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ARCBEST CORP /DE/ (ARCB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $1.048B; GAAP diluted EPS was $1.72 and non-GAAP diluted EPS was $1.46. Non-GAAP operating income was $49.8M and consolidated Adjusted EBITDA was $104.0M .
  • Asset-Based revenue rose to $726.5M; shipments/day +4.3% and tonnage/day +2.3% YoY, while non-GAAP operating ratio deteriorated 150 bps YoY to 92.5% (but improved 30 bps sequentially) .
  • Asset-Light delivered non-GAAP operating income of $1.6M versus a non-GAAP loss of $3.9M in 3Q24, with record shipments/day and all-time-high shipments per employee/day .
  • Versus Wall Street (S&P Global) consensus, Q3 beat on revenue ($1.049B vs $1.040B*) and non-GAAP EPS ($1.46 vs $1.37*); Q1–Q2 were misses on both metrics*. Bold beat in Q3 is a near-term stock catalyst as management also cut 2025 capex guidance, signaling capital discipline .
  • Q4 outlook embeds softness: Asset-Based OR expected to deteriorate ~400 bps sequentially; Asset-Light guided to a non-GAAP operating loss of $1–$3M, and full-year non-GAAP tax rate range nudged up to 26–27% .

What Went Well and What Went Wrong

What Went Well

  • “We achieved growth in LTL shipments and tonnage, and our Asset-Light segment delivered record shipment volumes and productivity,” highlighting integrated solutions strength and customer relationships .
  • Asset-Based pricing discipline: renewals/deferred agreements averaged +4.5% in Q3, supporting yield amid a rational pricing environment .
  • Asset-Light productivity: shipments per employee/day reached an all-time high, enabling non-GAAP operating income despite softer rates and a higher Managed mix .

What Went Wrong

  • Asset-Based revenue per hundredweight decreased 1.1% YoY due to lower weight per shipment and mix (manufacturing weakness), pressuring revenue per shipment without parallel cost reduction .
  • Seasonal and operational cost pressures: higher contracted union labor rates, elevated purchased transportation and cartage (normalized in September), and higher equipment depreciation lifted expenses .
  • Q4 set-up is soft: management expects Asset-Based OR to worsen ~400 bps sequentially and Asset-Light to post a non-GAAP operating loss as seasonality and macro weigh on volumes and mix .

Financial Results

Consolidated summary

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.967 $1.022 $1.048
GAAP Diluted EPS ($)$0.13 $1.12 $1.72
Non-GAAP Diluted EPS ($)$0.51 $1.36 $1.46
GAAP Operating Income ($USD Millions)$6.6 $37.3 $54.6
Non-GAAP Operating Income ($USD Millions)$17.3 $45.0 $49.8
Adjusted EBITDA ($USD Millions)$49.3 $81.0 $104.0

Segment revenue and operating income

MetricQ1 2025Q2 2025Q3 2025
Asset-Based Revenue ($USD Millions)$646.3 $713.3 $726.5
Asset-Light Revenue ($USD Millions)$356.0 $341.9 $356.0
Other & Eliminations ($USD Millions)$(35.2) $(33.0) $(34.3)
Total Revenue ($USD Millions)$967.1 $1,022.3 $1,048.1
Asset-Based GAAP Operating Income ($USD Millions)$26.4 $51.0 $70.2
Asset-Based OR (GAAP, %)95.9% 92.8% 90.3%
Asset-Based OR (Non-GAAP, %)N/AN/A92.5%
Asset-Light GAAP Operating Income ($USD Millions)$(4.4) $0.6 $(1.6)
Asset-Light Non-GAAP Operating Income ($USD Millions)$(1.2) $1.1 $1.6

KPIs (Asset-Based)

