Ladies and gentlemen, thank you for standing by, and welcome to the ArcBest Corporation Second Quarter 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 Monday, August 03, 2015. I’d now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead, sir.

Welcome to the ArcBest Corporation second quarter 2015 earnings conference call. We’ll have a short discussion of the second quarter results, and 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 and 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 risks. 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 SEC 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. We will now begin with Miss McReynolds.

Thank you for joining us this morning. I’m pleased to report improved second quarter 2015 performance from all of our operating companies when compared to last year and the highest second quarter revenue in ArcBest’s history. Our revenues increased 6% to $696 million and our earnings per share improved 17%. This improvement results from the hard work performed by our employees to deliver on customers’ expectations. In fact, when I attend customer meetings I frequently hear that based on our long experience with them, they trust us to do the difficult things well. Our customers feel that our expanded service offerings are very attractive options, coming from such a trusted partner. We are continuing to invest in our enterprise platform to make sure we have the right people, systems and processes in place that lead to the answers customers want. ArcBest enterprise solutions team develops and implements comprehensive solutions for shippers with wide ranging transportation needs. Oftentimes, these solutions are backed by committed and coordinated capacity options. The enterprise solutions team helps grow revenues by removing obstacles for both internal and external customers and streamlines the way we work with those customers. Since we deployed our enterprise solutions last year, we’ve seen account growth and we’ve maintained accounts by offering solutions with integrated ArcBest services we would not have been able to provide in the past ABF Freight’s second quarter revenue growth resulted from a combination of increased account pricing and additional tonnage handled during the quarter. ABF’s year over year total tonnage figures were positive in the first two months of the quarter, while total tonnage handled in June was below last year, versus a slightly stronger comparison. Throughout the second quarter, in order to maintain resources for our traditional LTL customers, we intentionally reduced the amount of volume…

Good morning and thank you for your interest in ArcBest. ArcBest earned $0.74 per diluted share in the quarter, compared to net income of $0.63 per diluted share last year. Excluding adjustments for pension settlement charges related to our non-union defying benefit pension plan, our second quarter net income was $20.3 million or $0.75 per diluted share compared to similarly adjusted net income of $0.65 in last year’s second quarter. In our early June 8K, we described additional investments of approximately $1 million to $2 million in Enterprise Customer Solutions. We’ve made to provide for an improved platform for revenue growth and also to enhance our ability to offer ArcBest services across multiple business units. The cost of these investments were included in the Other and Eliminations line of our segment detail. We estimate that quarterly cost associated with our Enterprise Customer Solutions imitative during the second half of 2015 will be comparable to the second quarter level. Our second quarter effective tax rate was 39%, which is consistent with the 37% to 40% range that we expect for our full year 2015 rate. As we did earlier in the year, during the second quarter, we purchased shares of our stock under a previously authorized stock repurchase program. We bought 99,000 shares of our stock for a total amount of $3.5 million. So far this year we have purchased 163,000 shares for a total price of $6 million. The remaining amount authorized for repurchase under this program is $12.2 million. ABF Freight reported second quarter revenue of $504 million, a 2% increase compared to last year. The change from the prior year second quarter was affected by lower fuel surcharges resulting from the change in fuel prices. ABF Freight’s quarterly tonnage per day increased by 1.9% compared to last year’s…

Thanks David. Earlier this week, we added two new members to ArcBest’s Board, Kathy McElligott and Steve Gorman. Kathy is Executive Vice President and Chief Information and Technology Officer of McKesson Corporation, the healthcare services and information technology company that is the largest pharmaceutical distributor in North America. Steve has served for the last year as CEO of a privately held company called Borden Dairy Company, a fresh milk and value-added dairy based in Dallas. Prior to that, he was the Executive Vice President and Chief Operating Officer of Delta Airlines from 2008 until 2014. He currently serves on the board of Aeroméxico, the largest airline in Mexico. As we enhance our ability to serve customers with a wide range of logistic services, Kathy with her IT and supply chain expertise, along with Steve and his strong background in operations and transportation management, are excellent additions to our Board of Directors. And now David, I think we are ready to take some questions.

Okay, I think we’re ready for some questions, operator.

Thank you. [Operator Instructions] And our first question comes from line of Alex Vecchio with Morgan Stanley. Please go ahead.

