Greetings, and welcome to the ArcBest Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead.

Thank you for joining us today. On today's call, we will walk you through the details of our record third quarter earnings. Our presentation this morning will be done by Judy McReynolds, Chairman, President and CEO of ArcBest; and David Humphrey; David Cobb, excuse me, Chief Financial Officer of ArcBest. Also joining us for the Q&A period will be Daniel Loe, ArcBest President of Asset-Light Logistics and Chief Yield Officer. To help you better understand ArcBest 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 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 and described in the tables in our earnings press release. Reconciliation of the GAAP financial measures to the related non-GAAP measures discussed in this call are also provided in the additional information section of the presentation slides. As a reminder, the slides that Judy and David will be referring to you here can be found on the ArcBest website, arcb.com and Exhibit 99.3 of the 8-K that was filed earlier this morning or you can follow along with us on the webcast. We will now begin with Judy.

Thank you, David, and good morning, everyone. This quarter, we achieved the highest quarterly revenue and operating income in ArcBest history, demonstrating the success of our growth strategy and cost management efforts and validating our strategic vision for the company. These results further strengthen our record-breaking 2021 performance and bolster our leading position as an integrated logistics powerhouse. I'd like to begin by highlighting some key achievements of our record third quarter performance and continuing business momentum. Then David Cobb will take you through the specifics of this quarter's financials in greater detail. And finally, I'll offer a few additional comments before we open it up for some questions. As noted on Slide 4, for the last few years, we've been executing on a 3-point strategy to drive revenue growth and improve profitability. These efforts are clearly paying off as underscored by our profit margin improvements and the increased consistency of our financial performance, the strength we are experiencing in our legacy business, combined with the capabilities we gained with the addition of MoLo, ensure we are well-positioned to continue advancing this strategy, meeting the expectations of our customers and driving growth and creating value for our shareholders and other stakeholders. This quarter, we are proud of the progress we made toward our goal of balancing our revenue mix. Each step of the way, our willingness to listen and our agility allows us to better support customers who often need both asset-based and asset-light solutions. Our asset-based business offers many advantages and resources that allow ArcBest to craft customized solutions using assets we already own and manage. ABF Freight flourishes when utilized alongside solid asset-light services because of the options we're able to provide our customers. These capabilities have been invaluable over the last few years as we have worked…

Thank you, Judy, and good morning, everyone. Beginning with some highlights of our financial position. We ended the third quarter with unrestricted cash and short-term investments of $468 million. Our $244 million of debt at the end of the third quarter included $50 million borrowed on our credit revolver and $194 million of notes payable, primarily on equipment for asset-based operation. Composite interest rate on all of our debt was 2.8%. We are encouraged by strong customer demand, the momentum in our business and the solid cash flow generation as evidenced by $389 million of adjusted EBITDA for the trailing 12 months ended September 30, 2021. The operating cash flow, combined with our balance sheet capacity enables us to pursue accretive external growth opportunities like the MoLo transaction, while making value-enhancing organic investments, paying in an attractive dividend and enhancing our share repurchase program. Our balanced capital allocation plan advances our growth strategy, building on ArcBest's leading position as an integrated logistics company. Given our prospects for continued growth and value creation, our Board believes the current stock price does not reflect our best intrinsic value. As Judy mentioned earlier, we announced a $100 million accelerated share repurchase program with final settlement expected to be completed in the first quarter of 2022. The $100 million authorization is in addition to the $42 million that remained available under our existing share repurchase program. On Slide 7, we note that on a pro-forma basis, considering our cash and debt position at the end of the third quarter and after deducting the $235 million cash payment associated with the MoLo acquisition and the $100 million accelerated share repurchase program, we would have a net debt position of $111 million, with total liquidity of $373 million, including our available resources under our credit revolver…

