ArcBest's (ARCB) CEO Judy R. McReynolds on Q4 2015 Results - Earnings Call Transcript

| About: ArcBest Corporation (ARCB)

ArcBest Corporation (NASDAQ:ARCB)

Q4 2015 Earnings Conference Call

February 03, 2016 09:30 AM ET

Executives

David Humphrey - VP, IR

Judy R. McReynolds - President and CEO

David Cobb - VP and CFO

Analysts

Alex Vecchio - Morgan Stanley

Brad Delco - Stephens

David Ross - Stifel Nicolaus

Chris Wetherbee - Citigroup

Ken Hoexter - Bank of America/Merrill Lynch

Todd Fowler - KeyBanc Capital Markets

Jason Seidl - Cowen & Company

Art Hatfield - Raymond James

Rob Salmon - Deutsche Bank

Matt Brooklier - Longbow Research

John Barnes - RBC Capital Markets

Scott Group - Wolfe Research

Matt Young - Morningstar

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the ArcBest Corporation's Fourth Quarter 2015 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, February 03, 2016.

I'd now like to turn the conference over to Mr. David Humphrey, Vice President of Investor Relations. Please go ahead, sir.

David Humphrey

Welcome to the ArcBest Corporation's fourth quarter 2015 earnings conference call. We'll have a short discussion of the fourth quarter and full year results and then we'll open up for a question-and-answer period. Our presentation this morning will be done by Ms. Judy R. McReynolds, President and Chief Executive Officer of ArcBest Corporation; and Mr. David R. Cobb, Vice President, Chief Financial Officer of ArcBest Corporation.

We thank you for joining us today. In order to help you better understand ArcBest Corporation and its results, some forward-looking statements could be made during this call. As we all know, forward-looking statements by their very nature are subject to uncertainties and risk. For a more complete discussion of factors that could affect the company's future results, please refer to the Forward-Looking Statements section of the company's earnings press release and the company's most recent public filings.

In order to provide meaningful comparisons, certain information discussed in this conference call includes non-GAAP financial measures as outlined in the tables in our earnings press release. As part of the 8-K filed this morning with our fourth quarter earnings release, we included four slides to summarizing historical annual results for ArcBest in our subsidiary companies. These slides illustrate a long-term progress ArcBest has made since 2012. A link for these slides, you can also be found on the front page of our Web site at arcb.com. We'll be referencing these slides during this morning's call.

We will begin with Ms. McReynolds.

Judy R. McReynolds

Thank you, David and good morning everyone. 2015 marked another period of transformation for ArcBest Corporation. The progress we have made, we fully recognized as a logistics company with a feel and a will to solve complex problem on behalf of customers has been substantial. I would like to thank our employees for their efforts to improve our company.

As we presented in November at our Investor Day conference in New York, we've gained attraction with our ongoing strategy to better serve customers with the supply chain, residential moving and vehicle maintenance and repair solutions they need. We outlined our growth strategy and provided many examples of collaboration across our companies. We also discussed our initiatives to significantly grow the asset light logistics portion of our business while insuring that our flagship carrier ABF Freight continues to perform well and optimize its operations and profitability.

In the fourth quarter, we were challenged by the weaker environment and did not accomplish our objectives in the freight business. However, we made progress in growing the asset light portion of our business. As seen on Slide 1, provided in our 8-K this morning, this business equaled 30% of total revenues in the fourth quarter. That slide also illustrates the steady growth of our asset light logistics business since 2009, would have only represented 7% of total revenue. If we add on there and acquisition we closed on December 1st, for all of 2015 this percentage would have increased to 32%. In all of our businesses we continue working hard to gain efficiencies and better position our services with customers, that work includes investing and enabling technologies.

As seen on Slide 2, adjusted operating income at ArcBest rose 7% for the full year to 81 million on revenue of 2.7 billion as a result of our efforts. Slide 2 also illustrates the steady progress ArcBest has made over the last four years in increasing revenue and operating profit and as I already mentioned, this year's progress would have been more if not for the soft environment, that resulted from high customer inventory levels and weakness in the industrial and manufacturing sectors of the economy. This weakness accelerated toward the end of the year and has yet to abate.

And now I'd like to discuss more details about our operating companies. As I mentioned ABF Freight experienced a challenging fourth quarter and produced weaker than expected operating result. ABF Freight’s performance was impacted by the economic factors that I just discussed and by continuing to provide a high level of customer service despite lower than anticipated tonnage levels, reduced purchase transportation and city cartage cost where beneficial but not enough to fully offset the excess labor expense we incurred. ABF Freight’s revenue decline versus last year was primarily related to reduced fuel surcharge revenues associated with the ongoing decline in diesel fuel prices and lower tonnage levels. Given the current slow economic environment we have taken actions to further reduce our labor force and better align it with the number of shipments moving through our network. We currently have over 200 docks treating yard employees in lay off status and many other personnel reductions have resulted from attrition. In January 2016, we've reduced our docks and city labor force by 4% compared to fourth quarter 2015, compared to January of last year that reduction is 3.3%.

Moving forward, we will continue to monitor our labor levels very closely. Later this year we expect improvements in our results from items in this year's capital plan that include replacement equipment and the IT hardware utilized by our dock and city personnel during freight handling, these updated tools will provide improved data visibility for labor and equipment planning purposes and enhance our ability to react even quicker to changing business levels.

During the fourth quarter ABF Freight maintained price discipline and secured rate increases from customers. Our reported decrease in fourth quarter revenue per hundredweight reflected the impact of year-over-year changes in fuel surcharges. Excluding fuel surcharge impacts the percent increase in our total and LTL revenue for hundredweight within the mid single-digits. The average 4% increase we secured on contract and deferred pricing accounts negotiated during the fourth quarter was a good level on these price sensitive accounts and somewhat below the level we secured in the previous quarters of the year. I'm encouraged by the fact that our sales team reports a healthy number of deals and potential new accounts in the pipeline. We will continue to emphasize price and profitability in our upcoming freight negotiations with customers.

On Slide 2, you can see that though ABF Freight’s steady progression of annual revenue growth was affected by significant declines in fuel surcharges and lower business levels in 2015. The trend of annual operating profit is positive and has increased since 2012. Throughout 2015, we made progress in expanding the scope of our logistics capabilities in the areas of truckload brokerage, premium and expedited transportation, rail, warehousing and ocean and air shipping. As a logistics company our ability to meet the needs of our customers has helped us effectively complement the core less than truckload services offered by ABF Freight with those provided by ABF Logistics, Panther and FleetNet.