Hey there. Judy, you gave some good color -- morning. You gave some good color on July tonnage and yield trends. I know it’s tough to forecast tonnage for the rest of the year, but the comps do get a bit tougher in the third quarter and then I think even more so in the fourth quarter. Can you help us think about how we should think about -- or how you think about tonnage in the back half in the year and is there a risk that it might be negative and is that maybe not necessarily such a bad thing given the strong pricing you’re still getting?

Our business levels are good and we started to see some year-over-year pressure on the comparisons in June. I think July is very similar to what we saw in June. And as we note, you’ve noted, we have the tougher comparisons as we move through the year. What I would expect with what we offer to our customers if the business environment improves some from where it is today, it’ a little soft right now, that we will do well in that environment. We have a lot to offer our customers. As we talked about, our enterprise platform is going and that’s attractive to our customers and our offerings in the other business units are attractive on their own. And so although we don’t forecast numbers into the future and that’s primarily because we don’t know them, our management team is poised and ready to tackle the environment whatever it is and make the best of it.

Okay, that’s helpful. And then just real quick on the OR, I think ABF Freight’s OR typically improves 150 basis points roughly sequentially in the third quarter. Can you help us think about -- put some ticks there, is there anything that suggests that normal seasonal pattern might not hold in the third quarter?

I think if you look at it, the longer history would reflect what you just suggested, but something changed and you saw it last year for the first time. As we entered into our labor contract at the end of 2013, it provides for the increases for our union labor employees to occur on July 1st instead of the April 1st that those increases historically occurred on. And what that does is it really changes the relationship I think from second to third and perhaps just on that issue, flattens that relationship out where you would see more consistent operating performance, again, if that was the only issue that was changing. And so, but it’s just a timing issue. The increases for those employees now occur on July 1st for their wages and August 1st for their health welfare and pension.

Okay, that’s helpful color. Thanks very much for the time.

Our next question comes from the line Chris Wetherbee with Citi. Please go ahead.

Good morning guys. Maybe just sticking on tonnage for a second. You mentioned a little bit of restrictions of some of the heavier weight stuff. I just want to get a sense of sort of, if that’s still ongoing in the second and early third quarter and maybe if you can parse out what the underlying demand environment looks like relative to some of your specific actions around tonnage?

I would say on the volume shipments that you were speaking of, we’re continuing that pattern. We do that as we have LTL shipments and want to make sure that we provide service and better handle those. We have the ability to increase those volume shipments at weaker times during the year and we certainly do that. We’ve done that for many, many years. Our indications though on the broader environment perhaps come from our other businesses. Whenever you look at the market demand index, which is a truck stop index, it's certainly weaker than it was last year. Panther has some spot market indexes that they follow. I think there’s one that’s a Morgan Stanley index that is specific to the spot market. It's in a pretty weak place right now. On the spot demand -- and I think that’s kind of the realm of things that you were referring to, I think it’s a little weak right now. That doesn’t mean that that won’t change as we move through the quarter. There are indications that the economy could get better. We are not saying that what’s happening now is some long term effect or anything like that. The truth is we don’t know, but I hope that gives you some color from our perspective. It’s certainly less robust from that volume shipment I think availability in the truckload market.

Okay. No, that that is helpful color. I appreciate it. And then maybe just following upon the pricing environment a little bit, just want to just get a sense of maybe how you think about customers’ reactions to the price increases. It sounded like the GRIs are holding. Just want to get a sense as we move into the second half of the year, what sort of natural stage should we be looking for? What are the things that you’re looking for to potentially think about at GRI? I'm guessing it’s a stronger underlying freight environment, but I'm curious to your thoughts. Thanks.

I think our comments about the underlying freight environment is right. What we’re seeing is a strong environment from a pricing perspective. We do expect that there will be a GRI sometime later this year. We are not certain about the timing though.

Okay, that’s. Thanks for the time. I appreciate it.

Our next question comes from the line of Ken Hoexter with Bank of America Merrill Lynch. Please go ahead.

Great. Maybe Judy -- Good morning. I just want to follow up on that last comment there on the GRI later this year. Just to confirm, you’re still thinking that you can implement one later this year despite what you’ve commented on a weak freight environment and the business is soft right now? You still think we can see one?

