ArcBest Corporation

Greetings and welcome to the ARCBEST first quarter 2023 earnings conference call. During the presentation, all participants will be in the listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded on Friday, April 28, 2023. I would now like to turn the conference over to Mr. David Humphrey, Vice President of Investor Relations. Please go ahead, sir.

Thank you for joining us. On today's call, we will provide an update on our business, walk you through the details of our recent first quarter 2023 results, and then answer some questions. Joining me today for the prepared remarks are Judy McReynolds, Chairman, President, and CEO of Artbest, and David Cobb, Chief Financial Officer. In addition, Dennis Anderson, Chief Strategy Officer, Stephen Leonard, Chief Commercial Officer and President of Asset Light Logistics, and Danny Lowe, Chief Yield Officer, are available to help answer questions. To help you better understand ARCBEST and our results, some forward-looking statements could be made during this call. Forward-looking statements, by their very nature, are subject to uncertainties and risk. For more complete discussion of factors that could affect ARPBEST's future results, please refer to the forward-looking statements section of our earnings press release and our most recent SEC public filings. To provide meaningful comparisons, certain information discussed in this call includes non-GAAP financial measures as outlined and described in the tables in our earnings press release. Reconciliations of the GAAP financial measures to the related non-GAAP measures Discussed in this call are also provided in the additional information section of the presentation slides. As a reminder, there's a conference call slide deck that could be found on the ARCBEST website, arcb.com, in Exhibit 99.3 of the 8K that was filed earlier this morning, or you can follow along on the webcast. We will now begin with Judy.

Good morning. We appreciate you joining us today. I want to start by thanking our customers for the trust they place in us every day to keep their supply chains running. They are the reason our employees come to work each day to give it everything they have. As you've heard us say many times before, ArcBest is a company that thinks and plans for the future. We're always striving to anticipate the needs of our customers and the market, manage short-term and long-term risk, and execute to the highest level. and it is this mentality that has driven our outperformance over the last several years. And nothing has changed as we face a softer economic environment, leading to reduced customer demand industry-wide. Years ago, we expanded our solutions at ArcBest to better meet our customers' needs, and we built our dynamic pricing offering that enhanced our pricing intelligence and has provided us the ability to profitably fill capacity, precisely in the locations where we need it. Today, we have much better visibility into demand and costs across our business, which provides the ability to make precise changes that have a meaningful impact versus taking a broad brush approach. And as the environment has evolved, we've doubled down on effectively managing personnel, costs, and equipment while continuing to deliver to our customers. The commitment to our growth strategy and disciplined cost management has demonstrated results. We continue to diversify our customer mix across industries. We drove an average 10% increase in our customer base, and retention remains solid across all segments of our business. While we experienced pressure on truckload spot rates, which decreased from fourth quarter levels, we grew shipments and won new customers despite that trend. This is a testament to the strength of our truckload solution and our ability to balance contract and spot business levels based on the macro environment. In the asset-based business, industry pricing remains rational. ArcVest continues to price appropriately to reflect our high-quality service offering. Our core pricing is strong with a nearly 10% increase year-over-year. The dynamic pricing tool we built a few years ago enables us to precisely place profitable shipments throughout the asset-based network to fill underutilized capacity. We carefully manage the volume of transactional shipments to supplement our core LTL business based on market dynamics. Having this lever to drive profitable business has enabled us to largely avoid layoffs up to this point. While we showed resilience in our performance, that has not deterred our focus on working efficiently and driving success through the power of our innovative, integrated solutions. We are continuing to invest in key aspects of our company and strategy to accelerate revenue growth and build on the strong momentum underway. First, we continue to invest in technology. We are capitalizing on the strength of ARCBEST's balance sheet, pursuing organic growth through new innovations that strengthen ARCBEST's competitive edge. During the quarter, we announced our new freight movement system, BOX, and it has been incredibly well received by customers. BOX, which began as an employee idea, is the first radical change to the freight handling process since the forklift was patented over a century ago. The industry has long been demanding change, and with Vox, we delivered. Additionally, in the first quarter, we completed the phase one rollout of city route optimization, an innovation that has delivered strong returns. These are just a few examples of how our innovative spirit drives ArcBest forward. We continue to use tech to make our people more efficient and effective, like the implementation of a best-in-class CRM tool and other systems that enable our sellers to be more productive in their day-to-day activities. We've also invested in our solutions. We have strengthened our truckload offering, one of the largest areas of growth opportunity and one that is bringing business opportunity to ABF as well. Additionally, ABF Freight was recently awarded the ATA Excellence in Claims and Loss Prevention Award for a record 10th time. This is a testament to our ongoing commitment to excellence and the high bar we set for ourselves. Supply chains are complex. ArcBest keeps it simple. We strive to make it easy to do business, knowing this is what our customers expect. Since we began executing on this strategy in 2012 and then further in 2017 with our enhanced market approach, we have doubled the number of customers who are cross-sold, and we continue expanding our relationships with these customers. And importantly, we have invested in our people. Hiring and retaining top talent is the foundation to our company's success, with the origin of Vox starting as an employee idea being a prime example. Our culture of workforce training and development is core to who we are and why we have some of the best talent in the industry, enabling our organization to be exceptionally productive, efficient, and agile. We're honored to rank in the top 20 on Training Magazine's 2023 Apex Awards list, a global ranking of organizations that excel at training and human capital management for the seventh consecutive year. We do not take this recognition lightly, and we are committed to continuing to invest in our employees' success. During the pandemic, we rapidly contracted our workforce to meet lower business levels at the time. While we still have not refilled all those essential roles, we have successfully kept our trained, experienced, and productive employees in place despite navigating a tougher labor market. As opposed to more deeply contracting our workforce again, we expect that retaining our talent will enable us to capitalize more quickly when demand rebounds. It also benefits us in the short term by allowing us to better utilize our network resources and personnel to capture future opportunities as core customer needs increase. a win for ArcBest, our customers, and our employees. In short, our objective is to drive sustainable growth, generate strong and resilient cash flow, and deliver superior returns for our investors. Over the past few years, and especially over the course of the pandemic, we've evolved tremendously. ArcBest is more agile than ever, and we've proven that we can deliver results regardless of the economic environment. While we believe these macro challenges are temporary, We are confident that our versatility and breadth of integrated solutions puts us in a strong position to thrive in any environment. We remain as focused as ever on our long-term vision and proven strategy focusing on accelerating growth, increasing efficiency, and driving innovation. Before I hand it over to David, I want to acknowledge two important things. First, earlier this month, we announced that effective May 14th, Matt Beasley will be our new CFO. Matt has been with ArcBest since early 2022 and is working closely with David Cobb, who will retire in October, to ensure a smooth and seamless transition. We look forward to welcoming Matt to the executive leadership team, and we will certainly miss working with David. He is a tremendous member of our team, and we wish him and his family the best in the next chapter of his life. And lastly, my most sincere thank you to the people of ArcBest. A century of business is no small feat. It's the people who show up to work every day, eager to grow with us, who have helped us reach this important milestone. I'm grateful for the passion and the dedication of our team, and I thank you for all you do. And now I'll turn it over to David to take you through the quarter in greater detail.