| OPERATING SEGMENT DATA |
NOTE I – OPERATING SEGMENT DATA The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company's Chief Executive Officer and Chairman of the Board is the CODM who makes decisions about resources to be acquired, allocated, and utilized in each operating segment. The CODM uses segment revenues, operating expense categories, operating ratios, operating income (loss), and key operating statistics to evaluate performance and allocate resources to the Company’s operations. The Company’s reportable operating segments are impacted by seasonal fluctuations which affect tonnage, shipment levels, and demand for services, as described below; therefore, operating results for the interim periods presented may not necessarily be indicative of the results for the fiscal year. Inclement weather conditions can adversely affect freight shipments and operating costs of the Asset-Based and Asset-Light segments. Shipments may decline during winter months because of post-holiday slowdowns and during summer months due to plant shutdowns affecting automotive and manufacturing customers of the Asset-Light segment; however, weather and other disruptive events can result in higher short-term demand for expedite services depending on the impact to customers' supply chains. Historically, the second and third calendar quarters of each year usually have the highest tonnage and shipment levels. In contrast, the first quarter generally has the lowest tonnage and shipment levels, although other factors, including the state of the U.S. and global economies; available capacity in the market; yield initiatives; and external events or conditions, such as the modification or implementation of new tariffs or trade policy, may influence quarterly business levels. The Company’s yield initiatives, along with increased technology-driven intelligence and visibility with respect to demand, have allowed for shipment optimization in non-peak times, reducing the Company’s susceptibility to seasonal fluctuations in recent years. The Company’s reportable operating segments are as follows: | ● | The Asset-Based segment includes the results of operations of ABF Freight System, Inc. and certain other subsidiaries. The segment operations include national, inter-regional, and regional transportation of general commodities through standard, expedited, and guaranteed LTL services. The Asset-Based segment provides services to the Asset-Light segment, including freight transportation related to managed transportation solutions and other services. |
| ● | The Asset-Light segment includes the results of operations of the Company’s service offerings in truckload, managed transportation, ground expedite, intermodal, household goods moving, warehousing and distribution, and international freight transportation for air, ocean, and ground. The Asset-Light segment provides services to the Asset-Based segment. |
The Company’s other business activities and operations that are not reportable segments include ArcBest Corporation (the parent holding company) and certain subsidiaries. Certain costs incurred by the parent holding company and the Company’s shared services subsidiary are allocated to the reporting segments. The Company eliminates intercompany transactions in consolidation. However, the information used by the CODM with respect to its reportable operating segments is before intersegment eliminations of revenues and expenses. Shared services represent costs incurred to support all segments, including sales, pricing, customer service, marketing, capacity sourcing functions, human resources, financial services, information technology, and other company-wide services. Certain overhead costs are not attributable to any segment and remain unallocated in “Other and eliminations.” Included in unallocated costs are expenses related to investor relations, legal, the Company’s Board of Directors, and certain technology investments. Shared services costs attributable to the reportable operating segments are predominantly allocated based upon estimated and planned resource utilization-related metrics, such as estimated shipment levels or number of personnel supported. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the reportable operating segments. Management believes the methods used to allocate expenses are reasonable. Further classifications of operations or revenues by geographic location are impracticable and, therefore, are not provided. The Company’s foreign operations are not significant. The following tables reflect the Company’s reportable operating segment information from continuing operations: | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | | | June 30 | | June 30 | | | | 2025 | | 2024 | | 2025 | | 2024 | | | | | (in thousands) | | REVENUES | | | | | | | | | | | | | | Asset-Based | | $ | 713,312 | | $ | 712,725 | | $ | 1,359,606 | | $ | 1,384,192 | | Asset-Light | | | 341,922 | | | 395,817 | | | 697,934 | | | 792,180 | | Other and eliminations | | | (32,978) | | | (30,711) | | | (68,207) | | | (62,122) | | Total consolidated revenues | | $ | 1,022,256 | | $ | 1,077,831 | | $ | 1,989,333 | | $ | 2,114,250 | | | | | | | | | | | | | | | | OPERATING EXPENSES | | | | | | | | | | | | | | Asset-Based | | | | | | | | | | | | | | Salaries, wages, and benefits | | $ | 365,929 | | $ | 352,678 | | $ | 710,070 | | $ | 697,677 | | Fuel, supplies, and expenses | | | 79,834 | | | 82,938 | | | 157,476 | | | 163,982 | | Operating taxes and licenses | | | 