I think you missed a little bit of what I was saying. I think on the LTL side, we’re seeing a decent business environment. It’s certainly not as robust I think as last year. My comments related to the weakness are really on the spot, the specific spot markets which wouldn’t have any bearing on what you would do on general rate increases and that sort of thing. I think we may be talking about two different things, but my comment about the general rate increase I feel like that there will be one before the year is up.

Great. I appreciate that clarification. Thank you. Just on Panther, it sounded like the market shifted there with revenues being down a bit, but yet a great job on cost and efficiencies let you really scale the income there. Can you maybe dig into a little bit more about what you did at Panther to get -- and what you still can do to get that operating ratio even more improved?

I think it’s utilization of the owner-operators and better intelligence over the choice of equipment to the specific shipment and making sure that we have the appropriate people that are deployed on the phones, whether it's a sale oriented thing or an operations oriented area that are handling that. I think that they did a nice job there. You also, on every load, have to do the right thing as far as managing the margin on that load. I think one thing that was encouraging that I haven’t yet mentioned is Panther has been able to growth the level of owner operators that they have. That continues to be a positive thing for them as well.

Great. Just a quick one on a number thing. David, was there an acquisition in the quarter?

Not in this quarter. No sir. That was earlier in the year, January.

Yeah. That’s the Oklahoma City acquisition of Smart Lines that was really folded in to ABF Logistics.

Wonderful. Thanks for the time.

Our next question comes from the line of David Ross with Stifel. Please go ahead.

Yes, good morning every one. First Judy, if you could talk about I guess the large customer base you have at ABF Freight and how that’s transitioning into growing the asset light services business. Do you track percentage of LTL customers who use also one or more of the asset light life services like Panther or FleetNet and how has that been trending if so?

Yes, we do track that. Something that’s really interesting to watch as we’ve rolled out this Enterprise Solutions Team is the success of it. We’ve seen that our revenue has grown. Our number of accounts have grown. What’s even further of interest is that the revenue per account is growing. And so we also believe that retention of those accounts is better whenever we handle more than one service with them. We have a lot to go. If you look just purely at the percentage of ABF freight account base that transacted business with either ABF Logistics or Panther, that’s about 21% versus say 18.5% last year and that’s grown a lot from 2010. What that tells you is that we are still in the early innings of this and that is actually sort of a generous view, because what we’d like to do is look at accounts that have multiple shipments with each of our companies. We actually internally evaluate it more based on that, because we don’t want it to be just every now and then. We want it to be a customer that has routine business with more than one of our companies. But what we found was, in order to make that happen, we needed a group that helped us with the internal obstacles, pushing those aside, making this easy. Many times when we have a discussion with a customer they say I want a single point of contact. Our Enterprise Solutions Group, along with our ABF Freight corporate sales folks make that happen. It's actually turned out to be a very satisfying thing as far as customers go.

That’s great and then just one question on ABF Freight, saw an 8% increase in the salary, wages and benefits lines in the quarter but only 4.5% growth in shipment account. What was I guess the reason for the disconnect there? Was it the wage increases part of that?

Are you -- you’re looking at the dollar, the percentage increase in the dollars or are you looking as a percentage of revenue?

No, just your absolute percentage increase.

When you look at that line item, it includes a number of things. It includes healthcare cost. It includes workers comp claims and that sort of thing and we did have some elevation in both of those areas as well. We continue, as I mentioned in my commentary, to have some issues with our street productivity that we’re working on. We’ve seen some improvements in dock productivity year over year, but street productivity we still have some work to do. We are starting to see that improve sequentially. So we’re encouraged by it, but we still have a lot of work to do there. As we see that improve, we’ll see that come down and be more in line I think with the shipment increases are hopefully less than what we see in the shipment increases. David, did you have anything to do?

No, I would agree with those comments.

Okay. Thanks Dave.

Our next question comes from the line of Matt Brooklier with Longbow Research LLC. Please go ahead.

Hey, thanks. Good morning. How are you? A question for you. Realizing that rail line hauled a descent amount of the total line haul for freight. Curious to hear your thoughts on improving rail service and what does it mean for the network I guess from a service level perspective and then also from maybe a cost profitability perspective.

I think rail service I think has improved some, still needs to improve more. We have wanted to better control service and so we’ve had some increases in our people cost if you will and utilized left purchase transportation, including rail service.

