out that when you look at Revit for 100 weight, it shows slightly down, and that's really just a story of business mix and a heavier profile that's showing up in our system. Obviously, you know, we do feel like we can continue the momentum that we have right now, and that's really our expectation as we go into the third quarter.

And your next question comes from the line of Jason Asirloff-Tedrick-Hawen.

Thank you, operator. Good morning, guys. I want to go back to the spillover business from the truckload side. If we look back, how much in terms of tonnage growth do you think you lost over the last couple of years? Just so we can sort of try to conceptualize what there is to gain going forward. And then the other question I have is related to sort of the historical MOLO business. What changes have you guys made sort of post the SCOTUS-Montgomery decision, and how should we think about insurance costs going forward?

Hey, Jason. This is Seth. I'll take both of those questions. When we think about the truckload migration to LTL, we're seeing modest improvements there where that freight's coming over. It's hard to give you an exact gauge of what the total or historically what that's going Generally, we look in the shipments that weigh heavier than 10,000 pounds, and that's where we're seeing some improvement in that space. But as truckload capacity continues to exit the market, as carriers continue to be pressured by margins, the Montgomery case, elevated fuel prices, all the things that you just mentioned, we believe a lot of those certain heavier, more complex shipments that historically have moved in an LTL network will start to shift back. And we're seeing the early signs of that. when you think about truckload multi-stops, that's just not in their wheelhouse, especially when freight rates improve. So I'm really pleased that we've continued to invest in our network, our fleet, our service capabilities throughout this entire cycle, which I think really positions us great for when the freight patterns start to normalize and those opportunities really do start to shift back to us. So while it's still early, we believe the combination of that tightening truckload capacity and just improving freight fundamentals overall is going to make it so it's going to shift that freight back over to us. In terms of Montgomery and everything that's going on there, it's obviously an evolving situation. Really, to me, the Supreme Court decision provides just that additional clarity around the legal framework for broker carrier selection and claims and reinforces the importance of strong safety, great compliance, carrier oversight practices across the industry. We think that's going to take some time to develop as insurance providers and shippers and carriers and brokers. Everybody just evaluates the ruling and determines whether any changes to requirements, contracts, things like that are necessary. But safety and discipline carrier selections always been a part of ARCVEST and how we operate. We maintain really a structured risk-based approach to third-party carrier onboarding and qualifications. We have ongoing monitoring to make sure that everything's on the up and up. And we believe those are important capabilities when we partner with our customers in managing our risk and their risk. So when you think about over time, it's really going to favor organizations that have well-established processes like ArcBest, have scale, have technology, and dedicated risk management teams, which we have all of those things. So, there's going to be continuing discussions around insurance costs and litigation trends, and I think we're still a little early there, but we've been doing it the right way for a long time with strict processes around carrier vetting. So, at this time, we don't expect any change in our outlook and what we're doing, but we're going to continue you to monitor as the landscape evolves.

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

Please go ahead. Yeah, hi, morning. Not sure if you discussed this fully, but on the restructuring plan, can you talk about the expected pacing of the realization timing? Is there a spread of that 40 million between asset light and the less than truckload that you could talk about. And then, is this augmentative to your longer-term targets from the investor day? Thanks.

Hey, Jordan. Good morning. It's Matt. So, yes, I'll walk you through that at a high level. So, in terms of the realization, we realized about $2 million of that cost savings in the second quarter. We expect to recognize about $6 million of that in the third quarter. And then we expect to be at that full run rate of $10 million a quarter or $40 million a year by the first quarter of 2027. And then just thinking about how that breaks down across the business of the $40 million, about 75% of that is associated with our asset-based business. Then on that remaining 25%, about 80% of that is associated with the asset-light business. And then a small amount, around $2 million, is associated with our Vox operation. And as you probably recall, those are expenses that we have historically removed from earnings on a non-GAAP basis. And so just thinking about non-GAAP impact, the non-GAAP full impact is going to be around $38 million with the majority of that, again, concentrated in the asset-based business. And then when you think about our long-term targets, you know, I would say these actions that we're taking really just further our view on the achievability of those targets, and they're really more in support of them than something that we're viewing as incremental to them.

Thank you.

Thanks.

