UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                          to                         

Commission file number 000-19969

ARCBEST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of
incorporation or organization) 71-0673405 (I.R.S. Employer Identification No.)

8401 McClure Drive

Fort Smith, Arkansas 72916

(479) 785-6000

(Address, including zip code, and telephone number, including

area code, of the registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 Par Value	ARCB	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 30, 2024
Common Stock, $0.01 par value	23,431,641 shares

ARCBEST CORPORATION

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets —March 31, 2024 and December 31, 2023	3
	Consolidated Statements of Operations — For the Three Months ended March 31, 2024 and 2023	4
	Consolidated Statements of Comprehensive Income — For the Three Months ended March 31, 2024 and 2023	5
	Consolidated Statements of Stockholders’ Equity — For the Three Months ended March 31, 2024 and 2023	6
	Consolidated Statements of Cash Flows — For the Three Months ended March 31, 2024 and 2023	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
SIGNATURES		53

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARCBEST CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31		December 31
	2024		2023
	(Unaudited)
	(in thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	172,855	$	262,226
Short-term investments		68,065		67,842
Accounts receivable, less allowances (2024 – $9,184; 2023 – $10,346)		433,717		430,122
Other accounts receivable, less allowances (2024 – $733; 2023 – $731)		11,389		52,124
Prepaid expenses		39,232		37,034
Prepaid and refundable income taxes		22,084		24,319
Other		11,136		11,116
TOTAL CURRENT ASSETS		758,478		884,783
PROPERTY, PLANT AND EQUIPMENT
Land and structures		491,555		460,068
Revenue equipment		1,119,446		1,126,055
Service, office, and other equipment		318,252		319,466
Software		176,988		173,354
Leasehold improvements		25,173		24,429
		2,131,414		2,103,372
Less allowances for depreciation and amortization		1,193,584		1,188,548
PROPERTY, PLANT AND EQUIPMENT, net		937,830		914,824
GOODWILL		304,753		304,753
INTANGIBLE ASSETS, net		97,940		101,150
OPERATING RIGHT-OF-USE ASSETS		174,987		169,999
DEFERRED INCOME TAXES		10,032		8,140
OTHER LONG-TERM ASSETS		73,123		101,445
TOTAL ASSETS	$	2,357,143	$	2,485,094
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	209,908	$	214,004
Income taxes payable		8		10,410
Accrued expenses		313,494		378,029
Current portion of long-term debt		63,179		66,948
Current portion of operating lease liabilities		31,986		32,172
TOTAL CURRENT LIABILITIES		618,575		701,563
LONG-TERM DEBT, less current portion		148,992		161,990
OPERATING LEASE LIABILITIES, less current portion		174,085		176,621
POSTRETIREMENT LIABILITIES, less current portion		13,318		13,319
CONTINGENT CONSIDERATION		100,220		92,900
OTHER LONG-TERM LIABILITIES		34,422		40,553
DEFERRED INCOME TAXES		44,798		55,785
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2024: 30,038,556 shares; 2023: 30,024,125 shares		300		300
Additional paid-in capital		343,102		340,961
Retained earnings		1,267,444		1,272,584
Treasury stock, at cost, 2024: 6,580,818 shares; 2023: 6,460,137 shares		(391,458)		(375,806)
Accumulated other comprehensive income		3,345		4,324
TOTAL STOCKHOLDERS’ EQUITY		1,222,733		1,242,363
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,357,143	$	2,485,094

See notes to consolidated financial statements.

3

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31
	2024		2023
	(Unaudited)
	(in thousands, except share and per share data)
REVENUES	$	1,036,419	$	1,106,094
OPERATING EXPENSES		1,013,984		1,084,935
OPERATING INCOME		22,435		21,159
OTHER INCOME (COSTS)
Interest and dividend income		3,315		2,933
Interest and other related financing costs		(2,228)		(2,327)
Other, net		(28,199)		1,780
		(27,112)		2,386
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(4,677)		23,545
INCOME TAX PROVISION (BENEFIT)		(1,765)		4,698
NET INCOME (LOSS) FROM CONTINUING OPERATIONS		(2,912)		18,847
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		600		52,436
NET INCOME (LOSS)	$	(2,312)	$	71,283
BASIC EARNINGS PER COMMON SHARE
Continuing operations	$	(0.12)	$	0.78
Discontinued operations		0.03		2.16
	$	(0.10)	$	2.93
DILUTED EARNINGS PER COMMON SHARE
Continuing operations	$	(0.12)	$	0.75
Discontinued operations		0.03		2.09
	$	(0.10)	$	2.84
AVERAGE COMMON SHARES OUTSTANDING
Basic		23,561,309		24,288,138
Diluted		23,561,309		25,057,726

See notes to consolidated financial statements.