Every day, we find new ways to solve our customers’ supply chain challenges with the array of services we offer. Our enterprise solutions group works to combine service offerings across ArcBest in a way that simplifies the experience for our customers. This group has been successful in gaining business that we would not have otherwise had. While providing better transportation solutions and significant cost savings to our customers, ABF Logistics concluded a successful year of organic and strategic growth that included the benefits of two acquisitions during the year. The recent purchase of Bear Transportation Services in December and the addition of Smart Lines Transportation Group in January of 2015, both of these companies were perfect matches for meeting our goal of broadening the scale of logistics services we offer through the addition of new business opportunities and growth with seasoned employees who have had past success in the brokerage business.

The addition of Bear expanded ABF Logistics’ geographic footprint into the Dallas and Northwest Arkansas areas, and just like Oklahoma City’s locations of Smart Lines, these geographic areas offer opportunities for adding new employees and enhancing new payment growth that ABF logistics has been experiencing over the last few years.

Slide 3 illustrates how our strategy of organic investments and key acquisitions since 2012 at ABF Logistics has resulted in 46% compounded annual growth of revenues and a 25% compounded annual growth rate in operating profit. Despite continued weak demand in the truckload marketplace and reduced fuel related revenue that contributed to lower revenue per load, ABF Logistics experience double-digit revenue and shipment growth in the fourth quarter. Account participation for ABF Logistics or Panther with the ABF Freight customers was over 23% at the end of 2015, up from just under 19% at the end of the previous year. As we integrate our locations, we anticipate improving the operating margins of this business.

During the fourth quarter, Panther's revenue and operating income declined despite an 11% increase in total load count compared to the same period last year. As seen throughout 2015, the availability of excess truckload capacity within the market impacted Panther's business opportunities by reducing the demand for its expedited services. As a result, Panther had lower average shipment revenue and profit margins.

Revenue totals and statistics versus fourth quarter 2014 were impacted by the effects of lower fuel surcharges and changes in the mix of accounts that contributed to a reduced length of haul during the quarter. As seen in recent quarters, Panther's customer needs are being met through the use of smaller Panther equipment types which also contributed to the reductions in revenue and margins. I am pleased that Panther has made a lot of progress as we bought them in June 2012. Slide 4 illustrates how the 2015 truckload capacity environment caused Panther's annual figures to be below those of a record setting year in 2014. However Panther's annual 2015 revenue and operating profit reflects significant improvements over 2013 and 2012.

FleetNet’s 18% fourth quarter revenue increase was driven by strong growth in roadside events resulting from additional business with current customers and events gained from new accounts. In addition the fleet maintenance portion of FleetNet’s business experienced moderate event growth. The fourth quarter operating loss of FleetNet was directly related to an $850,000 charge resulting from an unfavorable third-party casualty claim associated with the customer who later went bankrupt. This was an unusual situation these related costs wiped out very good operating quarter for FleetNet, excluding the charges related to this uncommon terrain FleetNet would have more than doubled their operating profit compared to last year's fourth quarter. As seen on Slide 4, over the last four years FleetNet has experienced consistent revenue and operating profit growth.

ABF Moving’s fourth quarter revenue increased 17% over the last year as a result of additional business with its consumer moving customers and continued success in growing its corporate relocation services with new and existing accounts. As seen throughout the year significant revenue growth associated with favorable government service scores resulted in handling a greater portion of government shipment. Operating income improved versus the previous year despite reductions in gross margins related to changes in shipment mix.

Slide 3 illustrates that since 2012 ABF Moving has consistently grown its annual revenue and operating profit producing record results in 2015. As seen in our 2015 capital expenditures and as David will discuss regarding our CapEx plans for 2016, we continue to make investments in ABF Freight’s tractor and trailer equipment fleet. This new equipment we have added in the last couple of years reduces maintenance cost and improves fuel economy. Our equipment replacement plan will help further reduce the average age of our tractor fleet and optimize our total cost of ownership. At the end of 2015 approximately 75% of our road tractors will covered under manufacturers' warranty with the new tractor purchases we're planning for 2016 we expect that all over tractors will be under warranty by the end of this year.

We've nearly completed the installation of electronic logging devices in all of our road and city tractors. We choose to adopt this technology two years ahead of the industry mandate. In addition to the necessary industry compliance there are other advantages in cost savings we have to gain from them. And those include capturing real time data for improved labor and resource management and GTS capabilities. The rapid pace of technological changes in the logistics industry and our efforts to equip our employees with the tools they need to most effectively serve customers, drive our information technology initiatives. We're investing in many new initiatives to improve efficiencies and lower cost.

Our IT subsidiary ArcBest technologies include our business inside and analytics group and our research and development team. They are actively involved in numerous projects with positive impact will reach through our company over the next several years., Also ArcBest corporate wellness value is driving proactive healthcare initiative to promote a healthy lifestyle for our employees and are expected to provide us meaningful medical cost savings due to provision in early detections. Many of these investments are ahead of the cost savings and process improvements they are design to create. However, their implementation is critical for the future success of our company by creating an environment that is best serve our customer needs and challenges.

During 2015, we took actions to enhance shareholder value. In October, we announced a 33% increase of our quarterly cash dividend to $0.08 per share from the previous level of $0.06 per share. During the year, we bought back 402,255 shares of our stock for a total price of 12.8 million. Our strong balance sheet allows us to enrich our shareholders in these ways, while further utilizing our resources for investments to grow our company, improve our profits and benefit our customers.

Yesterday, we announced my election as Chairman of ArcBest Board of Directors replacing Robert Young. This change will effect at end of our Annual Meeting to schedule for April 26, 2016. I'm humbled to follow Rob in Robert's footsteps by being apt to take on these new responsibilities in addition to my current role as President and CEO. Robert is a living legend at our company and much of our successful history is because of his leadership and influence. In addition, we named a ArcBest Board members, Steve Spinner as our Lead Independent Director, having Steve in this role creates appropriate governance balanced between our management team and in independent board other side of our company.

And now I'll turn it over to David to provide the financial highlights of the quarter.