Okay. And then just kind of a longer-term type of question. You have the new labor contract in place. You’ve had it in place for some time. You’ve done some work in terms of the internal consolidation within the network. I’m just curious if there’s a longer-term OR target that you have for freight in mind. If that’s something you are thinking about, something you’d be willing to share or maybe that’s something you would be willing to share at your investor day later this year.

Yes. We target our historical average operating ratio for ABF Freight when we talk internally about that. And over longer periods of time, that’s certainly what we are trying to accomplish. That typically would be in the lower 90s range, say a 92 or a 93 OR. But it’s possible if the demand environment picks up and if we see the driver shortage impacts that we could see in this industry that there is even further improvement that could be made with having an excellent LTL network as we have. So we are not going to limit ourselves, but our current discussion is to get back to that historical operating ratio range that we know that we can accomplish and that we have in the past.

Okay, appreciate the time.

Our next question comes from the line of Brad Delco with Stephens. Please go ahead.

Good morning Judy. Good morning guys. Judy, wanted to ask you just to make sure I’m looking at the right information. In your mid quarter update, I think through May you said the [company] sequential pricing improved 2% from the first quarter and then it looked like it finished up 3.5%. Was there something unique that happened in June or is that just normal sequential trends that we are just not accustomed to seeing on a monthly basis?

No, I don’t think you would necessarily call that normal, but I think it’s possible that we made the change to our fuel surcharge that it was in place for the full second quarter relative to first. That’s a possible influence on that, but certainly not the entire story and I think really it’s just an effort to continue in this good pricing environment to gain some grounds for the value that we provide to customers.

Got you. Just wanted to make sure the build revenue number wasn’t something else, looking at differently versus your reported yield.

No, no, that’s what we would use every time. Yeah, we would use that every time, Brad.

Yeah, got you. And then second, the good margins that we saw in ABF Logistics, can you kind of break out for us what your contracted volumes are in that business versus your transactional volumes?

Actually very small. Most of the business that we have there at ABF Logistics is really transactional business. Over time as that business grows, we will have more longer term contracts with customers, but we really to a large extend have a transactional model there that’s in place today. The good news on trying to have a greater mix of that contract business is that we have plenty of business opportunities with customers that we already know that would be willing to do that with us. So really it’s been from the beginning about building the carrier base to gain some scale in that business and as you gain more scale, it’s a better opportunity for you to do those contracts with larger accounts that have more business.

Okay. That’s great. Thank you for the time.

Our next question comes from the line of Rob Salmon with Deutsche Bank. Please go ahead.

Hey, thanks. Good morning guys. Judy, as a follow up to Brad’s question, could you give us a sense with regard to the assets like growth, how much of that growth you guys are seeing from new customers coming along versus growth from existing. And any sort of incremental color related to the benefits of the enterprise investments you guys are making and how that’s translating into the growth at the logistics segment.

Okay. Your first question that you asked was really targeted at new versus existing customers. I would suggest to you that the vast majority of our growth is with existing customers, although we do have new customers in there. When you’re looking at Panther, there’s a little bit different mix than when you are looking at ABF Logistics. But for the most part, it’s existing customers. And when you look at what we are doing on the Enterprise Solutions side, we are really facilitating growth into those businesses. And so what we are able to do for instance is say product launch business. We are able to mix the truckload services that can be performed by ABF Logistics with LTL offering that we have to really gain a better answer from a distribution standpoint for a customer. So we are able to combine some things among our subsidiaries and then also using third parties when we need to, to be able to accomplish things that are specific to a customer need. So what the Enterprise Solutions Group allows us to do is to manage all those details at the customer’s request, to make sure that we give them the best answer, but we are also certainly focused on the service offerings that we have with our own companies, because those offerings we know are good, they can be committed and we can count on them giving the good service to the customer.

Okay and I think in the prepared remarks you had mentioned briefly about for ABF Moving that you guys had won some incremental business from a government or a military offering. Can you give us a sense of how seasonal that is and what sort of line of sight you have with regard to that incremental win?

It is seasonal business. It’s moving business and there’s a season for that that typically starts around April and would finish up sometime in September, might go into October from a strength standpoint as you look at the months of the year. The truth is on that, it’s nothing new. It is just a better success with an existing offering that they have and where you win more business is by having a good quality score, which is a reflection of customer satisfaction and they just did a phenomenal job of that and were awarded more of that business. That it typically comes during that peak part of your season and so it’s never easy to handle. So the value that we provide to the customer there is at a high level, but we are excited for the team that they had that much growth and that it was coming because of the quality aspect of their business.

