ArcBest Corporation (NASDAQ:ARCB) Q4 2022 Earnings Call Transcript

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Judy McReynolds: And it’s year-over-year in January, that’s what we’re referring to. And then the other piece is just the contracts that renewed in the fourth quarter were at 5% year-over-year. And so, really, it is different. It’s different categories, but it’s just indications of the strength of the pricing environment is what we’re trying to give you, just give you color in a couple of different areas on that.

Ken Hoexter: But then on a revenue per hundredweight, it looks like, if you’re low-single-digits and then you remove, I guess the contract, are you saying it is holding firm or is it decelerating as you’re moving forward into January?

Danny Loe: So the core business, like we said, we kind of get those numbers, I think when you look the overall piece, you get mix involved in that. And so, the transactional business that we are bringing on to fill some empty capacity could be at a lower revenue, but like I mentioned, it’s profitable. But from a revenue per hundredweight standpoint, it could be that factors into the mix that you’re getting to.

Judy McReynolds: So, Ken let me try this. What we call our core customers, that’s our regular customers that are shipping. And those are they have published rates. And so, that’s what we’re referencing there. What Danny just talked about was when in particularly when those business levels are weaker, and when the network needs to be filled in certain lanes, we are supplementing that with transactional business that comes at the market. And so, you can have some differences in the revenue per hundredweight comparisons, both because of that, and also because of the profile of the freight that’s involved. But I think Danny made the comment earlier, we’re seeing the pricing environment be strong and we’re not seeing any real change to that.

Ken Hoexter: That’s a really helpful clarification because I think there was some concern on what is going on in the pricing market. And Judy, if I could follow-up on Jack’s questions before I just want to understand the kind of run through on costs and your expectation now I guess for operating ratio, you made a structural move, it seemed like into the 80s, I think after kind of 20 plus years in the high 90s. How do you view this? Maybe David with kind of, as volumes decelerate, you talked about some of the costs and then the cost of leverage you’ve got, but with a sequential, normal historical sequential shift, do we see that bounce back up above that 90 level and I guess what your thoughts are as we go into ’23?

Danny Loe: Yes, just in reference, short-term, kind of a short-term comment here, and just talking about fourth quarter to first quarter. You think about that 400 basis points and if you added that to our fourth quarter, that would give you a first quarter, that’s probably the second best first quarter in the past 20 years for ABF, despite it being a weak freight environment, and so I know that’s a short term, like I said, we’re building this business for even a longer-term perspective and to operate in those long-term targets, operating profit margin targets of 10% to 15% in a more consistent basis, and that’s for an annual kind of OR or operating profit margin perspective. And we know that first quarter is typically our weakest quarter of any given year. So, I’d share that with you from a quarter perspective, we’re not trying to manage this quarter-to-quarter again, we’re trying to build for longer-term view.

Ken Hoexter: It’s helpful, I guess, I’m just trying to understand given that fourth quarter was such a maybe a flattish seasonal business, and I know you’re not typically as retail exposed, but given it was flat, or if that first quarter then becomes even better than that seasonal shift becomes a little bit different than normal, sequential shifts between 4Q and 1Q.

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