4

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	March 31
	2024		2023
	(in thousands)
NET INCOME (LOSS)	$	(2,312)	$	71,283
OTHER COMPREHENSIVE INCOME (LOSS), net of tax
Postretirement benefit plans:
Amortization of unrecognized net periodic benefit cost (credit), net of tax: (2024 – $65; 2023 – $86)
Net actuarial gain		(187)		(247)
Interest rate swap and foreign currency translation:
Change in unrealized loss on interest rate swap, net of tax: (2024 – $130; 2023 – $161)		(366)		(452)
Change in foreign currency translation, net of tax: (2024 – $150; 2023 – $6)		(426)		(18)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax		(979)		(717)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(3,291)	$	70,566

See notes to consolidated financial statements.

5

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Three Months Ended March 31, 2024 and 2023
												Accumulated
					Additional							Other
	Common Stock				Paid-In		Retained		Treasury Stock			Comprehensive		Total
	Shares		Amount		Capital		Earnings		Shares	Amount		Income		Equity
		(Unaudited)
		(in thousands)
Balance at December 31, 2023		30,024	$	300	$	340,961	$	1,272,584	6,460	$	(375,806)	$	4,324	$	1,242,363
Net loss								(2,312)							(2,312)
Other comprehensive loss, net of tax													(979)		(979)
Issuance of common stock under share-based compensation plans		15		—		—									—
Shares withheld for employee tax remittance on share-based compensation						(748)									(748)
Share-based compensation expense						2,889									2,889
Purchase of treasury stock									121		(15,652)				(15,652)
Dividends declared on common stock								(2,828)							(2,828)
Balance at March 31, 2024		30,039	$	300	$	343,102	$	1,267,444	6,581	$	(391,458)	$	3,345	$	1,222,733
Balance at December 31, 2022		29,759	$	298	$	339,582	$	1,088,693	5,529	$	(284,275)	$	7,103	$	1,151,401
Net income								71,283							71,283
Other comprehensive loss, net of tax													(717)		(717)
Issuance of common stock under share-based compensation plans		50		—		—									—
Shares withheld for employee tax remittance on share-based compensation						(1,590)									(1,590)
Share-based compensation expense						2,489									2,489
Purchase of treasury stock									154		(14,092)				(14,092)
Dividends declared on common stock								(2,915)							(2,915)
Balance at March 31, 2023		29,809	$	298	$	340,481	$	1,157,061	5,683	$	(298,367)	$	6,386	$	1,205,859

See notes to consolidated financial statements.

6

ARCBEST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31
	2024		2023
	(Unaudited)
	(in thousands)
OPERATING ACTIVITIES
Net income (loss)	$	(2,312)	$	71,283
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		33,616		32,187
Amortization of intangibles		3,217		3,203
Share-based compensation expense		2,889		2,235
Provision for losses on accounts receivable		1,055		1,427
Change in deferred income taxes		(12,548)		(9,814)
(Gain) loss on sale of property and equipment		217		(9)
Pre-tax gain on sale of discontinued operations		(806)		(69,083)
Change in fair value of contingent consideration		7,320		15,040
Change in fair value of equity investment		28,739		—
Changes in operating assets and liabilities:
Receivables		35,059		43,977
Prepaid expenses		(2,198)		(1,464)
Other assets		(1,218)		3,874
Income taxes		(8,305)		6,221
Operating right-of-use assets and lease liabilities, net		(7,710)		1,570
Accounts payable, accrued expenses, and other liabilities		(70,548)		(79,984)
NET CASH PROVIDED BY OPERATING ACTIVITIES		6,467		20,663
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of financings		(55,049)		(34,657)
Proceeds from sale of property and equipment		1,292		1,833
Proceeds from sale of discontinued operations		—		101,138
Purchases of short-term investments		(5,236)		(35,588)
Proceeds from sale of short-term investments		5,635		41,865
Capitalization of internally developed software		(3,635)		(3,631)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(56,993)		70,960
FINANCING ACTIVITIES
Payments on long-term debt		(16,767)		(17,649)
Net change in book overdrafts		(2,850)		(10,493)
Deferred financing costs		—		63
Payment of common stock dividends		(2,828)		(2,915)
Purchases of treasury stock		(15,652)		(14,092)
Payments for tax withheld on share-based compensation		(748)		(1,590)
NET CASH USED IN FINANCING ACTIVITIES		(38,845)		(46,676)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(89,371)		44,947
Cash and cash equivalents of continuing operations at beginning of period		262,226		158,264
Cash and cash equivalents of discontinued operations at beginning of period		—		108
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	172,855	$	203,319
NONCASH INVESTING ACTIVITIES
Equipment financed	$	—	$	3,478
Accruals for equipment received	$	915	$	1,453
Lease liabilities arising from obtaining right-of-use assets	$	5,694	$	30,581