David Cobb

Thank you, Judy, and good morning, everyone. ArcBest's fourth quarter 2015 revenues declined 2.5% to 648 million due to reduced business levels and the impact of lower fuel surcharges at many of our businesses. Earnings per share equaled $0.19 for fourth quarter compared to $0.53 in the fourth quarter of 2014. As detailed in non-GAAP reconciliation tables in this morning's earnings press release adjusted fourth quarter of 2015 earnings per share equaled 0.21 compared to $0.44 in the same period of 2014. Our reported fourth quarter results were impacted by adjustments for pension settlement charges related to our non-union defying benefit pension plan that equaled to $0.02 per share compared to $0.03 per share in the fourth quarter of 2014.

Our effective tax rate for the quarter was 27%. This is below the full year rate of 38% which is in the expected range we provided throughout 2015. Tax legislation signed in late December extended the tax credit related to alternative fuels that previously expired as the end of 2014. As the new tax legislation that was enacted in December included a retroacted tax credit for all of 2015. This year's fourth quarter included the full year tax benefit of 1.1 million. The tax credit actually earned for the fourth quarter which is comparable to what was actually earned in the prior year quarter approximates $290,000 the remaining $850,000 is associated with the first nine months of 2015. You will recall that the same thing occurred at the end of 2014 and it similarly affected our fourth quarter of 2014 results.

During the fourth quarter of 2015, we experienced cash undervalue market gains of $0.02 per share associated with our life insurance program. During the fourth quarter of 2014, gains and insurance proceeds and market value increases benefited our results by $0.09 per share. A portion of the investments in these insurance policies are in equity and fixed income securities and therefore are subject to market volatility. These nontaxable changes in value appear in the other net income line of our income statement which is below the operating income line. Though this increased 2015's fourth quarter earnings the increase was approximately 2.1 million less than the increase that occurred in fourth quarter of 2014. Fourth quarter 2015 results includes transaction costs of $0.03 per share associated with ABF Logistics December acquisition of Bear Transportation Services.

Finally, as Judy previously referenced during the recent fourth quarter FleetNet’s results were impacted by third-party cash decline related to non-performance of a bankrupt customer. This approximate $850,000 pre-tax charge equaled $0.02 per share. Judy previously mentioned our stock repurchase program and in the fourth quarter we bought 110,000 shares for a total amount of $2.8 million. For the full year of 2015, consolidated revenues totaled 2.7 billion compared to 2.6 billion in 2014, an increase of 2%. Full year earnings per share were $1.67 compared to the $1.69 in 2014, but adjusted for the non-operational items I described earlier, 2015 earnings were $1.78 per share compared to $1.67 per share in 2014.

Our effective tax rate for 2015 was 38%. We expect our 2016 tax rate to be at a similar level in a range of 37% to 40%. We closed 2015 with unrestricted cash and short-term investments of $227 million combined with the available resources under our credit revolver and our receivable securitization agreement, our total liquidity equaled $353 million at the end of the year. The accordion features of those two agreements allow for an additional total amount of $100 million. Our total debt at yearend of $213 million included a $70 million balance on our credit revolver a $35 million borrowed on our receivable securitization and $108 million of notes payable in capital leases primarily on ABF Freight equipment. The composite interest rate on all of our debt is 2.1%. Full details of our GAAP cash flow were included in our earnings press release.

ABF Freight reported fourth quarter revenue of 462 million, a 5% decrease compared to last year. The change from last year's fourth quarter was impacted by our reduced business levels and the effect of lower fuel surcharges associated with the decline in fuel prices. ABF Freight’s quarterly tonnage per day decreased by 4.9% compared to last year's fourth quarter. Monthly tonnage increase in the previous year's fourth quarter was the strongest of any quarter in 2014, so we're up against some pretty challenging comps. For fourth quarter 2015 by month, ABF Freight’s daily tonnage declined versus the same period last year by 5.8% in October, 5.2% in November and 3.6% in December.

Furth quarter total shipments per day decreased by 1.5% compared to fourth quarter of 2014. ABF Freight’s tonnage per day declined 4% sequentially from third quarter 2015 to the fourth quarter. Compared to the most recent tenure period this is a relatively normal level of sequential tonnage change between these quarters. Since the freight recession that occurred beginning in fourth quarter of 2006, we have not experienced a fall peak business surge from third quarter to fourth quarter. Over that period ABF’s total third quarter to fourth quarter tonnage has declined on average about 4% with a 15 year prior to 2006 when the fall peak business surge traditionally occurred total third quarter to fourth quarter tonnage on a per day basis increased 1% to 2% on average.

ABF Freight’s total weight per shipment was 1,267 pounds, a 3.5% decrease from last year's fourth quarter and slightly below the third quarter of 2015. The reduction in average shipment size of ABF Freight's core LTL business was comparable to that for all shipments that ABF Freight handled during the fourth quarter. ABF Freight's average length of haul decreased approximately 1% to 1,014 miles compared to 1,026 miles in the fourth quarter of last year. Length of haul was also about 1% below the third quarter of 2015.

ABF Freight's fourth quarter total build revenue per hundredweight was 29.02, a decrease of 1.1% versus the fourth quarter of last year. Year-over-year comparisons of this yield figure continued to be impacted by lower fuel surcharge revenue versus last year. As we mentioned in our early fourth quarter business update compared to 2014, October benefited from the positive impact as two prior general rate increases, beginning in November the year-over-year affective one of those GRIs, or general rate increase went away, excluding fuel surcharge fourth quarter billed revenue per hundredweight on ABF Freight's traditional LTL freight had a percentage increase in the mid single-digits. On a sequentially basis to compared to third quarter ABS Freight’s total build revenue per hundredweight decreased 2.2% related to normal seasonal changes in freight profile and mix and further reductions in fuel surcharge levels. The change in sequential revenue per hundredweight was also affected by truckload rated shipments handled at lower rates due to market capacity conditions.

Depreciation and amortization cost increased in 2014’s fourth quarter related to the greater phase of new tracker, trailer and equipment purchases we made during 2015. These cost increases are being somewhat offset by reductions in equipment maintenance and fuel efficiency resulting from replacement of older equipment. As we move forward with further new equipment additions, we expect additional cost reductions in fuel and maintenance cost. In addition ABF Freight has continued to reduce its use of equipment rentals thus lowering those costs. One factor to keep in mind when performing prior year comparisons that ABF Freight’s cost items as a percent of revenue is the effect of the reduction in fuel surcharge revenue compared to last year. This was a significant factor in lowering ABF Freight’s total fourth quarter revenue and impacts percentage comparisons of all costs items, even those unrelated to fuel expense.