13,845 | | | 13,557 | | | 26,957 | | | 27,086 | | Insurance | | | 17,653 | | | 16,964 | | | 35,616 | | | 31,446 | | Communications and utilities | | | 5,150 | | | 4,412 | | | 10,960 | | | 9,211 | | Depreciation and amortization | | | 31,664 | | | 26,646 | | | 62,254 | | | 53,653 | | Rents and purchased transportation | | | 76,198 | | | 70,315 | | | 143,359 | | | 135,986 | | Shared services | | | 69,868 | | | 72,245 | | | 132,311 | | | 137,159 | | (Gain) loss on sale of property and equipment | | | (159) | | | (91) | | | (136) | | | 58 | | Other | | | 2,301 | | | 269 | | | 3,293 | | | 1,686 | | Total Asset-Based | | | 662,283 | | | 639,933 | | | 1,282,160 | | | 1,257,944 | | | | | | | | | | | | | | | | Asset-Light | | | | | | | | | | | | | | Purchased transportation | | | 288,580 | | | 339,247 | | | 593,194 | | | 683,369 | | Salaries, wages, and benefits | | | 25,629 | | | 31,036 | | | 51,178 | | | 61,340 | | Supplies and expenses | | | 1,739 | | | 2,768 | | | 3,478 | | | 5,577 | | Depreciation and amortization(1) | | | 4,605 | | | 5,039 | | | 9,223 | | | 10,117 | | Shared services | | | 18,594 | | | 17,297 | | | 36,575 | | | 33,571 | | Contingent consideration(2) | | | (2,650) | | | 3,850 | | | (2,650) | | | 11,170 | | Other | | | 4,834 | | | 6,078 | | | 10,725 | | | 11,792 | | Total Asset-Light | | | 341,331 | | | 405,315 | | | 701,723 | | | 816,936 | | | | | | | | | | | | | | | | Other and eliminations | | | (18,667) | | | (16,262) | | | (38,489) | | | (31,910) | | Total consolidated operating expenses | | $ | 984,947 | | $ | 1,028,986 | | $ | 1,945,394 | | $ | 2,042,970 | | | | | | | | | | | | | | | | OPERATING INCOME FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | Asset-Based | | $ | 51,029 | | $ | 72,792 | | $ | 77,446 | | $ | 126,248 | | Asset-Light | | | 591 | | | (9,498) | | | (3,789) | | | (24,756) | | Other and eliminations | | | (14,311) | | | (14,449) | | | (29,718) | | | (30,212) | | Total consolidated operating income | | $ | 37,309 | | $ | 48,845 | | $ | 43,939 | | $ | 71,280 | | OTHER INCOME (COSTS) FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | Interest and dividend income | | $ | 1,037 | | $ | 3,241 | | $ | 2,187 | | $ | 6,556 | | Interest and other related financing costs | | | (2,956) | | | (2,078) | | | (5,711) | | | (4,306) | | Other, net(3) | | | 578 | | | (781) | | | (273) | | | (28,980) | | Total other income (costs) | | | (1,341) | | | 382 | | | (3,797) | | | (26,730) | | INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | | $ | 35,968 | | $ | 49,227 | | $ | 40,142 | | $ | 44,550 | |
| (1) | Depreciation and amortization includes amortization of intangibles associated with acquired businesses. |
| (2) | Represents the change in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). |
| (3) | The six months ended June 30, 2024 includes a noncash impairment charge to write off the Company’s equity investment in Phantom Auto, as previously discussed (see Note B). |
The following table reflects information about revenues from customers and intersegment revenues: | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | | | June 30 | | June 30 | | | | 2025 | | 2024 | | 2025 | | 2024 | | | | | (in thousands) | | Revenues from customers | | | | | | | | | | | | | | Asset-Based | | $ | 680,936 | | $ | 682,558 | | $ | 1,292,271 | | $ | 1,323,134 | | Asset-Light | | | 340,098 | | | 394,377 | | | 694,666 | | | 789,202 | | Other | | | 1,222 | | | 896 | | | 2,396 | | | 1,914 | | Total consolidated revenues | | $ | 1,022,256 | | $ | 1,077,831 | | $ | 1,989,333 | | $ | 2,114,250 | | | | | | | | | | | | | | | | Intersegment revenues | | | | | | | | | | | | | | Asset-Based | | $ | 32,376 | | $ | 30,167 | | $ | 67,335 | | $ | 61,058 | | Asset-Light | | | 1,824 | | | 1,440 | | | 3,268 | | | 2,978 | | Other and eliminations | | | (34,200) | | | (31,607) | | | (70,603) | | | (64,036) | | Total intersegment revenues | | $ | — | | $ | — | | $ | — | | $ | — | | | | | | | | | | | | | | | | Total segment revenues | | | | | | | | | | | | | | Asset-Based | | $ | 713,312 | | $ | 712,725 | | $ | 1,359,606 | | $ | 1,384,192 | | Asset-Light | | | 341,922 | | | 395,817 | | | 697,934 | | | 792,180 | | Other and eliminations | | | (32,978) | | | (30,711) | | | (68,207) | | | (62,122) | | Total consolidated revenues | | $ | 1,022,256 | | $ | 1,077,831 | | $ | 1,989,333 | | $ | 2,114,250 | |
The following table presents operating expenses by category on a consolidated basis: | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended | | | | June 30 | | June 30 | | | | 2025 | | 2024 | | 2025 | | 2024 | | | | | (in thousands) | | OPERATING EXPENSES | | | | | | | | | | | | | | Salaries, wages, and benefits | | $ | 458,115 | | $ | 453,283 | | $ | 890,003 | | $ | 892,806 | | Rents, purchased transportation, and other costs of services | | | 328,571 | | | 376,137 | | | 662,341 | | | 751,456 | | Fuel, supplies, and expenses | | | 110,530 | | | 112,137 | | | 216,476 | | | 221,659 | | Depreciation and amortization(1) | | | 40,926 | | | 36,276 | | | 80,890 | | | 73,109 | | Contingent consideration(2) | | | (2,650) | | | 3,850 | | | (2,650) | | | 11,170 | | Other | | | 49,455 | | | 47,303 | | | 98,334 | | | 92,770 | | | | $ | 984,947 | | $ | 1,028,986 | | $ | 1,945,394 | | $ | 2,042,970 | |
| (1) | Includes amortization of intangible assets. |
| (2) | Represents the change in fair value of the contingent earnout consideration related to the MoLo acquisition (see Note B). |
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