Thanks, David. On Slide 12, you'll note that our 2020 ESG report was released in the third quarter. It is the second ESG report we have produced and it details the actions and progress we've made on environmental, social and corporate governance initiatives across our business. I am particularly proud of our people first response to COVID-19, which showcases how we put our people first every single day. The report highlights how we've grounded our actions in the ArcBest mission to connect and positively impact the world by solving logistics challenges. Now and long into the future, we are committed to operating responsibly and creating long-term value for all of our stakeholders. This commitment includes a strong focus on advancing key priorities, including sustainable procurement human rights, ethics and community involvement. As our report demonstrates, we've made significant progress this year on our ESG journey. The EcoVadis bronze metal that was awarded to us in March recognized ArcBest's sustainability performance among the top half of all rated companies and industries across the world. In April, for the third consecutive year, we were recognized as one of America's best employers for diversity by Forbes and Statista. At ArcBest, our people are at the heart of our success, and we're committed to providing a work environment that embraces different backgrounds and makes everyone feel welcomed and valued. We formally announced the diversity, equity and inclusion efforts underway across our organization in our inaugural 2019 ESG report, and we're committed to publicly sharing the progress we are making in each report moving forward. On a local level, in May, we partnered with the Fort Smith Public Schools and invested $1 million in the peak Innovation Center to help prepare our communities and workforce for tomorrow's careers. The center opens next year and will…

Okay, Sylvana. I think we are ready to take some questions.

[Operator Instructions] And our first question comes from Jason Seidl with Cowen.

Thank you, operator. Judy, David, David, good morning. I wanted to focus a little bit here on sequentially between 3Q and 4Q. I know historically, you guys stepped down on the asset base side and the OR a bit. But as I look at your commentary, you get the best core customer growth, but in your last 10 years, I think it's safe to say the pricing environment has never been better for LTL companies, at least not in my career, which dates back. I don't admit it now, but almost three decades. How should we look at that as we sort of marry up the two as we look to 4Q?

Yes, I think, Jason, this is David. Historically, as you pointed out, we have -- we've seen an increase in the OR about 200 basis points from the third to the fourth quarter. I would just say that I think we're seeing -- we are seeing just endorsement of our strategy, first of all, just where we're seeing increased retention of accounts just because we're able to provide customers more than one service. And so that's -- that's enhancing, I think, our -- or it is enhancing our ability to retain customers. And as I talked about, the strength of that core LTL business is showing up in October in a great way. And so if you think about that continuing, there's opportunity for that to produce good results as we move forward, not only just quarter-to-quarter, but I think beyond these near-term quarters. And so we're enthusiastic and optimistic about what we're seeing along those lines. And just kind of narrowing down into your question specifically around this year, it's -- there's some -- obviously, a lot of puts and takes, but we're continuing to see the higher purchase transportation usage, and that's really to serve a lot of those customers. And so we're getting compensated for that. But that's probably going to continue in the near term as we are successful in hiring, but that's just taking a longer period of time than we would like. And so we'll see -- continue to see a higher level of PT than we probably normally have. There may be some due to the supply constraints that you're well aware of, there may be some parts in maintenance costs that could be at a different level than we've seen in the past. But by and large, the business momentum is strong. The pricing environment is good, and we're serving our customers. So I hope that helps.

No. No, it does. And my one follow-up is going to be on the share repurchase side. I understand the $100 million share repurchase, but your existing $42 million, how should we look at timing of trying to complete that? Are you guys going to be opportunistic? Or, are you going to be aggressive in the marketplace?

Regarding the $42 million, Jason?

Yes. Yes.

That will kick back in once the ASR is complete, which, as I mentioned, matures in the first quarter. And so then that would be along the lines of opportunistic sort of buys at that point. That's right.

Okay. Perfect. Those are my questions. Guys, appreciate the time and always congrats in the quarter.

Thanks a lot.

And our next question comes from the line of Ken Hoexter with BofA.

And great job on the quarter and the ASR. David, just -- or Judy, I guess on the progress of your innovative tech, what is left to spend? What's left to accomplish on there? Maybe talk about your goals and what that can mean for your operating ratio? And then just, David, just ARAP scaled, -- Is that just a factor of the MoLo acquisition? Or is there something else going on there?