See notes to consolidated financial statements.

7

ARCBEST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE A – ORGANIZATION AND DESCRIPTION OF THE BUSINESS AND FINANCIAL STATEMENT PRESENTATION

Organization and Description of Business

ArcBest Corporation^™ (the “Company”) is a multibillion-dollar integrated logistics company that leverages technology and a full suite of shipping and logistics solutions to meet customers’ supply chain needs. The Company, which started over a century ago as a local freight hauler, is now a logistics powerhouse with global reach. The Company’s operations are conducted through its two reportable operating segments: Asset-Based, which consists of ABF Freight System, Inc. and certain other subsidiaries (“ABF Freight”), and Asset-Light, which includes MoLo Solutions, LLC (“MoLo”), Panther Premium Logistics^® (“Panther”), and certain other subsidiaries. References to the Company in this Quarterly Report on Form 10-Q are primarily to the Company and its subsidiaries on a consolidated basis.

The Asset-Based segment represented approximately 63% of the Company’s total revenues before other revenues and intercompany eliminations for the three months ended March 31, 2024. As of March 2024, approximately 82% of the Asset-Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “2023 ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2028.

Financial Statement Presentation

On February 28, 2023, the Company sold FleetNet America, Inc. (“FleetNet”), a wholly owned subsidiary and reportable operating segment of the Company, for an aggregate adjusted cash purchase price of $100.9 million, including post-closing adjustments. The sale of FleetNet^® was a strategic shift for the Company as it exited the fleet roadside assistance and maintenance management business; therefore, the sale was accounted for as discontinued operations. As such, historical results of FleetNet have been excluded from both continuing operations and segment results for all periods presented. The cash flows related to the discontinued operations have not been segregated and are included in the consolidated statements of cash flows. Unless otherwise indicated, all amounts in this Quarterly Report on Form 10-Q refer to continuing operations, including comparisons to the prior year. For more information on the Company’s discontinued operations, see Note C.

For the three months ended March 31, 2023, certain reclassifications have been made between operating expenses lines of the Asset-Light segment to conform to the current-year presentation (see Note J). There was no impact on total Asset-Light operating expenses as a result of these reclassifications.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore, should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2023 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments (which are of a normal and recurring nature) considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts may differ from those estimates.

8

Accounting Pronouncements Not Yet Adopted

Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, was amended in November 2023 through the issuance of Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 will require enhanced disclosures of significant segment expenses on an annual and interim basis. ASU 2023-07, which is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, is not expected to have a significant impact on the Company’s disclosures.

ASC Topic 740, Income Taxes, was amended in December 2023 through the issuance of ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, while early adoption is permitted. The Company is currently assessing the amendment’s impact on the Company’s disclosures.

In March 2024, the SEC adopted final rules under SEC Release Nos. 33-11275 and 33-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, that will require registrants to provide certain climate-related information in their registration statements and annual reports. This information includes, among other things, material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks; information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition; disclosure of Scope 1 and 2 greenhouse gas emissions; the filing of an attestation report covering the required disclosure of such registrants’ Scope 1 and 2 emissions; and disclosure of the financial statement effects of severe weather events and other natural conditions in the notes to the consolidated financial statements. Disclosure requirements are effective using a phased-in compliance period beginning with the Company’s 2025 Annual Report on Form 10-K. Subsequent to issuance, the rules became the subject of litigation, and the SEC has issued a stay to allow the legal process to proceed. The Company is currently assessing the impact of the final rules on the Company’s disclosures.

