Arcbest Corporation · NASDAQ:ARCB
Arcbest — Investor Presentation (September 2018)
39 slides from Arcbest's investor presentation, September 2018
Slide 1: ArcBest: More Than Logistics
ArcBest More Than Logistics
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements and information in this presentation may constitute “forward-looking statements.” Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,”
Slide 3: Deep Roots and Broad Reach
DEEP ROOTS AND BROAD REACH $2.9 BILLION 13,000 1923 TTM Revenue through June 30, 2018 Employees Founded 3
Slide 4: Who Are We?
WHO ARE WE? With creative We’ll find a way to deliver: A LEADING problem solvers Knowledge A can-do attitude with LOGISTICS who deliver Expertise every shipment and supply COMPANY integrated chain solution, household solutions. Options move or vehicle repair 4
Slide 5: Solutions and Services
SOLUTIONS AND SERVICES LESS-THAN- TRUCKLOAD EXPEDITE & FINAL TRUCKLOAD TIME CRITICAL MILE Data-Driven Solutions INTERNATIONAL WAREHOUSING MANAGED SUPPLY CHAIN AIR & OCEAN TRANSPORTATION OPTIMIZATION High Touch; Unique Services RETAIL PRODUCT TRADE SHOW PREMIUM LOGISTICS LAUNCH SHIPPING LOGISTICS 5
Slide 6: Our Vision
Sent ibe ; ArcBest | «6
Slide 7: Our Values
OUR VALUES CREATIVITY We create solutions INTEGRITY We do the right thing COLLABORATION We work together GROWTH We grow our people and our business EXCELLENCE We exceed expectations WELLNESS We embrace total health 7
Slide 8: Evolving Landscape
EVOLVING LANDSCAPE Adapting to a Changing Market 1 Increasing Supply Chain Complexity 2 Optimal Conditions For Growth 3 ArcBest Strategy 4 ArcBest is Powerfully Positioned 8
Slide 9: Increasing Supply Chain Complexity
INCREASING SUPPLY CHAIN COMPLEXITY Supply chains are evolving rapidly due to rising consumer expectations, omnichannel distribution, tightening transportation capacity, speed of fulfillment and cost volatility 1 Global product sourcing requires unique distribution models offering visibility and effi
Slide 10: Increasing Supply Chain Complexity
INCREASING SUPPLY CHAIN COMPLEXITY Customers are asking for: • Expertise through a strategic business partner who is able to address complex challenges with clarity and simplicity • Flexibility to respond to the ever-changing needs of their customers • Supply chain visibility for real-time insight t
Slide 11: Increasing Supply Chain Complexity
INCREASING SUPPLY CHAIN COMPLEXITY ArcBest has conducted extensive research to better understand: The voice and needs The services we How to effectively Current voids in the of our diverse must offer to meet deliver those services marketplace that customer base their needs as a trusted partner ArcBe
Slide 12: Optimal Conditions for Growth
OPTIMAL CONDITIONS FOR GROWTH Market Potential Approximate ArcBest® Opportunity: $286B $38 B $5 B $62 B Domestic Transportation Less-Than-Truckload Expedite Shipping Management $20 B $49 B $39 B Premium Logistics International Warehousing & Distribution $17 B $13 B $43 B Moving Services Final Mile M
Slide 13: Optimal Conditions for Growth: Existing Opportunities
OPTIMAL CONDITIONS FOR GROWTH Existing Opportunities: Research indicates that nearly 75% of our customers have two or more logistics needs offered by ArcBest. Nearly 85% of our customers would consider or strongly consider sourcing one or more of those additional logistics services from ArcBest. As
Slide 14: Benefits of Cross-Selling ArcBest Services
OPTIMAL CONDITIONS FOR GROWTH 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: Asset-Based Customers: Asset-Light Market Potential
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 16: Expedite Customers: Market Potential Revenue
OPTIMAL CONDITIONS FOR GROWTH ArcBest Expedite Customers: Expedite & Premium Logistics 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 Pro
Slide 17: ArcBest Differentiators
ARCBEST STRATEGY ArcBest Differentiators Deep Spirit of Long-Lasting Assured Understanding Pragmatic and Values-Driven Customer Capacity of Profitability Disruptive Culture Relationships Options Drivers Innovation 17
Slide 18: ArcBest Strategy
ARCBEST STRATEGY Our strategy leverages differentiators for growth, efficiency and innovation Deepen and broaden customer relationships through seamless access • Enhanced market approach • Investment in digital platforms Make optimal yield decisions • Use of analytics • Implementation of space-based
Slide 19: Impact of Innovation & Technology
ARCBEST STRATEGY 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: Continuing network Dock optimizations Improved tools Digital platform enhan
Slide 20: 2Q 2018 Financial Highlights
POWERFULLY POSITIONED 2Q 2018 Financial Highlights YTD Non-GAAP YTD Non-GAAP Operating Income Earnings Per Share 205% YOY 315% YOY Total Liquidity Stock Price $420 million 35% YTD (8/31/18) 20
Slide 21: Consolidated Revenue & Operating Income
POWERFULLY POSITIONED $3,000 Consolidated Revenue & Operating Income* $120 $2,948 Adjusted Operating Income* ( millions) $2,826 Revenue $2,667 $2,700 $2,613 Operating Income* $2,300 $81 $85 $76 Revenue (millions) $2,066 $1,908 $63 $1,658 $43 $21 $11 -$12 -$54 $0 2010 2011 2012 2013 2014 2015 2016 20