For the full year of 2015, ABF Freight reported revenue of $1.9 billion slightly below 2014. Average adjusted operating profit improved 17% over 2014. ABF Freight’s 2015 total tonnage per day decreased 1.5% versus the previous year. On an adjusted basis ABF Freight’s full operating ratio was 96.6% compared to 97.1% in 2014. In total our asset-light logistics businesses had revenue of $198 million reflecting an increase of 6% versus last year's fourth quarter. Fourth quarter revenue totals were positively affected by increases versus the same period last year at ABF Logistics, FleetNet and ABF Moving. Fourth quarter operating income for these businesses totaled $3.5 million compared to 5.6 million in the prior year quarter. The ongoing 2015 pattern of the significantly availability of truckload equipment capacity and the associated impact on demand for expediting large shipments, contributed to lower fourth quarter revenues and margins at Panther.

Full year 2015 revenue for the asset-light logistics businesses was $798 million compared to $723 million in 2014 an increase of 10%. Full year 2015 operating income for these businesses was $24 million compared to $26 million in 2014. ABF Freight results for the month of January 2016 versus January 2015 are as follows. Preliminary daily revenues decreased by approximately 2% and preliminary daily tonnage per day increased by approximately 0.5%. Preliminary January 2016, total revenue per hundredweight is down approximately 2.5% versus January 2015 due to lower fuel surcharges. The change in revenue per hundredweight was also affected by spot truckload rated shipments handled at lower rates due to market capacity conditions. On a preliminary basis we have obtained an approximate 3.7% increase on deferred and contract renewals in January. We still believe the market is fairly rational in terms of price as we achieve sequential price increases in January versus the fourth quarter on our base LTL business.

Since the year-over-year difference in fuel pricing narrowed in January 2016, the negative impact of fuel surcharge on the total revenue per hundredweight measure also narrowed for the month of January 2016 compared to the effect experienced in previous quarters. Recall that in early February 2015 we modified our fuel surcharge scale in order to be more appropriately compensated at lower fuel cost levels. The preliminary January 2016 revenue per hundredweight figures we are reporting this morning compare back to a period before we changed our fuel surcharge scale. Our recent historical sequential change in ABF Freight’s operating ratio has been an average increase in the first quarter operating ratio over the fourth quarter operating ratio of approximately 4 percentage points.

On a combined basis, revenue from our asset-light logistics businesses increased approximately 14% in January 2016 versus the prior year January. Panther’s January 2016 revenue versus last year is approximately 4% lower loads handled by Panther though in January are projected increase by approximately 13%. As seen in 2015 Panther's lower revenue per load reflects a business mix shift to increase available truckload capacity in the spot market for large shipments. January revenue growth at our other asset-light logistics companies reflects solid improvement at FleetNet and ABF Moving and additional business at ABF Logistics related to our acquisition Bear Transportation Services. January 2016 revenue for ABF Logistics is expected increase by over 40% due to the Bear acquisition.

Bear generated approximately $110 million of revenue in 2015 but recent months have been 20% to 25% below 2015 levels, reflecting a decline in revenue per shipment primarily associated with the effect of lower fuel prices. Beginning in 2015, and prior to acquisition on December 1, Bear’s business began to impacted by customers associated with the oil and gas industry. While we continue to serve those customers, the industry impact has resulted in a lower number of shipments than historically handled by Bear. Judy mentioned the work that our enterprise solutions group is performing toward combing service operating across ArcBest in a way that simplifies the experience of our customers. Because of this successes achieved, we are continuing to invest to provide an improved platform for future revenue growth and as a result quarterly other corporate cost in 2016 on average are expected to be approximately $1 million above 2015 quarterly levels.

I'll conclude with some details about our CapEx. In 2015 ArcBest’s net capital expenditures totaled $152 million, including approximately $106 million of revenue equipment for ABF Freight and Panther. Depreciation and amortization cost on fixed assets equaled $89 million. For 2016, net capital expenditures are estimated to range between $170 million and $200 million. This includes revenue equipment purchases of $95 million primarily for road tractors and road and city trailers at ABF Freight, to replace both existing equipment and local rentals.

In 2015, we purchased 600 new road tractors a higher annual number than in the past, this year we plan to purchase 600 same road tractors. As we previously discussed this accelerated level of purchases helps improve the age and reduce the maintenance cost of our equipment. As an example, the new tractors we purchased in 2015 are currently trending with increased miles per gallon of 5%, the expected real estate expenditures totaling approximately $45 million improved construction cost for an office building and call center facilities that were previously disclosed in last year's expected CapEx plans, but due to timing have shifted into 2016. The remainder of capital expenditures planned for 2016 is for a variety of investments including handling equipment upgrades and replacements, dock security systems, U-Pack equipment and a number of information technology investments throughout the company ArcBest depreciation and amortization cost on fixed assets in 2016 are expected to be in a range of $100 million and $110 million.

Now turn I will it back to Judy for some additional comments.

Judy R. McReynolds

Thank you, David. I wanted to highlight a couple of honors that ArcBest received in the last few months. In mid-November the Women's Forum of New York recognized our company for achieving at least 20% female representation on our Board of Directors. In addition to my service on the ArcBest Board during the last few years, we've been fortunate to welcome Janice E. Stipp and Kathy D. McElligott as ArcBest Board members. Janice is a Chief Financial Officer of Rogers Corporation and Kathy is Executive Vice President and Chief Information Officer and Chief Technology Officer of McKesson Corporation. Our company greatly benefits from their business experience and the insights they offer.

Also last month ArcBest was named a Chief Executive Magazine's 2016 Best Companies for Leaders. We were number 35 on the list of 40 global public companies recognized for excellence in leadership development. One of the keys to our successes over many years has been our people. They have a special attitude that keeps each ArcBest customer and their unique needs at the forefront of everything they do. The various elements of our leadership initiatives are designed early in their careers to identify, train and develop future generations of leaders throughout our company.

I'd like to take this opportunity to reiterate the main themes from our Investor Day event held during the fourth quarter. First to recap, we hear every day from our customers that they face increased supply chain complexity, including global product sourcing, demand for real-time information even faster delivery times and the need for consultative analytical professionals with deep knowledge and expertise. This reality necessitates that we constantly evolve our own business to meet their needs to expand the logistics offerings in areas like truckload brokerage, warehousing, ocean shipping, boarding, expedited and outsourcing of transportation management.

