Arcbest Corporation · NASDAQ:ARCB
Arcbest — Citi 2017 Industrials Conference
42 slides from Arcbest's conference presentation, Jun 14, 2017
Slide 1: ArcBest - Citi 2017 Industrials Conference
℠ ARCBEST June 14, 2017 Citi 2017 Industrials Conference
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements and information in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “int
Slide 3: Logistics Leader
Logistics Leader 1923 13,000 $2.7 billion Customer Focus Founded Employees Revenue in 2016 3
Slide 4: Who Are We?
Who Are We? A leading logistics company Skill is meeting our customers’ Will is With creative problem solvers who deliver integrated demands. demanding more of ourselves solutions than they do. We’ll find a way to deliver: • Knowledge • Expertise • Options • A can-do attitude with every shipment and
Slide 5: Vision
Vision 5
Slide 6: Our Values
Our Values Growth We grow our people and our business Creativity Excellence We do the We exceed right thing expectations Wellness We embrace tctal health
Slide 7: A Logistics Company with the Skill & The Will to Grow
Key Elements A Logistics Company with the Skill & The Will to Grow 1 Increasing Supply Chain Complexity 2 Optimal Conditions For Growth 3 Impact of Innovation & Technology 4 ArcBest is Powerfully Positioned 7
Slide 8: Increasing Supply Chain Complexity
Increasing Supply Chain Complexity Supply chains are evolving rapidly due to faster customer demand for products, lean inventory levels, transportation capacity, speed of fulfillment and cost volatilities 1 Global product sourcing requires unique distribution models offering ease of visibility and e
Slide 9: Enhanced Market Approach: New Corporate Structure
Increasing Supply Chain Complexity Enhanced Market Approach Effective January 1, 2017, ArcBest Implemented a New Corporate Structure to Better Serve Customers Goal: Differentiate ArcBest from our competition by becoming one fully integrated logistics enterprise that provides our customers with a sup
Slide 10: Enhanced Market Approach: Who We Are
Increasing Supply Chain Complexity Enhanced Market Approach Who We Are • ArcBest is one logistics enterprise with assets and guaranteed capacity options with creative problem solvers who deliver integrated logistics solutions. What We Are Doing • We are shaping our organization and processes to effi
Slide 11: Key Specific Organizational Changes
Increasing Supply Chain Complexity Enhanced Market Approach Key Specific Organizational Changes Sales Marketing and Customer Experience Unified ArcBest sales function Unified ArcBest marketing function and new ArcBest customer experience function Yield Management Unified ArcBest yield management fun
Slide 12: ArcBest Brands and Services
ArcBest Brands and Services International Managed National and Ground Expedite Movin Maintenance Shipping Transportation Regional LTL and Premium g and Repair op ‘ aloe 5 a> « ‘%) cg Warehousing and Truckload Distribution = i ABF Panther UPack FleetNet We Drive, You Save, SEE Amerton
Slide 13: Cost Savings & Charges
Increasing Supply Chain Complexity Enhanced Market Approach Cost Savings & Charges l The improved organizational structure, along with the consolidation of certain systems and facilities and other cost saving actions produce an estimated pre-tax annualized operating expense savings of $15 million. l
Slide 14: Benefits of Cross-Selling ArcBest Services
Increasing Supply Chain Complexity Benefits of Cross-Selling ArcBest Services Compared to accounts using only one ArcBest service, accounts using multiple ArcBest services have: • Higher retention rates • Higher number of shipments • Greater revenue • Greater profit 14
Slide 15: Welcome to Simplistics
Increasing Supply Chain Complexity Welcome to SimplisticsTM • ArcBest national ad campaign launched April 2017 • Print and digital ads published in national trade and news publications, including The Wall Street Journal and Fortune • Pre-roll videos for digital advertising arcb.com/simplistics 15
Slide 16: What is Simplistics?