Okay, but we should think about that as kind of in line with how the business normally moves and nothing that’s consistent at that level throughout the year.

Right, but what is different is that they were awarded more business because of the high quality level that they were providing their customers. But again, it’s opportunities that we have each summer.

Okay, thanks so much.

Our next question comes from the line of Jeff Kauffman with Buckingham Research. Please go ahead.

Thank you very much. Hey everyone. Good morning. I just wanted to come back for a detailed point here. You were pretty specific about the increases you’re getting on your new business side, on your rev per hundredweight increases, but you were pretty vague about what the rev per hundredweight change was ex-fuel. You said mid-single digits. Do you have a more specific number?

Well, I think what we would say there is it’s consistent with others that you’re seeing out there. We just -- we like to stay in keeping with providing the total numbers and there’s a lot more that we have to get into in terms of detail if we get specific at a further level. And so, but just think of it as similar figures to what you’re seeing from the others that we compete with.

So something between 5% and 6%, which should be consistent with what we’re seeing elsewhere?

Mid-single digits is our comment.

Okay. A couple other questions. Last year in the fall, there was a lot of hiring of new employees, particularly dock workers and that was followed by some other actions you’ve taken. We do have the bump up in the wage and the healthcare rates coming in the third quarter, but when do we start to anniversary some of this increase in efficiency that we saw from the new hires last year?

Well, that really began in the, I would say kind of March, April timeframe in 2014. We’re starting to lapse some of that even now, but it continued beyond the second quarter last year.

Okay. I remember us discussing in both the third and fourth quarter calls. So I was wondering when do you -- you’re starting to see the productivity pick up, but not materially.

Yeah. Our dock productivity is 2.9% better and we’ve got an issue that we’re still working on on the street productivity side, but again I commented that we made sequential progress on that and that’s encouraging.

I would just add the other thing is that this is -- some of these we have to balance with serving the customers and really improving the service level to our customers. And so we’re strategically doing that, not just trying to pull lever.

Right. The other that I think has been commented on in the past is that we’re managing down cartage agents and rented equipment and you see some of that savings when you look at that line item as well.

That’s right. So you have to balance the whole FP&L we provided.

Okay, one final question. We have two bills in congress trying to get 33 foot pop trailers out there. I think one is attached to the highway bill, the other to the annual transportation department funding bill. I think the THUD is what they’re calling it. If this were to pass, whether it’s this fall or end of year, how does it change your thinking, not just about your capital deployment, but what could this mean for you in terms of cost savings, margins, efficiencies, things like that?

Really what we’re seeing is the greatest impact being the capacity that’s available from a line haul standpoint. We estimate that that would increase about 18%, but it does cause you to have greater efficiencies from a labor standpoint as well. And so we see that that would be a likely outcome of the implementation of those trailers, but we feel like that that would happen to some extent over time, not all at once. And so the implementation of it would be obviously as soon as you possibly could, but it would be somewhat gradual. But I think it would be beneficial because we continue to – we have less of an issue with driver turnover I think than others that either we compete with or on the truckload side, but it’s still an issue. And highway congestion is a big issue that needs to be solved and we feel like that this change would be beneficial in those areas as well. And there’s a lot of pressure on us from a productivity standpoint as we just discussed and so this hits on a couple of different marks very well.

Our next question comes from the line of Will Milby with BB&T Capital Markets. Please go ahead.

Sorry if I missed this in the prepared remarks, but did you give year-over-year tonnage by months in the quarter?

We did.

Okay, I’ll check the transcript on that then. And on the, I guess the CapEx being slightly reduced this year, is the $95 million to $100 million on D&A still a good number to think about?

Yeah, Will. It’s probably at the lower end of that, but yes that range is still relevant.

All right. And last question for me, housekeeping. Can you give the PT miles that were on truck this quarter and same question for rail?

I’ll just give you -- on the rail percentage, it was 13.8%. That compares to 14.1% in the second quarter last year, Will. And then on PT, road PT, 2.7% in second quarter of this year. That compares to 3.2% in second quarter of last year.

All right, great. Thanks very much.

Hey operator, would you please repeat the information for getting through the question queue?