In fact, we have offered these services for years, but we now tie them together for customers more easily through our enterprise solutions group, often through a single point of contact. We also constantly strive to understand their needs as the marketplace continues to change rapidly, we have optimal conditions for growth nearly 75% of ABF Freight’s campaign for customers have two or more logistics needs for solutions that we offer across the enterprise, but the normal and capacity constrained and operating environments, they like being able to go to one place for asset and asset light solutions. The choice is important to them and based on their long experience with us they trust that we can do the job. We recognize the need to produce improvement in revenue and profit growth and that starts with improved results at ABF Freight, this company is the foundation of our business and we must improve the efficiency of our operations while maintaining a high level of customer service. We are actively working to do so.

Thanks for your time and David now I think we're ready for some questions.

David Humphrey

Okay, Savannah I think we're ready for some questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line Alex Vecchio with Morgan Stanley. Please proceed with your question.

Alex Vecchio

Good morning, thanks for taking my questions. David, I just wanted to clarify a comment you've made on the ABF Freight OR, sequentially I think I heard you say that it was trending, I just want to confirm did you say January was trending in line with seasonality and that was up 400 basis points sequentially or that you expect the fourth quarter to follow that normal seasonal trend and then that would kind of suggest 102% OR just wanted to clarify that?

David Cobb

Thanks for the clarifying question, what I stated was just our historic average OR deterioration from fourth quarter to first quarter is historically in the 400 basis points range, now that's all the same, but we don't -- as you know, we don’t provide guidance but that's just a historical average that we've had.

Alex Vecchio

Okay that's helpful and then, I wanted to touch on the CapEx a little bit more, it's increasing versus last year and I realized that you've got a bunch of replacements going on but it also looks you have what 45 million with label of expansion opportunities and I guess I want to just think a little bit more about why you're investing in growth right now especially in the LTL segment when your returns are below your cost of capital and maybe we can talk a little bit more about what those expansion opportunities are there?

David Cobb

I believe the expansion you're talking about is the real estate is that right? And…

Alex Vecchio

I think that is right.

David Cobb

Yes, most of that is a replacement of currently leased facilities, so we should have a benefit there from just the total cost of ownership I guess the -- and then a lot of that is for previously announced projects that we had in 2015 announced and carried over due to timing into 2016, a lot of that is supporting the logistics businesses as well where we're having tremendous growth and opportunities for growth. On the terms of the ABF Freight investments, we talked about this in the past where we view this as long-term view of the company and we mentioned that in 2013, we bought basically no road revenue equipment and during the recession we were behind on some of that. But this through some studies of long-term ownership, we realized that we need to be in a better place there.

And so as we pointed out, we're seeing improvements in miles per gallon and these are the backup. This is replacement equipment, not additions, so just to make that clear. And so what we're replacing is old equipment that as it ages you're familiar with will result in higher maintenance cost and as we look at this over the life of these units, we studied and note that we need to have a newer or get back to a sort of like historical to light on that equipment. So again we anticipated some higher cost initially due to some higher depreciation, but we're seeing the benefit of that as we reduce rentals and we have better maintenance and better miles per gallon.

Operator

Our next question comes from the line of Brad Delco with Stephens Incorporation. Please proceed with your question.

David Humphrey

Brad you there?

Operator

Mr. Delco, please go ahead, your line is open.

Brad Delco

Judy, I wanted to see if, you guys have made a lot of investments in the logistics portion of your asset-light business and I think David or Judy made a comment about there being a focus on improving the operating income there, looking at the margins there today can you at least quantify kind of how much investment you think is bear that you’d have the potential to leverage or if you just decided just to sort of pullback the investment in growth where you think those logistics margins could settle out because obviously they're sort of underperforming relative to peers and just trying to get a sense of what those could look like?

Judy R. McReynolds

Sure Brad, that's great question because we're in a mode with ABF Logistics in particular of heavy investment and that investment tends to come through adding people ahead of business, also you have a technology spend to try to gain better efficiency in the business and so when we look at in particular and this is kind of -- I am going to make some comments here that are excluding the Bear acquisition and integration. But if we look at our sales employees, we have about 22% or so of those folks that have been in their jobs less than a year and if a person has been in that role for more than a year they tend to be twice as productive as someone who hasn’t.

And then on the operation side, we got roughly 20% of our truck finders that have less than 6 months of experience and once they have that experience behind them that 6 months of experience they tend to improve their productivity by about 40%. But when you shake all that out, what you're looking for is an answer that gets us to a place that you see on average the best-in-class logistics companies performing at. And we certainly see that, I mean, we sees clearly that if we had a kind of steady state workforce there that we could have a 5% or 6% margins in this business. But it's our view because of the massive opportunity that we have to grow this business and the early stage that we're at in doing that, that we should pursue this growth and really that is something that is not affected by what's going on with the economy.

It's something that really is a great opportunity one that us with customers that we know and that we know need the services and that’s what we are trying to pursue there. With the Bear acquisition put in the mix of this, we are do not going to see that be accretive in the first quarter and we knew that because we have got some integration to do, to get everyone on the same platform but as we gotten in there we are really excited about some of the best practices from their system and their approach to things. The best practices that ABF Logistics Freight kind a combining those into a great system of platform for our employees to work from. And we really like the Plano and Fayetteville locations also from both a business standpoint and employee standpoint. I hope that answers your question Brad?

David Humphrey

Hi, Brad I think we will go move along we got several folk in the queue.

Operator

Our next question comes from the line of David Ross with Stifel Nicolaus. Please proceed with your question.

David Ross

Maybe a question for David just on the operating income, as I look down with ABF generating around 8 million in the quarter and the Logistics generating a little over 4 million when you back out the insurance, there is that other eliminations line and you went through a lot numbers in the prepared remarks may be I didn’t catch them all. But can you talk a little bit as to what that 3.9 million take-away from operating income is?

David Cobb

Right, hi David yes that’s -- a big piece of that is the transaction cost related to the acquisition of Bear. And so that is about $1.4 million of transaction cost in there.

David Ross

Okay and then what would the other 2.5 million be?

David Cobb

That -- as we talked about the investments that we are making in enterprise services Judy mentioned and I mentioned it also in my prepared remarks that’s investment that we are making there.