NOTE B – FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Instruments

The following table presents the components of cash and cash equivalents and short-term investments:

	March 31		December 31
	2024		2023
	(in thousands)
Cash and cash equivalents
Cash deposits(1)	$	140,655	$	168,472
Money market funds(2)		32,200		93,754
Total cash and cash equivalents	$	172,855	$	262,226
Short-term investments
Certificates of deposit(1)	$	68,065	$	67,842

(1) Recorded at cost plus accrued interest, which approximates fair value.

(2) Recorded at fair value as determined by quoted market prices (see amounts presented in the table of financial assets and liabilities measured at fair value within this Note).

The Company’s long-term financial instruments are presented in the table of financial assets and liabilities measured at fair value within this Note.

9

Concentrations of Credit Risk of Financial Instruments

The Company is potentially subject to concentrations of credit risk related to its cash, cash equivalents, and short-term investments. The Company reduces credit risk by maintaining its cash deposits and short-term investments in accounts and certificates of deposit which are primarily FDIC-insured or in direct obligations of the U.S. government. However, certain cash deposits and certificates of deposit may exceed federally insured limits. At March 31, 2024 and December 31, 2023, cash deposits and short-term investments totaling $60.0 million and $76.3 million, respectively, were not FDIC insured. The Company also holds money market funds, which are invested in U.S. government securities and repurchase agreements collateralized solely by U.S. government securities.

Fair Value Disclosure of Financial Instruments

Fair value disclosures are made in accordance with the following hierarchy of valuation techniques based on whether the inputs of market data and market assumptions used to measure fair value are observable or unobservable:

● Level 1 — Quoted prices for identical assets and liabilities in active markets.

● Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

● Level 3 — Unobservable inputs (Company’s market assumptions) that are significant to the valuation model.

Fair value and carrying value disclosures of financial instruments are presented in the following table:

	March 31				December 31
	2024				2023
	(in thousands)
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Credit Facility(1)	$	50,000	$	50,000	$	50,000	$	50,000
Notes payable(2)		162,171		159,385		178,938		177,149
New England Pension Fund withdrawal liability(3)		19,222		17,734		19,402		18,220
	$	231,393	$	227,119	$	248,340	$	245,369

(1) The revolving credit facility (the “Credit Facility”) carries a variable interest rate based on Secured Overnight Financing Rate (“SOFR”), plus a margin, priced at market for debt instruments having similar terms and collateral requirements (Level 2 of the fair value hierarchy).

(2) Fair value of the notes payable was determined using a present value income approach based on quoted interest rates from lending institutions with which the Company would enter into similar transactions (Level 2 of the fair value hierarchy).

(3) ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018, which resulted in a related withdrawal liability. The fair value of the outstanding withdrawal liability is equal to the present value of the future withdrawal liability payments, discounted at an interest rate of 5.6% and 5.3% at March 31, 2024 and December 31, 2023, respectively, determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy). As of March 31, 2024, the outstanding withdrawal liability totaled $19.2 million, of which $0.7 million was recorded in accrued expenses, and the remaining portion was recorded in other long-term liabilities.

10

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:

	March 31, 2024
			Fair Value Measurements Using
			Quoted Prices		Significant		Significant
			In Active		Observable		Unobservable
			Markets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Assets:
Money market funds(1)	$	32,200	$	32,200	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		4,821		4,821		—		—
Interest rate swap(3)		1,214		—		1,214		—
	$	38,235	$	37,021	$	1,214	$	—
Liabilities:
Contingent consideration(4)	$	100,220	$	—	$	—	$	100,220

	December 31, 2023
			Fair Value Measurements Using
			Quoted Prices		Significant		Significant
			In Active		Observable		Unobservable
			Markets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Assets:
Money market funds(1)	$	93,754	$	93,754	$	—	$	—
Equity, bond, and money market mutual funds held in trust related to the Voluntary Savings Plan(2)		4,627		4,627		—		—
Interest rate swap(3)		1,710		—		1,710		—
	$	100,091	$	98,381	$	1,710	$	—
Liabilities:
Contingent consideration(4)	$	92,900	$	—	$	—	$	92,900

(1) Included in cash and cash equivalents.

(2) Nonqualified deferred compensation plan investments consist of U.S. and international equity mutual funds, government and corporate bond mutual funds, and money market funds which are held in a trust with a third-party brokerage firm. Included in other long-term assets, with a corresponding liability reported within other long-term liabilities.