Yes. I'll hit the ARAP -- That's no. MoLo, again, we just closed that yesterday. So that is not in our third quarter results. It will be reflected in our fourth quarter accounting. The ARAP is really just a growth in the business. You see both of those kind of moving in tandem, I think, from year-end on our cash flow statement. Does that help, Ken?

Yes. But it seemed like an outsized large gap, but that's fine.

Okay. I think, Ken, you were -- I think you were specifically asking about the asset-based business. Is that right with regard to the technology piece?

Exactly. Yes.

Yes. That's what I thought. Okay. And so we are seeing progress there. And I think as you know, we have our pilot locations for the new mobile platform technology and process. And that's in about three locations, one of those being a distribution center in Kansas City. And so we've been experimenting with a lot of different approaches there and making good progress on the software and narrowing down what the ultimate answer will be. And so as we move into 2022, we are planning for another distributions that are towards the end of 2022, and that's going to be in Salt Lake City, where this technology is deployed. And so what's happening is the operating software, which is all encompassing. It's our operating platform as well as running the flash process is going to be in a larger number of facilities as we move forward. And we are seeing the benefits of that expansion. It gives us greater visibility on individual shipments. It gives us the ability to do better planning, it's a better claims answer, and it's a better work experience for our workforce, which all of those are really positive. And as we -- again, as we narrow down the different scenarios that we're looking at, we expect it to really begin to have some impact on the results. But -- We've disclosed, I think, what the costs are on a quarter and then you can see it accumulated over the period. And just suffice it to say that we're positive on it, and we're excited about it, and there's going to be more to come on how all of that impacts the operation. But it's certainly designed to have a positive impact. We have improved the operating performance for ABF pretty drastically over the last 5 years, I think, probably 750 basis points. And this whole project has really not had the impact yet that it could have. And so it's going to be a contributor to future positive margin expansion as well as what David talked about in terms of the yield environment. And remember, our labor contract goes through the end of June 2023, and it's got an overall 2% increase for wages and benefits in it as well. And so all of that comes together in a pretty good formula for continued improvement at ABF. And then I think David also mentioned the growth potential coming at us, and that's exciting, too.

Yes, that's what I was getting at, is there still seems like there's upside from those investments. And then just if I can clarify before my time runs out, Dave, the 27% growth per day. Obviously, you just mentioned MoLo is not in there. Do you want to give a thought on what it is with -- as you look for the quarter with MoLo in terms of your revenue per day?

Yes. I don't have a stat for you, but what we've talked about with MoLo, and Danny is here also, he can maybe add some color if you'd like, but around MoLo. But we talked about MoLo having a 2021 revenue year of around $600 million. So if you think about us capturing a couple of months of that, I mean, that's probably one way to think about revenue added to our fourth quarter. I think that's fair. So I don't know if Dani has any other color to add to that. But...

No, I agree with David's comments on that. I would think as you think through the year that they had been on a growth trajectory. So when you think of the annual revenue that it would be heavier towards the back end of the year than it was in the front end of the year as you think through your model.

Our next question comes from Chris Wetherbee with Citi.

James on for Chris. I wanted to actually utilize revenue for underweight and improved sequentially for at least the past six quarters. Should we expect that to continue to improve? Is there anything from mix perspective that would allow one not do? I mean, given fuel and price seems like condition strong tailwinds. Just wanted to understand the puts and takes on that particularly?

Yes. I'm so sorry. We can not -- we can hardly hear you. I didn't really understand the question. Can you just repeat the first part of that to get us going?

Yes. Apologies for that. Is this better? I just wanted to actually touch on revenue per one way it's been improving sequentially. I want to know if there's anything to be thinking of in terms of mix to be aware of that, we should be sort of considering as we model that moving forward over the next few quarters, price is strong, fuel is strong. Just want to know if there's anything to be considered from a mix perspective?

This is Danny. I would say when you think through the revenue underway, I mean mix is a piece that we've seen as we've gone through this. But as Judy and David commented, we've seen really growth from our core customers. And so we can -- the strongest sequential we've seen. So as we look forward from that, that mix seems to be kind of a steady-state now with -- as we view it. So I don't see anything at this point that would be from a mix standpoint that would change that.