Increasing Supply Chain Complexity What is Simplistics? It’s uncomplicating shipping and logistics. Removing barriers and replacing them with possibilities. Trading questions for confidence. Simplistics means crazy-hard deliveries aren’t crazy after all. Precisely timed deliveries happen all the tim
Slide 17: Market Potential
Optimal Conditions for Growth Market Potential Approximate ArcBest Opportunity: $280B SM $38 B $5 B $59 B Domestic Transportation Less-Than-Truckload Expedite Shipping Management $20 B $47 B $38 B Premium Logistics International Warehousing & Distribution $17 B $13 B $43 B Moving Services Final Mile
Slide 18: Optimal Conditions for Growth: Steps Taken
Optimal Conditions for Growth ArcBest has conducted extensive research to better understand: • The voice and needs of our diverse customer base • The services we must offer to meet their needs • How to effectively deliver those services as a trusted partner • Current voids in the marketplace that Ar
Slide 19: Existing Opportunities
Optimal Conditions for Growth Existing Opportunities: Research indicates that nearly 75% of our less-than-truckload and expedite customers have two or more logistics needs offered by the ArcBest enterprise. Nearly 85% of our current less-than-truckload and expedite customers would consider or strong
Slide 20: Asset-Light Total Market Potential Revenue
Optimal Conditions for Growth ArcBest Asset-Based Customers: Asset-Light Total Market Potential Revenue Has need for the service and is Confident or Neutral that ArcBest can Provide The Service and is Using – or would consider using – a 3PL or Broker $12.8B …and is Aware that ArcBest Provides The Se
Slide 21: Expedited Total Market Potential Revenue
Optimal Conditions for Growth ArcBest Expedite Customers: Expedited Total Market Potential Revenue Has need for the service and is Confident or Neutral that ArcBest can Provide The Service $5.7B …and is Not Price-Sensitive $1.6B …and tends to be Loyal and is Aware that ArcBest Provides The Service $
Slide 22: Impact of Innovation & Technology
Impact of Innovation & Technology Differentiating technologies and innovations have played a strong role in ArcBest’s history and will help us seize our opportunities for growth. Current initiatives include: • Enhancements and redesign to further optimize the less-than- truckload linehaul and street
Slide 23: Consolidated Revenue & Operating Income
Powerfully Positioned $3,000 Consolidated Revenue & Operating Income* $120 $2,700 $2,730 $2,613 $2,667 Revenue Adjusted Operating Income* ( millions) Operating Income* $2,300 $81 $76 $2,066 Revenue (millions) $1,908 $43 $43 $1,658 $21 $11 -$12 -$54 $0 2010 2011 2012 2013 2014 2015 2016 1Q'17 $-80 TT
Slide 24: Historical Financial Results
Historical Financial Results As of March 31, 2017 Powerfully Positioned Net Cash (Debt) ($88) Million Total Debt to LTM EBITDAR* 1.25X Total Debt to Capitalization 0.28X $700 Equity, Cash & Outstanding Debt Total Equity $592 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '10 Dec. '11 Dec. '1
Slide 25: Strategic and Operating Initiatives
Powerfully Positioned Strategic and Operating Initiatives Growth and Operating Initiatives • Capital investments consistent with service initiatives and strategy • Invest in operational efficiencies and innovation • Selective tuck-in and strategic acquisitions Balanced Maintain Strong Balance Sheet
Slide 26: ArcBest Diversification
Percent of ArcBest Revenue ArcBest Diversification Goal Growth of the Asset-Light Businesses An Ever-Increasing Percentage of ArcBest’s Revenue 50% 50% ArcBest Revenue $2,700 $2,730 2016 $2,613 $2,667 $2,300 Asset-Light $2,066 30% $1,908 Asset-Based $1,658 70% $1,473 2009 7% 2009 2010 2011 2012 2013
Slide 27: Strategies for Future Growth