Judy R. McReynolds

And basically David it is a platform for us to bring people to work with customers as a single point of contact across the enterprise. And we are seeing some good success there and it's brining business into the operating companies and it's still at an early stage but it's something that customers have specifically asked for us to do.

David Ross

So are there more IT investments or sales investments kind of at the corporate level?

Judy R. McReynolds

They are anything from sales investments to analytical people, to people that handle -- manage transportation for customers that sort of thing and again…

David Ross

Okay. So as you grow that enterprise solutions segment, we should see more in that other eliminations line just because there is going to be more expense it is necessarily attributable to ABF or the Logistics?

Judy R. McReynolds

Well, we do anticipate that that will become as it matures, it will be become more clear how those people are allocating and spending their time. And so we go through a process of charging that back if you will to the operating companies. But it is just at an early stage and we are trying work through exactly how that’s going to perform and work before we do the full extent of that does that make sense?

David Ross

It does thank you.

Operator

Our next question comes from the line of Chris Wetherbee with Citi. Please proceed with your question.

Chris Wetherbee

Just I wanted to ask a question on pricing. You gave some detail about the contract and deferred pricing in January but just generally speaking as you are talking to customers, kind of how you are thinking about it? It seem like we are seeing a little bit of a deterioration which I think would be expected given where tonnage levels are but with tonnage kind of stabilizing to some extent in January, how is that planning out for the first quarter? And maybe what's your outlook for 2016?

Judy R. McReynolds

Well, I think for the first quarter there is a number of things as David mentioned that you have to consider. And I guess more specifically let’s just talk about January since that’s the month that we have that’s recently behind us. This time of year we will recognize that more of our costs are fixed and in the spot market or that part of our business we take advantage of that market, and at times we will reduce our pricing in the spot market to attract some business that helps us, cover those fixed cost. But when we look at the overall results for the company the operating profit is improved as a result of that action. So that’s something that we typically will do in the first quarter relative to other quarters of the year -- I mean obviously it tappers off and is not something that you have much of any affect from say in the month of March. But because of the weakness in the environment we actually did some of that same type of thing back in the latter parts of the fourth quarter and again when you get back from it and you look at the implications on the business. The idea is that you have an improved profit performance even though it appears that there is some pressure in the peer revenue per hundredweight metric.

The other thing that you have going on is just a dramatic effect that fuel surcharges have had on that measure and we're trying to give you some information about kind of a LTL based pricing, which I felt like in the fourth quarter was fine, mid single-digits in this kind of an environment is fine, what we're getting on deferreds and contracts which is our most price sensitive business, in that 3.5% to 4% range, that's a good outcome in this kind of an environment. And so, we're continuing to pursue price discipline and profit improvements in our business. I mean it's obvious we have to make a lot of investments in our business to keep space with customer demands and so, that's our posture. So, I hope that helps.

David Humphrey

It does.

Chris Wetherbee

And just one point of clarity, just quickly to understand in the contract and deferred rate increases in the mid single-digit that you have talked about does that include some of the actions you taken in the stock market, or does that exclude what are the actions you have taken?

Judy R. McReynolds

No, let me back for a minute just to explain to be clear about that, we have about 35% of our business that is under general tariffs kind of normal regular customers under general tariffs we have another say 50% or so of our customers that have contracts most of those are year-long contracts, so that's the piece that we're talking about when we give that 3.5% to 4% and then the rest of our business is more transactional and quoted on the spot market. I mean that includes our…

Chris Wetherbee

Okay. That's very helpful.

Judy R. McReynolds

Yes, that includes our moving business as well.

Operator

Our next question comes from the line of Ken Hoexter with Bank of America/Merrill Lynch. Please proceed with your question.

Ken Hoexter

Can you talk about -- I think David was talking a little bit about the employees and some of the labor, on either furlough or lay away what can you do to lessen some on that fixed cost at ABF Freight in a downturn market like this?

Judy R. McReynolds

Well, we did mention that we have 200 people that are currently on layoff status. We also mentioned that we have taken advantage of retirements and certain positions and that's actually been quite a number of people that we're not replacing those positions in this kind of an environment. Something else that's been a good effort I think this year is to really reduce our use of purchase transportation, rented equipments, cartage agents and to really invest in technologies that allow us greater visibility in all of our operations including mine haul operations, so that we have an improved ability to do things like build the empty capacity and something else that we have talked about I think, we talked about more at our Investor Day but the ability to use for instance ABF Freight as a capacity source for the business that we gain in the brokerage arena that's been…

Ken Hoexter

But Judy, I know David is going to cut me off so I was just wanted because I have two questions but I just wanted to understand that how…

Judy R. McReynolds

You cut me off. [Multiple Speakers]

Ken Hoexter

How flexible is the labor cut like the labor, I want to focus on the labor side, if you're seeing the volume go down a little bit more accelerated can you do anything more on the labor side or is it more just waiting for that rent retirement portion?

Judy R. McReynolds

Well, no we have the flexibility to reduce headcount as we did with these 200, I mean, I think sometimes people believe that we have some limitation there but that's actually inaccurate, we have the flexibility to do what we need to do match up, what our issue is, is giving service to customers, when you have a January and February that have lower average tonnage and shipment levels relative to other times in a year, you don't just go back to a customer and say well we don't give good service in January and February, you continue to give the good service and so that's what limits you, if you have the idea and we certainly do that we're going to give good customer service. So, it is more or less featuring a play math.

David Humphrey

Yes and Judy, I'm going to have to cut you off now.

Ken Hoexter

A little bit of honor in that.

Judy R. McReynolds

It works on all times Ken thanks.

Operator

Our next question comes from Todd Fowler with KeyBanc Capital Markets. Please proceed with your question.

Todd Fowler

Great, thanks good morning everyone and Judy congratulations on the Board position.

Judy R. McReynolds

Thank you so much.

Todd Fowler

I wanted to ask a little bit about the labor expense in the fourth quarter and from David’s comments it feels like that the sequential change in tonnage was consistent with what you've seen over the past several years, but I think in your comments you talked a little bit about some excess labor expense and adjusting to the slower environment. So, I'm just trying to get a sense, I mean does the quarter shape up differently than what you're expecting and I know to Ken's question you're just talking about the staffing levels, I'm just trying to get a sense of why it feels like maybe that the cost were a little bit different than the volumes but the lines were in line with what you've seen historically?