Certainly [Operator Instructions] Our next question comes from the line of Jason Seidl with Cowen & Co. Please go ahead. Q – Jason Seidl : Thank you. Good morning everybody. Judy, a lot of your peers are sort of saying the same things you guys are right now. The pricing environment is good and they’re saying that that’s one of the reasons for the sluggish tonnage demand that we’ve been seeing fairly up and down, maybe say for something like Old Dominion and the LTL industry. Where is this freight going if it’s just based on pricing? Have you been able to figure that out? That’s the thing that’s perplexing me right now.

I think when you compare back to last year, I think the – what I have seen is the overriding theme is that the environment is a little softer. And so I think some of it is just that it’s not there. And again, remember that you’re comparing back to 2014 that was very strong. And what we’ve seen happen though is there has been some model shift a little bit where you’ve seen some of the business that was handled by LTL carriers going back to truckload carriers because they have the capacity and availability to do that, which that tells me that the demand is another I guess piece of evidence to point to that the demand hasn’t been as strong in 2015 as it was in 2014. There are a lot of discussions that have occurred about planning. In 2014, there were companies that got into capacity crunches that had difficult times finding capacity when they needed it. And so there’s -- particularly early in the year, there were lots of discussions about better planning so that that didn’t happen again. There also were some discussion about at the end of last year that there were -- that perhaps it was a little stronger at the end of last year because of the port situation, trying to position to be able to not be affected by that port situation. And so I think all of those are factors in this, but it’s very difficult to sort through. I do think the one thing that you can come away with is that the companies that we compete with have a better recognition that we provide a value as an industry and that we should be paid for it. You can see that in their position, their posture, their numbers, which we welcome that. We welcome that the attitude is there. And so I think that’s the positive takeaway for me and for us in our positioning as we carry forward. Q – Jason Seidl : And if you go back to the last time that I guess you guys started seeing a big spike from the truckload sector and demand, you guys really had an issue with ramping up on the hiring and now you’re starting to dig out that that with some improvements in your dock productivity. Going forward if we see another capacity issue on the truckload side, what can you do differently so that we don’t see a repeat of what happened last year?

For one thing I think we would better recognize how to handle it. I think something that happened to us and I think it happened to others is to some extent people were caught off-guard by the rapid increase in that spillover if you will. And I think that you have a memory and certainly our team would do a good job to draw back from that memory and remember what that felt like, how it affected things and go into it with a posture that we only want to handle the business that’s good for us in the right places and to hire people when it makes sense to hire people and to not use so much in terms of excess resources from rented equipment and cartage and all of that until we know more about the business and whether it’s going to be impacting our company positively. All of those are lessons that you can learn and certainly it would be best not repeat again.

Hi Jason. I'm going to move on. We’ve got a couple of more I want to try to get in. Q – Jason Seidl: I appreciate it.

Our next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

Hi thanks. Good morning. One quick, I missed the June tonnage number. Can you just give that again?

Yeah. Scott, the June number, it was down 1.1%.

Okay and you’re saying July pretty similar with that?

Yes. Down about 1%.

Consistently across the board from the LTLs we’re hearing July is similar with June, if not a little bit better. What's your take on just the demand? Do you see signs of things starting to pick up a little bit again and re-accelerate or hey, just one month and don’t read anything into that?

I think that’s kind of the latter. I feel what we’ve seen in July is not necessarily indicative of what we’ll see for the entire quarter. July is not particularly good month to read off of. It just isn’t. You’ve got the holiday in there and as far as Panther goes, you have the auto plants that have closures. So it's just a difficult month to get a good read off. But we’ve reported the numbers. It's consistent with what our historical relationship is and that’s what we know today. From an economic perspective; we have mixed signals, I think. The industrial side is still a little bit weaker. We’re hearing strength in housing and the employment figures look pretty good, but it's really a mixed bag. I tell our team that we have to navigate the uncertainties and that’s what we continue to have to do. It’s not an environment that you can get a clear read on at this point.

Okay. Judy, your comment about third quarter operating margins holding all else equal maybe similar with second quarter. I'm assuming that does not assume a GRI in the third quarter? Is that right?

Yeah. What I was commenting about was just the effect of moving the wage increase on our labor union side from April to July and just the impact that that has in the relationship of second to third. No, I wasn’t commenting about anything else.

