Cole Couzens

Cole Couzens inquired about Class 8 pricing dynamics, asking if OEMs are raising prices or if the market remains competitive, and how this might progress with EPA 2027 on the horizon. He also sought clarification on the nature of recent December and January orders (replacement, growth, or pre-buy) and the risk of cancellations. Lastly, he asked about national account performance and initiatives to grow this segment, contrasting it with small accounts.

Answer

CEO, President, and Chairman Rusty Rush stated that Class 8 pricing is currently balanced, with OEMs focused on building backlogs rather than significant discounting or price increases. He suggested that if demand continues to outpace supply, prices could increase later in the year. Mr. Rush expressed confidence in the solidity of recent orders, viewing them as proactive purchases driven by improving business conditions and EPA 2027 regulations, with low risk of cancellations. He noted that national account business was up over 6% in 2025, emphasizing its sustainable and repetitive nature, and affirmed continued focus on growing this segment. He hopes for a return of the higher-margin small customer base later in the year as the overall market improves.

Cole Couzens asked about the performance of national accounts versus small accounts and the initiatives Rush Enterprises is pursuing to grow its national account mix.

Answer

Rusty Rush (CEO, President and Chairman, Rush Enterprises) stated that national account business was up, though not as much as in previous years (overall blended up over 6% last year). He emphasized that national accounts provide a more stable, repetitive foundation despite lower margins compared to the higher-margin, but more volatile, 'unassigned' small customer accounts (roughly 30% of business). He confirmed continued focus on growing the national account mix for its manageability and sustainability.

Cole Couzens asked for the embedded tonnage and yield assumptions within ArcBest's Q1 guidance of 100-200 basis points of OR deterioration, and inquired about typical Q2 OR seasonality and the potential to outperform it this year given the storm dynamics.

Answer

CFO Matt Beasley stated that Q1 tonnage, while up 8% in January, is expected to moderate to a 4%-5% range for the full quarter, with continued year-over-year shipment per day growth. He noted that the Q1 OR increase of 100-200 basis points is an improvement over the historical 250-260 basis points. He added that it's too early to be specific about Q2 expectations but expressed confidence in yield and productivity initiatives.

Cole Couzens asked about the embedded tonnage and yield assumptions within ArcBest's 1Q guidance of 100-200 basis points of operating ratio deterioration. He also inquired about typical OR seasonality into 2Q and whether outperformance is expected this year given the storm dynamics.

Answer

Matt Beasley, Chief Financial Officer of ArcBest, projected that daily tonnage, which was up 8% in January, would moderate to a 4-5% increase for the full quarter, with continued year-over-year shipment per day growth. He reiterated the 100-200 basis points OR increase guidance for Q1, noting it's better than the historical 250-260 basis points. Matt stated it's too early to be specific about Q1 to Q2 seasonality but expressed confidence in ongoing yield and productivity initiatives.

Cole Couzens, representing Scott Group from Wolfe Research, LLC, asked how Aurora's progress on its second-generation (Fabrinet) and third-generation (Continental) hardware kits compares to original expectations. He also asked which hardware generation would be integrated into the incoming prototype trucks from OEM partners.

Answer

CEO Chris Urmson confirmed that progress is aligned with their consistent expectations, targeting the second-gen hardware for 2026 and the third-gen for 2027. He noted that samples from Fabrinet are already being tested. Urmson explained that incoming prototype trucks will be fitted with different hardware generations (Gen 1, 2, or 3) depending on specific internal engineering and validation needs.

Cole Couzens, on for Scott Group, asked about firm carrier commitments for their own fleets, potential conversations with other OEMs like Daimler and Navistar, and the execution risk of transferring software to new hardware generations.

Answer

CEO Chris Urmson and CFO David Maday clarified that while partners intend to eventually buy Aurora-equipped trucks, current commitments are for Aurora to operate the fleet. Urmson confirmed ongoing conversations across the OEM industry. Regarding hardware, he stated that the software transfer is a manageable execution risk due to long-standing architectural planning and dedicated workstreams.

Cole Couzens asked to quantify the tariff pull-forward, inquired about the impact of charges on Chinese-built ships, and sought clarity on the potential for different quarterly growth patterns.

Answer

CEO Ed Ryan stated the tariff pull-forward was not material and dismissed concerns about charges on foreign-built ships, as nearly all are foreign-made. He reiterated confidence in the annual 10-15% EBITDA growth target but noted quarterly patterns could vary due to market uncertainty, explaining they will react as needed to ensure the annual goal is met.

Cole Couzens of Wolfe Research asked to quantify the benefit from pre-tariff shipment pull-forwards, inquired about post-Chinese New Year activity, and questioned the company's confidence in its annual EBITDA growth target amid market uncertainty.

Answer

CEO Ed Ryan stated that the tariff-related pull-forward was helpful but not material and declined to comment on current quarter activity. He dismissed concerns about potential fees on Chinese-built ships, noting nearly all international vessels are foreign-built. He reaffirmed confidence in achieving the 10-15% annual adjusted EBITDA growth target for fiscal 2026, while cautioning that quarterly growth patterns might be uneven due to the uncertain environment.

Asked about the company's capital needs beyond Q1 2025, the expected timeline for positive free cash flow, current delivery trends, and the outlook for 2025 deliveries.

Answer

The company confirmed their cash runway lasts into Q1 2025 and they are actively talking to strategic partners to raise capital for the rest of the year. They are also focused on self-help measures like improving the cash conversion cycle. They have strong potential for Q4 deliveries but will provide 2025 guidance during the Q4 call. Customer feedback is positive, and the overall market setup for hydrogen is favorable.