Judy R. McReynolds

Yes, Todd that's a very good question. I think that the short answer there is that in December, in particular we had some difficulty, reading where the business levels were going the first part of December was stronger, the last part was very weak, and you know it's always tricky around the holidays to determine kind of where things are, but we would've liked to have had a more efficient answer as we moved to those last few weeks of the year and so that's a part of our results that's something that we've reflected on and we could have done a better job and we will do a better on that. But in terms of just the overall results for the fourth quarter relative to the third kind of the normal relationship, really it wasn't out of line with what we've seen as David mentioned kind of in the recent 10 years of history. But we certainly have expectations to improve beyond what we've recently been doing and that's the other thing that was a bit of a disappointment for us. And again, we have opportunities to correct. We took the action to add to the people that are on layoff status and we're looking to make sure that we've got our labor matched up with our business levels as we go through the first quarter. [Multiple Speakers]

Operator

Our next question comes from the line of Jason Seidl with Cowen. Please proceed with your question.

Jason Seidl

Thank you very much. And Judy don’t feel bad by getting cut off by Davis I am sure you can get in the back of the queue again. Just a couple of quick questions, could you guys remind us your monthly comps and tonnage for 1Q?

David Cobb

For 1Q? Yes.

Judy R. McReynolds

I've got something here, you are talking about last year.

David Cobb

You are talking about, yes you are talking about last year.

Jason Seidl

Last year you had a comp exactly yes.

David Cobb

Yes, okay, the quarter was down 0.5% and the month January was up 4%, February was down 4.4% and March was down 1.6%, the total of that was down 0.5 for the quarter.

Jason Seidl

Okay that's very helpful. Next question is regarding…

Judy R. McReynolds

So let me just interrupt here for a second, I think February was affected by weather pretty extremely maybe you just kind of think about what David just said, [Multiple Speakers] you might wonder.

Jason Seidl

When I am looking at the headcount reductions and the furloughs that you guys have taken coupled with the commentary that your average OR sequentially usually gets about 400 basis points worse, how much proximately do you think those headcount reductions are worth for your OR?

Judy R. McReynolds

Well, I mean I think that's difficult to say because we can't predict exactly the business levels and that's an unfortunate thing, but it was a good -- when you look at what's happening with headcount kind of relative back -- I mentioned back to the fourth quarter when you look at sequential business levels, it's not an entire amount that would address the issue. But again we're trying to balance that with giving the service that customers has an expectation of us. And so we think we're at a place where we're balancing that okay still probably have some more things to think about as we go into February and we see where things are. But there is a lot of moving parts to this and not the least of which is our ability to track some business on the spot market to help us with filling capacity as well. So we have cut all those things that we're balancing, we think we're in an okay place and we're going to continue to evaluate it each week.

Operator

Our next question comes from the line of Art Hatfield with Raymond James. Please proceed with your question.

Art Hatfield

I am going to try and get this out real quick.

Judy R. McReynolds

Hi Art.

Art Hatfield

Hi Judy, and congrats on your appointment Judy.

Judy R. McReynolds

Thank you.

Art Hatfield

Judy as we think about things you made the comment earlier that January was up 0.5% on tonnage per day in ’16, can you talk a little bit about how the month trended? The other thing as I think about that the comments about how volumes trended last year, you're comping up against your toughest month comp in Q1, are you in a position that if things don't deteriorate further that you're going to be able to ramp cost backup in an appropriate fashion, so you don’t kind of add too much too soon I guess is what I am trying to ask?

Judy R. McReynolds

Yes, I think we have -- we're in a really good spot on that. I mean we don't want to do this but we can always look to purchase transportation sources for things those tend to be more expensive for us, but it's very doable to bring the people back that we have on layoff status for instance. And we have good numbers on the road driver side of things and we have our team at graduates that are coming out of that teamster military systems program that we're really valuing. So we're in a good spot there. But I would enjoy that to have that problem and if the environment improves, we'll be in a really good position I think.

Art Hatfield

And could you comment on about how the weeks in January trended?

Judy R. McReynolds

I want to say that we didn't see a lot of -- we kind of hovered at the same place. We are all kind of looking at each other, we know we have that in front of us but I don’t recall anything that varied from that much. There was weather -- that was over the I guess the weekend of January of 22nd or so maybe a Friday and a weekend and Monday that were affected by that but kind of after that it was over we went right back to where we were. And even that 0.5% increase includes some impact of the weather but we look back to last year we had some weather in January of '15 as well. So we are not making any issue of that it's just kind of what happens in January.

Operator

Our next question comes from the line of Rob Salmon with Deutsche Bank. Please proceed with your question.

Rob Salmon

With regard to the update in January, can you give us a bit of color? I think in your prepared remarks you had mentioned you guys were using some of the transactional business as a way to increase offset fixed cost within the network. Is that what was driving the growth or is the 0.5% tonnage per day growth that we have seen, kind of across your contractual as well as the GRI business that we typically see through the ABF network?

Judy R. McReynolds

Well, I think that our trends really both in the LTL business and our other which we call truckload rate of business are similar. I don’t think that that there is much there to take note of. So it's similar.

Rob Salmon

Okay and then I guess, my quick follow-up is I guess in the light of where the equity value is today in the marketplace. Does your thought in terms of using some of your cash in the balance sheet does that change between M&A or buybacks here?

Judy R. McReynolds

Well what our view is, is that we need a balance of all those things. I mean we mentioned the increase that we made in the dividend, the authorization that we have remaining on the share repurchase is 47 million and we are certainly be making use of that as we go through the year our intention is to use that. And that the M&A side of things you have to fully appreciate what you go through there to get to a point of actually making a transaction, not only do you have to have a willing seller but it has to be the right business, it has to fit into one of our areas that we need scaled and so many other thing. So we have to be ready to deploy capital in all those ways and we are very focused on that. We do have a good cash level and availability from our banking partners that really gives us some flexibility there. But certainly taking note of the share price and when the trading windows open, we can take advantage of that.

Operator

Our next question comes from the line of Matt Brooklier with Longbow Research. Please proceed with your question.

Matt Brooklier

So I am going to try one more time on the labor question what do you think in annual savings are from the headcount reductions in the early retirements?

Judy R. McReynolds

Well, we don’t give guidance and we are not going to I mean that’s labor is 65% of our cost and so if we were to give you some kind of a forecast on that, that would be -- but it's going to change throughout the quarter based on business levels. And I think you all I know have models that determine hours work in that sort of things and so it is just going to have to be a part of how you approach that.