KPIQ1 2025Q2 2025Q3 2025
Billed Revenue/CWT ($)$49.40; YoY +1.7% $48.54; YoY −3.1% $50.19; YoY −1.1%
Billed Revenue/Shipment ($)$530.49; YoY −2.3% $537.94; YoY −4.3% $534.80; YoY −3.0%
Tonnage/Day10,466; YoY −4.3% 11,666; YoY +4.3% 11,238; YoY +2.3%
Shipments/Day19,491; YoY −0.4% 21,051; YoY +5.6% 21,095; YoY +4.3%
Weight/Shipment (lbs)1,074; YoY −3.9% 1,108; YoY −1.2% 1,065; YoY −1.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Asset-Based OR (sequential change)Q4 2025Historical deterioration ~100–200 bps from Q3 to Q4 Deterioration ~400 bps Raised deterioration
Asset-Light Non-GAAP Operating IncomeQ4 2025Not provided$(1)M to $(3)M New (guided to loss)
Capex (net, incl. financed equipment)FY 2025$225M–$275M ≈$200M Lowered
PP&E Depreciation & AmortizationFY 2025≈$164M ≈$158M Lowered
Intangible AmortizationFY 2025$13M $13M Maintained
Non-GAAP Effective Tax RateFY 202525.5%–26.5% 26.0%–27.0% Raised
WorkdaysQ4 202561.5 (Q4’24) 61.0 (Q4’25) Context (slightly lower)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/technology initiativesCity Route Optimization pilots; digital quoting up; tech savings; truckload digital roadmap (carrier portal adoption 22–24%, digitally fulfilled shipments ~45–46%) AI/automation in inbound call scheduling, quote augmentation; carrier portal adoption 28%, 52% of truckload shipments digitally augmented Accelerating adoption and productivity gains
Supply chain/macroSeasonality typical; freight recession backdrop; manufacturing weakness; Q1 OR up 390 bps sequentially; Q2 OR improved 310 bps sequentially October softer than normal; PMI <50; inventory pull-forward; government shutdown secondary impacts; Q4 softness embedded Macro headwinds intensified into Q4
Pricing/yieldRenewals/deferred pricing +4.0% in Q2; announced 5.9% GRI effective Aug 4 Renewals/deferred pricing +4.5%; pricing environment rational; mix/weight pressure noisy in yield metrics Discipline maintained; mix remains headwind
Product performanceAsset-Based shipments/day +5.6% and tonnage/day +4.3% in Q2; Asset-Light non-GAAP turned positive Asset-Based shipments/day +4.3%, tonnage/day +2.3%; Asset-Light record shipments/day and productivity; non-GAAP +$1.6M Volumes resilient; productivity improving
Capacity/industryLong-term OR bridge benefits contingent on truckload rates normalizing LTL capacity structurally lower post Yellow; ArcBest added ~800 doors since 2021; positioned for pricing power when demand turns Favorable long-term setup
Housing (U-Pack)Weak housing pressured weight per shipment and profitability Pent-up demand; lower rates could boost housing, truckload capacity, and spill into LTL; outsized impact when housing flips Potential 2026 tailwind

Management Commentary

  • Judy McReynolds (CEO/Chairman): “ArcBest continues to deliver, even in this challenging freight environment… Asset-Light segment delivered record shipment volumes and productivity” .
  • Seth Runser (CEO-elect/President): “We averaged 21,000 Asset-Based LTL shipments per day… renewal increases averaged 4.5%… Managed shipments grew double digits, setting new records” .
  • Matt Beasley (CFO): “For the fourth quarter, we expect our operating ratio to increase by approximately 400 basis points sequentially… Asset-Light anticipates an operating loss of $1–$3 million” .
  • Eddie Sorg (CCO): “We posted a 4.5% renewal increase… momentum improved throughout the quarter; pricing remains rational despite mix-driven noise in yield metrics” .

Q&A Highlights

  • Sequential OR deterioration and cost alignment: Management is pulling cost levers (labor planning, reduced cartage/PT, optimization projects) to offset macro softness; cost/shipment down 1% YoY despite inflation .
  • Pricing/yield dynamics: Yield metrics noisy due to mix and lower weight/shipment; incumbency and value-based selling support renewal increases; ability to price out unprofitable lanes .
  • Industry capacity and Yellow auction: Structural LTL capacity reduction; ArcBest’s ~800-door expansion positions it to “say yes” to customers and support price recovery when volumes inflect .
  • Asset-Light productivity: Automation and AI (carrier portal, quote augmentation, scheduling) drove a 33% improvement in shipments per employee/day; record Managed shipments provide scale benefits .
  • Macro watch (PMI, government shutdown, seasonality): October weaker than typical; Asset-Light expedite felt shutdown impacts; November’s calendar (18 business days) complicates top line .

Estimates Context

PeriodConsensus EPS ($)*Actual Non-GAAP EPS ($)EPS Beat/MissConsensus Revenue ($USD Billions)*Actual Revenue ($USD Billions)Revenue Beat/Miss
Q1 20250.516*0.51 Miss*0.986*0.967 Miss*
Q2 20251.464*1.36 Miss*1.043*1.022 Miss*
Q3 20251.369*1.46 Bold Beat*1.040*1.048 Bold Beat*

Values retrieved from S&P Global.
Interpretation: Q3 delivered a double beat; Q1–Q2 were misses on both EPS and revenue.*

Key Takeaways for Investors

  • Q3 double beat on EPS and revenue vs consensus is a positive surprise; the EPS beat is notable given mix/weight pressure in LTL and a soft-rate environment in Asset-Light .
  • Near-term caution: Q4 guide implies seasonal and macro-driven margin pressure (Asset-Based OR −400 bps sequential; Asset-Light loss), tempering momentum into year-end .
  • Pricing discipline intact with +4.5% renewals; when demand turns and with lower industry capacity post Yellow, ArcBest’s network expansion (~800 doors) should support yield recovery .
  • Structural productivity gains (AI/automation, route optimization, training) are visible in cost/shipment and Asset-Light throughput, underpinning medium-term margin expansion .
  • Capital discipline: 2025 capex cut to ≈$200M with real estate sale gains; share repurchase authorization increased to $125M, providing optionality alongside investment-grade metrics .
  • Watch housing/U-Pack: management expects outsized positive impact when housing normalizes as rates fall—a potential 2026 catalyst .
  • Trading implication: Expect near-term volatility around Q4 softness; medium-term narrative favors operating leverage and pricing in the next upcycle given capacity/pricing setup and ongoing productivity initiatives .