Slide 22: Historical Financial Results: Equity, Cash & Debt
POWERFULLY POSITIONED As of June 30, 2018 Historical Financial Results Net Cash (Debt) ($22) Million Total Debt to LTM EBITDAR* 1.05X Total Debt to Capitalization 0.27X $700 Equity, Cash & Outstanding Debt Total Equity $669 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '10 Dec. '11 Dec. '12
Slide 23: 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 24: Powerfully Positioned
POWERFULLY POSITIONED ArcBest is built on a Our employees have We listen to the customer strong foundation as a The Skill and The Will and respond to their needs trusted customer to solve customers’ by developing the logistics partner. supply chain challenges. solutions they desire, often through gu
Slide 25: Q&A
ArcBest More Than Logistics Q&A ArcBest | 25
Slide 26: ArcBest Consolidated
ARCBEST CONSOLIDATED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/18 6/30/17 % Change 12/31/17 12/31/16 % Change Revenue $ 793.4 $ 720.4 9.3% $ 2,826.5 $ 2,700.2 5.1% Operating Income (1) 41.4 26.1 62.6 43.0 Net Income (1) $ 2
Slide 27: ArcBest Consolidated Reconciliation
Three Months Three Months Twelve Months Twelve Months ARCBEST CONSOLIDATED Ended Ended Ended Ended Millions ($000,000) 6/30/18 6/30/17 12/31/17 12/31/16 Operating Income (Loss) Amounts on a GAAP basis $ 3.2 $ 25.8 $ 53.5 $ 29.0 Multiemployer pension fund withdrawal liability charge, pre-tax (1) 37.9
Slide 28: Consolidated Cash Flow
ARCBEST CONSOLIDATED Trailing Twelve Month – June 30, 2018 In Millions TTM Consolidated Cash Flow 6/30/18 Cash and Short-term Investments, beginning of period $ 157 Net Income 45 Depreciation and amortization (a) 106 Pension settlement expense and amortization of actuarial losses on benefit plans an
Slide 29: Asset-Based
ASSET-BASED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/18 6/30/17 % Change 12/31/17 12/31/16 % Change Revenue $ 559.2 $ 514.5 7.8% $ 1,993.3 $ 1,916.4 4.4% Operating Income 41.3 22.9 57.0 37.1 Operating Ratio 92.6% 95.6% 97.
Slide 30: Asset-Light
ASSET-LIGHT Three MonthsThree Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 6/30/18 6/30/17 % Change 12/31/17 12/31/16 % Change ArcBest Revenue $ 200.0 $ 175.9 13.7% $ 706.7 $ 640.7 10.3% Oper. Inc. 3.9 6.0 20.1 15.0 FleetNet Revenue $ 46.8 $ 36.5 28.2% $ 156.3 $ 162
Slide 31: Net Capital Expenditures vs. Operating Cash
NET CAPITAL EXPENDITURES VS. OPERATING CASH 160 $152 $152 140 $143 $144 $146 $143 $146 120 $112 100 Millions $105 $101 $94 80 $86 $85 $86 $77 $69 60 40 $44 $42 $42 20 $26 $24 $12 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Capex Cash Provided by Operations Note: Capital expenditures
Slide 32: 2018 Net Capital Expenditures (Estimated)
2018 NET CAPITAL EXPENDITURES (estimated) $200 $180 $160 $155 - $165 $140 $120 Millions $100 $100 - $105 $100 $80 $60 $40 $48 $20 $17 $0 Revenue (1)(4) Real Estate (2) Other (6) Total Net Capital (5) Depreciation and (3) Equipment Expenditures Amortization 1. Revenue equipment purchases of $100 mill
Slide 33: Asset-Based Billed Revenue per Hundredweight
ASSET-BASED BILLED REVENUE PER HUNDREDWEIGHT (INCLUDING FSC) $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 33
Slide 34: 2018 Information Provided on August 1, 2018
2018 INFORMATION PROVIDED ON AUGUST 1, 2018 ● ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund will be restructured, effective August 1, 2018. The restructuring results in ABF Freight’s withdrawal, as a participating employer, from
Slide 35: 2018 Information Provided on August 1, 2018
2018 INFORMATION PROVIDED ON AUGUST 1, 2018 ● Our 2Q’18 income before tax included a $1.8 million charge, or $1.3 million after-tax, and $0.05 per share, related to our nonunion pension plan, including settlement expense. 2Q’17 included a similar charge of $600,000 pre-tax, or approximately $400,000
Slide 36: 2018 Information Provided on August 1, 2018
2018 INFORMATION PROVIDED ON AUGUST 1, 2018 ● Changes in cash surrender value of life insurance are reported in the “Other, net” line of our income statement, of which we had income of $820,000 in 2Q’18 compared to income of $407,000 in 2Q’17. We exclude changes in cash surrender value when presenti
Slide 37: 2018 Information Provided on August 1, 2018
2018 INFORMATION PROVIDED ON AUGUST 1, 2018 ● For 2018, total net capital expenditures, including equipment expected to be financed, are estimated to range from $155 million to $165 million. This includes revenue equipment purchases of approximately $100 million, primarily for ArcBest’s Asset-Based
Slide 38: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CONSOLIDATED (Unaudited) 2Q’18 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2010 2011 2012 2013 2014 2015 2016 2017 TTM (5) ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis $ (54.5) $ 9.8 $ (14.6) $ 19.1 $ 69.2 $ 75.5 $ 29.0 $ 53.5 $ 45.7 Res
Slide 39: ArcBest: More Than Logistics
ArcBest More Than Logistics