Strategies for Future Growth Work toward strengthening the asset-based 1 foundation of ArcBest Sustained growth through new customer additions 2 and solutions selling with established base of over 40,000 active, transacting ArcBest customers How will ArcBest seek to grow its revenue to solve Continu
Slide 28: Key Takeaways
Key Takeaways • ArcBest is a logistics company with creative problem solvers who deliver integrated supply chain solutions. • We own and control assets and offer unique access to guaranteed transportation capacity. • We consider the customer in everything we do through our focus on delivering a supe
Slide 29: Q&A
Q&A 29
Slide 30: Additional Information
ADDITIONAL INFORMATION 30
Slide 31: ArcBest Consolidated
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 3/31/17 3/31/16 % Change 12/31/16 12/31/15 % Change Revenue $ 651.1 $ 621.5 4.0% $ 2,700.2 $ 2,666.9 0.8% Operating Income (1) (8.7) (8.4) 43.1 81.0 (1) Net Income $
Slide 32: ArcBest Consolidated
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 3/31/17 3/31/16 12/31/16 12/31/15 Operating Income Amounts on a GAAP basis $ (12.3) $ (9.3) $ 29.0 $ 75.5 Restructuring charges, pre-tax (1) 1.6 - 10.3 - Transaction costs, pre-tax
Slide 33: Consolidated Cash Flow
ArcBest Consolidated In Millions Consolidated Cash Flow 2016 2015 Actual Actual Cash and Short-term Investments, January 1 $ 227 $ 203 Net Income 19 45 Depreciation and amortization (a) 103 93 Amortization of actuarial losses on benefit plans and pension settlement expense 8 7 Net change in other as
Slide 34: Consolidated Cash Flow
ArcBest Consolidated In Millions Consolidated Cash Flow 2017 Actual Cash and Short-term Investments, January 1, 2017 $ 171 Net Income (7) Depreciation and amortization (a) 25 Amortization of actuarial losses on benefit plans and pension settlement expense 3 Net change in other assets and liabilities
Slide 35: Asset-Based
Asset-Based Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 3/31/17 3/31/16 % Change 12/31/16 12/31/15 % Change Revenue $ 464.4 $ 439.1 4.9% $ 1,916.4 $ 1,916.6 (0.4%) Operating Income (8.5) (8.3) 37.0 64.8 Operating Ratio 101.9% 101.
Slide 36: Asset-Light
Asset-Light Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 3/31/17 3/31/16 % Change 12/31/16 12/31/15 % Change ArcBest Revenue $ 152.9 $ 142.4 7.4% $ 640.7 $ 590.4 8.5% Oper. Inc. 1.8 0.0 15.0 20.9 FleetNet Revenue $ 40.2 $ 43.6 (7.6)% $ 162.6 $ 175
Slide 37: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 180.0 160.0 $168 $152 140.0 $143 $144 $146 $143 $136 120.0 Millions $110 100.0 $105 $101 $94 80.0 $86 $85 $86 $77 60.0 $69 40.0 $42 $44 $42 20.0 $26 $24 $12 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Net Capex Cash Provided by Operations No
Slide 38: 2017 Net Capital Expenditures
2017 Net Capital Expenditures $200.0 $180.0 $160.0 $145 - $170 $140.0 Millions $120.0 $105 - $115 $100.0 $94 $80.0 $60.0 $40.0 $44 $32 $20.0 $0.0 Revenue(1)(4) Real Estate (2) Other (6) Total Net Capital(5) Depreciation and (3) Equipment Expenditures Amortization Expenditures 1. Revenue equipment pu
Slide 39: Asset-Based Billed Revenue per Hundredweight
Asset-Based Billed Revenue per Hundredweight (including FSC) $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 39
Slide 40: 2017 Information Provided on May 5, 2017
2017 Information Provided on May 5, 2017 • On a historical basis, the average sequential change in ArcBest’s Asset-Based operating ratio in the second quarter, versus the first quarter, has been an improvement of approximately 500 to 600 basis points. • Consistent with the recent first quarter, for
Slide 41: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CORPORATION (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL TTM MEASURES 2010 2011 2012 2013 2014 2015 2016 2017 (1) ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis $ (54.5) $ 9.8 $ (14.6) $ 19.1 $ 69.2 $ 75.5 $ 28.9 $ 26.0 Restructuring cha
Slide 42: ArcBest - Citi 2017 Industrials Conference
℠ ARCBEST June 14, 2017 Citi 2017 Industrials Conference