Great. And then in terms of also just the pricing environment, overall, is there -- you commented on lengthy general strength. Is there any sort of freight that you're pushing off from sort of an OR perspective that could essentially lead to any sort of step change? Is there anything? Or, is the mix sort of where you want it now? Or, is that basically the work done on that price?

Yes. I wouldn't target anything specifically. I think we have better visibility and a better understanding of our costs and what our network needs. And so really since 2017 with space-based pricing in 2019, when we introduced Dynamet pricing, we just have better tools and better technology to help us understand what the system needs. And so really our focus is on what the system needs and getting the right price on that freight.

Our next question comes from Jack Atkins with Stephens.

Congrats on a great quarter. So Judy, I guess, maybe going back to your comment a moment ago about the accelerating momentum that you're seeing in your business really kind of across both the top and the bottom line. I'm just sort of curious, when we think about the asset-based business for a moment, it feels like we're going to be trending towards a double-digit operating margin, a sub-90 operating ratio in 2021. As you think forward, given the momentum that you're seeing in the business, how are you thinking about operating margin -- operating ratio potential within the asset-based business over the next several years? I mean, is a mid-80s operating ratio now sort of on the table as you're thinking about the potential for the business? Just sort of curious if you can provide some thoughts around that?

Well, it absolutely is. I mean we're really there over the last two quarters, just really good momentum. And I think when I look over longer periods of time at what we're experiencing the asset-based business, there's a couple of things. One is just the value of our LTL network to customers and especially as we combine it with some of the asset-light solutions that we offer. We talked about that a little bit in the prepared comments, but it really is the case. I mean the growth at times can come in a more holistic approach with an account where you're bringing that account on as an overall provider of solutions to them. And it just means a lot, especially right now that you have assets to deploy in that solution set. -- just because of the certainty of it, and it just works well. So with that backdrop, when I think about our approach, I feel like -- and Danny is here on this call, so we'll give him a compliment he and his team. I mean we have the best yield managers in the industry. And we're seeing a lot of value in the technology that we've deployed, giving us visibility on the best answers and options for us. And we feel like that's going to help us with consistency even as economic conditions change, which that's a great feeling knowing that in the past, there may have been some difficulty that we would have in anticipating what would be best to do. But that helps us with our workforce. I mean we've hired a lot of people. I think 850 people net -- What we want to do with those people is to make sure that as things move forward, despite the environment changes that we have those people working. And I feel good about our ability to do that. And then in the near term, I think I've already mentioned it, we do have a predictable labor wage and benefit increase level. And what we have at the same time is an overall package that we provide to our employees that's the best in the industry. And so that combination of things really lends itself to further margin expansion. And again, as I spoke to earlier, the growth opportunities that we have with our holistic approach with customers. So we're bullish, we're excited about it.

Okay. Great. That's fantastic to hear. And I guess for my follow-up question, David Cobb, with regard to the capacity expansion plans over the next 12 to 18 months that you guys outlined on the last conference call? Could you maybe update us on your outlook for terminal door growth maybe in '22? I'm just sort of curious, given some of the supply chain challenges that are out there that I think everyone is aware of. How that may be impacted as we think about capacity growth next year?