Okay, that makes sense. And the last thing, so you talked about getting back to hopefully a 92, 93 operating ratio. I assume that’s a full year number. We are going to be somewhere in the 95, 96 range let’s assume this year. What are the moving pieces to get you that other 300, 400 basis points, I'm wondering? How much do you think that the inefficiencies of the street operations is causing you and then is the rest of it just leverage to tonnage growth or is there something else specific that gets you there?

I think one of the things and David commented on this earlier that we’ve needed is some improvement in service. That’s part of the plan here is to make sure that we are where we need to be there, but what that gets you is a better ability to grow, talking about the LTL Company. So that’s part of what gets you there. The other thing that I expect to be over a little bit longer period of time here is that the demand environment I think is going to improve. It’s going to recover. With that, based on everything I’m seeing will be a healthy pricing environment. The combination of having good service, greater efficiencies in our operations, the ability to grow and to gain that at the right price, that’s the formula to get you to that place. That’s what we are driving towards.

Our next question comes from the line of Todd Fowler with KeyBank Capital Markets. Please go ahead.

Great, thanks. Good morning everyone. Hi Judy. Hey David. Nice quarter guys. Just, Judy a little bit more on the growth side. I understand that you got difficult comps in the LTL business in the back half of the year, but how are you thinking about growth for that businesses longer term? I know that you have been historically focused on more specialized freight. Do you see any opportunity to grow the asset light businesses to feed growth into the LTL network or does it come back to your answer in the last question that there are some service issues and some other things that you need to really help to drive growth on the LTL side?

That’s an excellent point, Todd. Yeah, if we are successful with the growth of our asset light services and utilizing our Enterprise Solutions Group, we will be feeding additional freight into the LTL network. We expect to be successful. We have a lot of opportunity. Customers are responding well to what we’re offering them and we are able to bring about combinations of things that in this capacity constrained world that we live in now, are valuable to customers. And so we are excited about that and we think that what we’re offering is a win for the growth of the segments of ABF Freight, ABF Logistics and Panther. FleetNet has its own exciting growth story, but the other three will be brought about by doing the things that we’ve already talked about, utilizing our Enterprise Solutions and just providing excellent service in our services that we provide.

Where would you say that you’re at in the process of seeing the benefits from the enterprise services? Are you in the just very initial pinnings of that and that’s something that we’re going to see more in the next couple of years or are you starting to see some of that play out at this point?

We are seeing some of it play out, but we are an inning, maybe two on that. It’s just really early stage.

Okay. And then just the last one I had. Was the expectation that there’s still going to be elevated cost for the investment in the enterprise systems in 2016 or is that just in the second half of 2015?

Well, our visibility on it at this point is just for the second half of 2015, but we’ll provide more color on that as we go through the year. Like we said, we like what we’re seeing so far. The investment is front ended. It is something that you have to do. We've got about 40 people working in that area and we had to put them in place in order to accomplish that. And so we’re going to see how that goes. If we like what we see, we’ll continue down that path, but we also reserve the right to change course if for some reason we need to do it a little differently. The other thing is we are looking for an acquisition that would be in that arena and that could help as well.

Got it, okay. Thanks for the time this morning.

Okay, thanks a lot. We’ve got one last question I think and we’ll take that one and then we’ll conclude.

Our last question for today comes from the line of Brad Delco with Stephens. Please go ahead.

Hey, thanks for squeezing me in, David. Just wanted one quick question. Judy, can you tell us what the breakout is between your, call it retail versus industrial customer base and your LTL business and how you think that compares to some of your peers?

Well, we’re affected by both of those areas pretty strongly. We have an internal index that we use that correlates well with our tonnage. Where we have actually the highest correlation is in that retail area, but at the same time as I say that, we know that with about a four month lag or so, when the PMI index moves up or down, we’re affected by that as well. We really have a strong presence of both in our tonnage and our customer base.

Okay, but you just don’t dissect it saying 50% retail, 50% industrial, no break down like that?

Well, we really don’t because it’s very difficult to do that because for instance if you have something that’s manufactured moving into a retail location, what is that? So again we don’t have a specific enough breakdown for our own reasons, for business reasons. So we really don’t have one in this case as well.

Okay, great. Thanks for taking my follow up.

Thanks a lot. Well, this concludes our call. We thank you for joining us this morning. We appreciate your interest in ArcBest Corporation. This concludes our call. Thank you very much.

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