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

Hey, thanks. Good morning. So, I wanted to get your perspective on the revenue trend, right? So, April was up 11, and then plus 9, plus 8, July up plus 7. So, decelerating a little bit, is this fuel dynamic at play? Maybe, like, can you talk to this, like, revenue per day trend, ex-fuel? I don't know, just any color or thoughts on the trend.

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

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

Okay. And your next question comes to sign up Bruce Chan of Stifol. Please go ahead.

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

Thanks, Bruce. This is Seth. Yeah. When I look at our percent mix, we don't disclose the exact percentage of what we do, you know, dynamic or transactional and then versus core, but the vast majority of our business is core ltl business and and when we look at retention around those customers it still remains very strong they just continue to ship a little bit less because the the weaker demand environment but as that as the demand environment starts to improve we believe that's going to create some outsized operating leverage for us because we still have all those customers at great prices when you when you think about the transactional business our dynamic business, all those different markets, it's really about helping maintain consistency in the network. We've spent a lot of time making sure that our service levels are at a great place, and we've executed on that the second quarter. Our service is in an amazing place, and we hear feedback from our customers. Our internal NPS continues to improve, so it's really about maintaining that consistency in the network with dynamic, but what's really important to understand, and we've said this before, is we optimize our mix on a daily basis, and it's based on profit maximization, based on what the current market is giving us, and also available capacity there. So as we expand that quote pool, we can be more selective in real time, which in turn, you know, improves profitability, like we've talked about. So you've seen the improvements that we've made over the long term, and these investments in our tools really give us greater flexibility especially as the market turns uh but we have we have some of the best visibility into our network that we've ever had in our history with all the tech investments we've made and i expect further improvements as we continue to expand those capabilities all right thank you thanks your next question comes from the line of ken hexter of bank of america please go ahead hey great good morning um morning so i understand you're you're closing uh some facilities 10 ltl facilities as part of the restructuring i get it's one percent

doors i think you said you're still up eight percent maybe thoughts on where you think excess capacity is today how should we see your ability to flex up into the up cycle both across not just doors but labor physical doors and and uh and equipment and then it seems that i'm gonna ask to at the same time but tons per day are outpacing seasonal norms into july maybe thoughts on why that shouldn't support an above seasonal asset-based margin. Is it simply fuel or is there anything else in there? Thanks.

Hey, Ken, this is Seth. I'll start with the capacity questions that you had. And if Matt Godfrey has anything to chime in, he can. But we've said in the past that we really bucket capacity into three different areas, people, equipment, and facilities. So the people side, we feel like we're in a great spot there. We can add people as needed. We have the most attractive wage and benefit package in the entire industry. So we haven't seen really any recruiting challenges on the equipment we've invested over the long term throughout this cycle, have one of the youngest fleets on the road, and that allows us to flex the fleet up or down based off of the demand and what the customer demand is. So on the real estate side, we worked on a long-term plan that we've discussed over the last four or five years, starting around 2020, 2021. And we've added over 800 doors to the network. We continuously optimize that network day in and day out. And we did a full review of the network and determined that these 10 facilities were not needed because we could service them at nearby facilities and not actually change the service that we're delivering to our customers. So we've still added about 8% doors in strategic markets where we see growth, service, or efficiency opportunities. So, I would estimate our capacity is around 15% to 20% excess capacity, and that allows us to flex up or down based off of what the demand is given to us. So, Matt, I don't know if you have anything to add there.

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

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

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

Hi, good morning. Appreciate the time. I guess I did want to circle back to a prior question and commentary on the asset light side of the business. I do think we kind of lump both MOLO and Expedited together, but maybe as we think about what's just evolving over time in the brokerage industry and certainly from a liability standpoint that might be coming post the SCOTUS ruling, is there anything we should be thinking about as we think about maybe the different components within your asset light business, and especially as you kind of address vettings or what processes you already have in place? So I wanted to follow up there, and then I do have a follow-up to that. Thank you.

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

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

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

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

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

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

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

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

So, I'd say dynamic mix is changing slightly, but we believe it's a better outcome but but the core business continues to remain pretty consistent okay thank you and there are no further questions at this time i will now turn it back to amy mandenhall for closing remarks thank you to everyone who joined us today we certainly appreciate your interest in arc best hope everyone has a great day ladies and gentlemen that concludes today's call Thank you, everyone, for joining. You may now disconnect.