Yes. Thank you, Jack. We've talked about and we are intentional about expanding our capacity. First of all, we're on a solid hiring pace. I mean that's critical for us right now is adequate personnel and certainly in certain locations, it's more critical than others. And that's a big part of our growth plans. But in terms of the investment from a capital standpoint, we've talked about fleet expansion above historical levels, and we're targeting that. You mentioned the supply constraints, and that is putting a little delay, we think, in some of our deliveries of equipment. And so we do see that impacting us some. We do think we'll get our tractor orders for 2021, at least by early 2022. And then our 2022 expectation at a higher level is expected to come in at this point anyway in 2022. So it's good on the tractor front. Trailers is a little more challenging standpoint. But nevertheless, we we're adding there and think that's a good opportunity for us to grow. From a facility standpoint, we manage that through some owned properties as well as lease properties. And so as you mentioned, the supply chain is impacting that as well, making some of these projects a little longer term than we would like. And those are -- this environment for the real estate market is a tough one as well. But nevertheless, we've got a 5-year plan targeting certain locations. Some of those are renovations that we are more feasible to get done. And those renovations will help in a number of ways. Those -- in certain cases, they'll add some capacity, some door capacity. Other cases, they're also improving our energy efficiency and work-life arrangements for our people. So that's always good. But in terms of just our longer-term target of increasing, I talked about increasing the level of spend there kind of on an annual basis above historical levels of around the $50 million range. And that's still on our plans. It's just a matter of getting those done. Now some of that may, as I mentioned, be in terms of a lease as opposed to capital, so it may not fall into a strict capex kind of a format on the financial statements. But I target, I think it's easy -- or reasonable to say that we would look to add an increased shipment capacity in the mid-single-digit percentage range kind of by the end of 2022 to our existing footprint there. So you think about productivity improvements could also provide an opportunity to increase revenue per facility. So an example of that is, think about some of our warehouse configurations that we've added like a Kansas City distribution center, we've talked about, it doesn't necessarily add doors, but it adds the opportunity to increase throughput in a situation like that. So there's a number of moving parts, obviously, but hopefully, that's helpful to you, Jack.

I really appreciate it.

Thanks, Jack.

Our next question comes from Ravi Shanker with Morgan Stanley.

Great. Judy, can you help unpack the expedited business a little bit more? Kind of feel like that's a business that should be really killing it right now and may also be a little bit of a leading indicator on kind of where we are in the cycle and where the industrial environment looks like. So maybe a little more detail there would be right.

Sure. Well, and I'll make a couple of comments, and then Danny can, I think, speak to that a little bit in more detail. But we're excited about how we're doing in all parts of our business, as we mentioned. And the expedite is certainly doing very well right now. And it is a great solution to some of our customers most significant supply chain challenges and just works well in this kind of environment. But we've also got a lot of plans for the sustainability of that and as we move forward. So Danny, you want to make some comments about that?

I think, Judy, when I think of our exit business, it's in the asset-light category. But for many of our customers, it's like an asset because of the surety that we can provide the service with those customers. And so in this environment, obviously, there is more demand for it. But I think one thing that we really haven't mentioned there when we think moving forward is that we have some headwind really with the auto industry in that area. And so the strength is really coming from manufacturing. And so it will be interesting as all to returns in the general scheme of things, that will take capacity out of truckload as well. So we're still bullish on expedite. And as Judy said, we're looking at how do we maintain the sustainability of Experis as we go forward.

Got it. That makes sense. And maybe a bigger picture follow-up. Judy, it's been a little bit of a banner year for you kind of just given everything that's happened in the macro, the acquisitions, other stuff as well. I think it's about time for another Analyst Day. But short of that, maybe on this call, like what's next for you guys? I mean we are the big missing pieces, things to build on? Kind of what does ArcBest look like 5 years from now?

Yes. Well, thank you for that question. And I agree with you. We do need to get together some dates for another Analyst Day and to reset some of our targets whenever you see the results that certainly speaks to the need for that. So I'm excited about that opportunity. But when we look at our overall business, there's so much potential with what we offer. I mean we do business in markets that total $330 billion. We have $3 billion of opportunity within our most loyal customers. A lot of that comes from the truckload business, and that's why the Molo acquisition makes so much sense. I mean we're excited about embracing that and bringing into that team that's so experienced and additive to what we're doing. And we feel like there's a lot of runway there. I mean the domestic transportation management market is $91 billion and growing. And I think logistics services are predicted to grow 10% to 15% over the next decade on an annual basis. And so we've got a lot of opportunity there. But -- But I will mention another part of our strategy that we're working toward that we talked about a little bit earlier, which is -- relates to our R&D efforts. We have a lot of potential there to get our flash process, the mobile platforms and that process deployed within the asset-based business, but also thinking about that as a solution for our customers and some investments that we're looking at with our innovation accelerator and that R&D team specifically. And so these are things that are adjacent maybe in some ways, but also for the most part, they are just really solutions that help us impact either our growth potential of our existing business or the efficiency of it. And so we're excited about having the dollars of capital available for those types of investments as well. And there will be more to come on that in the next months and into 2022. And I'm excited about that part of our opportunity as well. So thank you.