Matt Brooklier

Okay and just to clarify that the headcount reduction, it was a 3% reduction in total headcount?

Judy R. McReynolds

It was 3%...

David Cobb

It was a dock and city that is dock and city employees the 3% was January this year versus January last year. Judy also mentioned that January of this year versus fourth quarter was down 4% for dock and city employees only.

Matt Brooklier

Okay.

David Cobb

There are some other things as well Matt that we didn’t talk about but those are the primary ones.

Matt Brooklier

Could you give a rough sense as to how that 4% relates to I guess total headcount in the freight network?

Judy R. McReynolds

Well, I mean we have 7,500 or so employees and 4,000 or so of those are road and city drivers and the rest are dock workers.

Operator

Our next question comes from the line of John Barnes with RBC Capital Markets. Please proceed with your question.

John Barnes

Hi guys Judy, I think piggy backing on the question that was asked earlier about if and when you start to see some stability or maybe even a little bit of an uptick in freight volumes as the year progresses maybe to the point where you have to start bringing on -- back on some of these furloughed employees, you have had an issues from time-to-time with productivity as you have added those employees back into the system. Are you fearful that you get pulled through that again, is that something we should be concerned about as those employees come back online or is this a group of people that are trained up enough, that they can kind of take back on the positions without the slope in productivity?

Judy R. McReynolds

Well, it should be -- when we are adding those employees before we didn't have the ability to go back with experienced employees that are on layoff and so, so certainly that would be your first place to go and they would have more experience than what we had, when we were dealing with this back in 2014. The other thing that was an issue back then that's much better now is that we have operation supervisors in fact we had some really new people on those positions that who had gained some experience and so the management, the workforce is in a more experienced place and should help us there.

The other thing that we're really looking forward to is just the use of better tools to give us visibility and to manage the hours and just kind of the location of things. We're going to have the ELDs in all of the tractors, so that that helps us with real time visibility we're also working on replacing the equipment that’s used by our dock employees and we're really looking forward to having that in place and we think that again it gives us greater management tools and greater visibility and so we'll be able to spot whatever issues that we have in that regard earlier and address them quicker. And so, I think all of that puts us in a better position than we were back in 2014.

John Barnes

Okay and could you elaborate on maybe what you've done from a non-docking city worker employment, I guess, I'm talking non, I am talking I guess more like back office and things like that, have you reduced headcount there and if so why, and how much magnitude? Thanks for the time.

Judy R. McReynolds

Well again, we've taken advantage of retirements in the business and we haven't done a reduction in force there, we're watching the business to see how things are going to go here. It is certainly the case that it's not just the field operations that has to work through this but the rest of the company and so if we see that this is going to be a continued lower level of business a sustained lower level, we're going to have to evaluate those things and make the necessary adjustments.

David Humphrey

John thanks a lot, and we got two more folks in the queue who we will try to get to real quick.

Operator

Our next question comes from the line of Scott Group from Wolfe Research. Please proceed with your question.

Scott Group

So, just want to follow-up on the January tonnage just one last time, so it's better than what we were expecting, are you seeing, is that a better than normal sequential trend that you're seeing or did we just kind of miss something in terms of the comps, are you actually seeing some real underlying improvement?

Judy R. McReynolds

Well we actually talked about that yesterday and it's not at the kind of top of the heap in terms of the past several years of looking at sequential tonnage, I believe that it was seventh out of 20 plus year maybe so it's pretty good, but it's not at the best level. So, I think that's the best information we have.

Scott Group

Right, and if I heard you earlier, you don't think it's being caused by the pricing actions on the spot market because you're seeing it more broad-based?

Judy R. McReynolds

Well, that is certainly I mean that contributes but I wouldn't say that the results would be much different, it's -- we are not for that. So, I think that it does contribute that's why we do it but it's certainly helpful but it's -- I don't know that it is the story.

Scott Group

Okay and then just last thing real quick, so I think back a year ago when fuel was first coming down and everyone was concerned about the earnings impact on LTLs, kind of you and pretty much all the companies said, it's not going to have that much of an earnings impact and that was right, but now that it has been here for longer, it looks like maybe it is starting to have an earnings impact at least in the fourth quarter, is this something that we should be thinking about as having ongoing earnings impact into 2016 from a year-over-year basis just lower fuel?

Judy R. McReynolds

Well, Scott I mean, I think the way we manage that issue is as a part of an overall account management process, that considers base rates and fuel surcharges and then it looks at the operating ratio of that given account and so if for some reason, the fuel component were to take you to a place that has profitability that wasn't desired it would be worked as an account that needed to improve profit just like any other accounts that we would have, so we have really managed that as an entire process on an account-by-account basis, if that helps. We also, we have a lot of moving parts on the cost side we have the fuel effect directly from the diesel prices that we pay and then the amounts that we buy kind of on the retail side, we also have what we're paying to the railroads and to others and that we used for purchase transportation. So there is a number of factors there but we like to look at it, as I said in total as a total part of the account evaluations that we do and it's really managed very closely that way.

Operator

And our final question comes from the line of Matt Young with Morningstar. Please proceed with your question.

Matt Young

Just a quick question on Panther, I think you've hinted that you're still seeing an unfavorable mix shift there and I am guessing that's to the cargo van and straight truck drive versus tractor trailer business, just wondering what the mix of the straight truck versus tractor trailer business is at this point and along those lines would you say that this is a permanent shift where perhaps the margin profile would change?

Judy R. McReynolds

No, I wouldn’t say it's permanent at all. I mean it's just really a reflection of the capacity that’s available in the spot market and what you see when there is more capacity is Panther will handle fewer shipments on 53 foot vans. But the good story there is the cargo van and straight truck business is in the auto arena and so we've had good trends there that's good business for us, it's more steady business than other business that we can have. And so although it operates at a little worse margins probably in total, it's still good business to have and we're glad to see the load growth from it and it is indicative that the economy is kind of mixed so to speak. I mean the auto side, is a little stronger, housings is a little stronger, but you certainly see the dramatic weakness on the manufacturing industrial side.

Matt Young

So then the mix shift is a good portion cyclical?

Judy R. McReynolds

I believe so.

David Humphrey

Okay, well I think this concludes our call. We appreciate you joining us this morning and we appreciate your interest in ArcBest Corporation. This now concludes our call. Thank you very much.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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