(3) Included in other long-term assets. The fair value of the interest rate swap was determined by discounting future cash flows and receipts based on expected interest rates observed in market interest rate curves adjusted for estimated credit valuation considerations reflecting nonperformance risk of the Company and the counterparty, which are generally considered to be in Level 3 of the fair value hierarchy. However, the Company assessed Level 3 inputs as insignificant to the valuation at March 31, 2024 and December 31, 2023 and considers the interest rate swap valuation in Level 2 of the fair value hierarchy.

(4) Included as a long-term liability, based on the March 31, 2024 remeasurement as achievement of the 2024 target is not expected. As part of the Agreement and Plan of Merger (the “Merger Agreement”) of MoLo, executed on November 1, 2021, certain additional cash consideration is required to be paid by the Company based on the achievement of certain incremental targets of adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for each of the years ended December 31, 2023, 2024, and 2025. The adjusted EBITDA metric was below target for 2023, resulting in no earnout payment for 2023. At 100% of the target, the cumulative additional consideration through 2025 would be $215.0 million, consisting of target earnout payments of $70.0 million and $145.0 million, including catch-up provisions, for the years ended December 31, 2024 and 2025, respectively. Possible undiscounted cash consideration could range from a total of $95.0 million at 80% of target to $455.0 million at 300% of target, as outlined in the Merger Agreement. The estimated fair value of contingent consideration is determined by assessing Level 3 inputs. The Level 3 assessments utilize a Monte Carlo simulation with inputs including scenarios of estimated revenues and adjusted EBITDA to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 13.4% and 13.3% as of March 31, 2024 and December 31, 2023, respectively. Changes in the significant unobservable inputs might result in a significantly higher or lower fair value at the reporting date. The increase in fair value of contingent earnout consideration as of March 31, 2024, compared to December 31, 2023, primarily relates to the shorter discount period remaining until the expected payout.

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The following table provides the changes in fair value of the liabilities measured at fair value using inputs categorized in Level 3 of the fair value hierarchy:

	Contingent Consideration
	(in thousands)
Balance at December 31, 2023	$	92,900
Change in fair value included in operating income		7,320
Balance at March 31, 2024	$	100,220

Assets Measured at Fair Value on a Nonrecurring Basis

The Company remeasures certain assets on a nonrecurring basis upon the occurrence of certain events. In November 2021, the Company recorded an equity investment for $25.0 million in Phantom Auto, a startup provider of human-centered remote operation software, and became a lead investor in their Series B Preferred offering. The equity investment was accounted for as a nonmarketable equity security without a readily determinable value using the measurement alternative, which allowed the investment to be recorded at cost, less any impairment and adjusted for observable price changes. During the second quarter of 2023, the fair value of the Company’s investment in Phantom Auto increased by $3.7 million based on an observable price change upon the closing of Phantom Auto’s Series B-2 funding round. During the first quarter of 2024, the Company was notified that Phantom Auto was ceasing operations due to liquidity concerns from failing to secure additional funding from investors or lenders. As a result, the Company assessed the likelihood of recovering its investment as remote and recorded a pre-tax, noncash impairment charge of $28.7 million, to write off the equity investment in Phantom Auto, which was recognized below the operating income line in “Other, net” within “Other income (costs).”

The following table provides the change in fair value of equity investments on a nonrecurring basis using inputs categorized in Level 3 of the fair value hierarchy:

	Equity Investment
	(in thousands)
Balance at December 31, 2023	$	28,739
Change in fair value included in other income		(28,739)
Balance at March 31, 2024	$	—

NOTE C – DISCONTINUED OPERATIONS

On February 28, 2023, the Company sold FleetNet, a wholly owned subsidiary of the Company, for an initial aggregate cash purchase price of $101.1 million, which was subject to certain tax and other customary adjustments, and recorded a pre-tax gain on sale of $69.1 million, or $51.4 million, net of tax. The purchase price was adjusted during the second quarter of 2023, resulting in an aggregate adjusted cash purchase price of $100.9 million. After adjustments the total pre-tax gain recognized in 2023 and the first quarter of 2024 was $70.2 million and $0.8 million, respectively. FleetNet provided roadside repair solutions and vehicle maintenance management services for commercial and private fleets through a network of third-party service providers. The sale of FleetNet allowed the Company to focus on growing its continuing operations, as FleetNet was no longer core to the Company’s growth initiatives. The financial results of FleetNet have been accounted for as discontinued operations for all periods presented.

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The following table summarizes the financial results from discontinued operations:

	Three Months Ended
	March 31
	2024		2023
	(in thousands)
Revenues	$	—	$	55,929
Operating expenses
Gain on sale of business(1)