Our next question comes from Scott Group with Wolfe Research.

Judy, you talked about, I think, 2% wage inflation next year. Can you just remind us, is that all in, including the benefits? And then I don't think there's any incremental payout to the teamsters if the OR gets better from here, but can you just confirm that?

Yes. When we talk about the 2%, that is the wage, the annual wage and health welfare intention increase. So that's all encompassing on that. And then in addition, as you mentioned, there is an incentive plan for those employees. And if you -- I think in our 8-K, we've reproduced the scale for that. And so the 3% level is there for a GAAP OR of 93% and below. And so as things improve from this point, the encouraging thing is there's a 3% incentive that goes with it. So yes, good observation.

But meaning it doesn't -- it doesn't go above 3%?

Yes. I mean that's where the scale ends as far as that percentage. But to point out, when we look at past times that we paid, it's been at 1%. So we're very excited about the benefits that this could provide to our employees.

Okay. And then I just want to ask about the tonnage environment. And it sounds like the core LTL business has really good tonnage growth right now. And it strikes me that almost no other place in transportation has much volume growth right now. Do you think there's something about these supply chain issues and disruptions that is uniquely benefiting the LTL volume environment right now?

Well, as I mentioned earlier, I just feel like the LTL networks work well in this type of environment. Some of that, I was speaking to the certainty of it, the delivery, the pickup and the delivery of your shipments. But also, I think as e-commerce has become a greater portion of the economy, when you think about the first, middle and last mile LTL networks can participate in all three of those and do that effectively. And I think for us, it provides us a lot of optionality in dealing with customers. And so we find situations where we're utilizing one segment of that, combined with some other modes that we do that really help facilitate an overall solution for a customer. I think some of it is the growth there, but I think it's also the case when we look at our situation with our drivers, our turnover is very low in comparison to the -- certainly, the truckload industry. I mean it's low relative to other LTL carriers as well. But it's -- David, I want to say it's six with retirements. Yes, as what David Humphreys saying to me. And that's just a -- that's a benefit. If you're a customer wanting certainty, that helps. And so I'll stop there, but I think that's a good positive.

Our next question comes from Jordan Alliger with Goldman Sachs.

Wondering now that MoLo is closed, curious the thoughts or your thoughts on where they see the truck brokerage market fundamentals. But then secondly, you had talked, I think, on the -- when you had the conference call a while back about timing of breakeven and being in the black. And I just wanted to see if there's an update on that. I think you had said the fourth quarter, and I didn't know if it was -- operating income was going to be in the black by the fourth quarter and breakeven until then. Any update on that would be great.

Yes. This is Danny. I'll give a quick on that. Really nothing has changed since our previous thing. We see they've been around a breakeven and that our plan is that as we had in the fourth quarter that they would be on the run rate that we kind of have the target for 2023. I think just as you look at the overall, I think there's not really been a break in kind of what you see in the projection, the tender rejection index, which just, to me, is an indicator of the overall market. It's -- the market is tight. Capacity is tight in that area. You may see a weekly type softening and then it returns the next week. So I think overall, what you've seen is just a very consistent that there's a little more demand than capacity in the truckload area.

Our next question comes from Bruce Chan with Stifel.

Congrats on results here and the good news. David, you talked a little bit about the elevated PT experience just given the tightness in the market right now. And that makes a lot of sense. I wanted to get maybe both of your thoughts here on how you see that trending as MoLo kind of enters the picture? Is there an opportunity to get better on procurement? And what's sort of the pathway for that? And then maybe just a little bit more broadly, when we think about the interaction between all of the pieces, the asset-light expedited and LTL. Is it all purely arm's length? Or is there any preference of priority of capacity to MoLo or loads to Panther, ABF that we should think about?

Bruce, this is Danny. I think the biggest piece when you look at this is we're really looking at it from a customer angle on this. And so we make the best decisions for our customers that flows through to our business lines. But being the logistics company we are, we have those options. We get to make the decisions that's best for the customer that typically if we make the decision best for the customer, it leases down and it's the best decision for ArcBest as well, too. So priority-wise, it's really -- it's hard to say there's a single priority. It's just the ability to have those options let you make decisions that work both for the customers and for us.

Yes. I mean I think, Bruce, what's being highlighted there, and this is a decision that we made several years ago is that we are mode-neutral, which means that we do see our business through the eyes of the customer. So we're not trying to force and answer one place or the other. We're trying to identify the best solution for them. And at the time that we made that decision, it was not that easy to make that decision. Today, it's a lot better. We're a lot more equipped, and we're glad we have that in place. But that's the mentality here, and I think it's the right one.

Got it. Well, that's my one -- Appreciate the time.

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

Judy, with the step-up in the profitability in the Asset-Based segment, a big improvement in the OR here this year. How do you think about the ability to show continued improvement going forward? Is this something that some of your peers have talked about the ability to show 100 or 200 basis points of annual improvement. Do you think that the business has shifted now where you can see steady improvements in the OR and kind of remove some of the cyclicality from that segment going forward?

Yes. I mean I talked about this a little bit earlier, but I do believe that the steps that we've taken put us in a position where there's going to be the ability to grow more consistently and to be less of a victim to the depths of the cycles. And -- but it's really not just defined within the asset-based business. It's really kind of our holistic approach that we've been talking about. But I do think that, for instance, some of the yield actions that we've taken with space-based pricing and then the visibility that we have, connecting our operating needs with the opportunity set that we get from customers on quoted business. Those combined with the work that we're doing to grow our core customers really puts a good flow of freight into the asset-based business as we move forward. And I feel like that some of our technology and optimization efforts that we have yet to go are going to further improve efficiency. And in that business, when you improve efficiency and throughput, you improved the ability to grow. And then in the near term here, what we've been encountering is a need to have more people in the business. And we've hired more people than we ever have in the history of the company. We've also had a good number of retirements. But on the net, we've added 850 people to that business, and we continue to need to add more. But again, once -- that really has been our obstacle to growing more. So as we get them in place and trained in everything, we should see that potential -- the throughput potential and the growth potential accelerate. And then I think David has already talked about the potential that we have with our equipment and our real estate. So a good backdrop.

Yes. No, it certainly sounds like that you've got everything positioned now going forward, which is really encouraging. So maybe just for a quick follow-up to that point. Does it feel like at this point, the network with doing some actions to supplement with heavier weighted shipments last year, some of the home moving business is kind of all of that kind of where you want it to be. And so when we think about tonnage growth going forward, we're in kind of more of a normal cadence of tonnage growth, kind of core LTL tonnage growth from this point as we move into '22?

Yes. I mean I think our view of demand from core customers is that it's good and that it's continuing. And that's into 2022. But to your point, those other two spot market opportunities really help us both as we see imbalance in the system and also as we see seasonal changes in the business. So we're glad to have that as well.

Yes. Congratulations.

And Sylvana, I think we've got time for one more question.

Our final question comes from Stephanie Moore with Truist.

I wanted to follow up a little bit on the comments Judy, you made actually Jack's question a little bit earlier. You talked about the revenue opportunity from cross-selling LTL and asset-light customers kind of better servicing what that customer needs, which often isn't just one mode of transportation. But is there any associated margin benefit opportunity as well, maybe some cost synergies or just from taking that more holistic approach to providing these services?

Well, I'll just -- Stephanie, I'll just direct you back to that Slide 13 that we have in our presentation, which the profit per account is 4x higher on cross-sold accounts. And so that's what we look at. And revenue per account is 5x higher, and our retention is 9 percentage points higher. So those are really good, solid statistics that support our approach. And again, we're excited about it. And we see that. I mean, we know that when we serve a customer well this way that -- what we're doing is we're actually partnering with them on their supply chain and really getting involved with them and understanding what's going to work well for them. And that's very important right now to our customer base.

All right. Well, we want to thank everybody for joining us today, and this concludes our call. Thank you very much.

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