Arcbest Corporation · NASDAQ:ARCB
Arcbest — Stephens Fall Investment Conference 2016
43 slides from Arcbest's conference presentation, Nov 8, 2016
Slide 1: ArcBest Corporation Stephens Fall Investment Conference
® ARCBEST CORPORATION November 8, 2016 Stephens Fall Investment 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 2015 3
Slide 4: Who Are We?
Who Are We? A logistics company with assets With The Skill & The Will to creatively solve our customers’ complex supply chain challenges We’ll find a way to deliver: • Knowledge • Expertise • Options • A can-do attitude with every shipment and supply chain solution, household move or vehicle repair
Slide 5: Common DNA Customer Focus
Common DNA We use creativity and cooperation to solve transportation and logistics challenges for customers worldwide who value quality and an exceptional experience. Customer Focus Truckload Ocean and Air Managed Transportation Warehousing Commercial Shippers Commercial Consumers and Consumers of L
Slide 6: Vision
Vision 6
Slide 7: Our Values
ArcBest Corporation OUR VALUES CREATIVITY GROWTH We create solutions. We grow our people and our business. INTEGRITY EXCELLENCE We do the right thing. We exceed expectations. COLLABORATION WELLNESS We work together. We embrace total health. SKIL ILL ArcBest
Slide 8: 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 8
Slide 9: 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 1 offering ease of visibility and
Slide 10: Optimal Conditions for Growth
Optimal Conditions for Growth Market Potential Approximate ArcBest Opportunity: $266B SM $37 B $5 B $57 B Less-Than-Truckload Expedited Transportation Freight Brokerage & Management $20 B $47 B $37 B Premium Logistics Air & Ocean Freight Forwarding Warehousing / Distribution $17 B $3 B $43 B Househo
Slide 11: Optimal Conditions for Growth
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 12: Optimal Conditions for Growth
Optimal Conditions for Growth Existing Opportunities: Research indicates that nearly 75% of ABF Freight and Panther customers have two or more logistics needs offered within our family of companies. Nearly 85% of current ABF Freight and Panther customers would consider or strongly consider sourcing
Slide 13: Optimal Conditions for Growth: ABF Freight Customer Base
Optimal Conditions for Growth ABF Freight Customer Base: Asset-light Total Market Potential Revenue Has need for the service and is Confident or Neutral that ABF Freight can Provide The Service and is Using – or would consider using – a 3PL or Broker $12.8B …and is Aware that ABF Freight or ABF Logi
Slide 14: Optimal Conditions for Growth: Panther Customer Base
Optimal Conditions for Growth Panther Customer Base: Expedited Total Market Potential Revenue Has need for the service and is Confident or Neutral that Panther can Provide The Service $5.7B …and is Not Price-Sensitive $1.6B …and tends to be Loyal and is Aware that Panther Provides The Service $1.2B
Slide 15: New ArcBest Corporate Structure
New ArcBest Corporate Structure Effective January 1, 2017, ArcBest Corporation to Implement New Corporate Structure to Better Serve Customers – press release November 3, 2016 Goal: Differentiate ArcBest from our competition by becoming one fully integrated logistics enterprise that provides our cust
Slide 16: New ArcBest Corporate Structure Key Messages
New ArcBest Corporate Structure Key Messages Who We Are ArcBest Corporation is one logistics enterprise with creative problem solvers who deliver integrated logistics solutions. What We Are Doing We are shaping our organization and processes to efficiently provide the absolute best customer expe
Slide 17: Key Specific Organizational Changes
New ArcBest Corporate Structure 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 function Training and Quality A
Slide 18: Brands and Services – As of January 1, 2017
Brands and Services – As of January 1, 2017 18
Slide 19: Cost Savings & Charges
New ArcBest Corporate Structure Cost Savings & Charges 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. Cost savings will generally
Slide 20: 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 on our opportunities for growth. Technology and innovations: • Enhance and optimize operations • Create efficiencies • Allow for better management of p
Slide 21: Powerfully Positioned
Powerfully Positioned ArcBest is built on the Our employees have We have responded to strong foundation of The Skill and The Will customer needs by ABF Freight as a trusted to solve customers’ developing the logistics customer partner. supply chain challenges. strategies they desire and coordinating
Slide 22: ArcBest Diversification
Percent of ArcBest Revenue ArcBest Diversification Goal Growth of the Asset-Light Logistics Businesses An Ever-Increasing Percentage of ArcBest’s Revenue 50% 50% ArcBest Revenue $2,613 $2,667 $2,660 3Q’16 $2,300 Asset-Light Logistics $2,066 30% $1,908 ABF Freight $1,658 70% $1,473 2009 7% 2009 2010
Slide 23: Success Stories
Success Stories Collaboration Throughout the ArcBest Enterprise ABF Logistics’ web visibility tools helped an ABF Freight electronic equipment account reduce their ocean shipping costs by as much as 50% while significantly improving their customer delivery time. A U.S. importer and distributor of au
Slide 24: Evolution Has Begun
Evolution Has Begun While ABF Freight offers a strong foundation for ArcBest, we are a multi-faceted logistics company providing supply chain solutions to complex transportation challenges. ABF Freight Account Base Who ArcBest Revenues Derived From Used ABF Logistics or Panther Asset-Light Logistics
Slide 25: Historical Financial Results: Consolidated Revenue & Operating Income
Historical Financial Results Consolidated Revenue & Operating Income $2,700 $120 $2,667 $2,660 $2,613 Adjusted Operating Income* ( millions) $2,300 $81 Revenue $76 $2,066 Revenue (millions) Operating Income* $1,908 $1,658 $41 $21 $11 -$12 -$54 $0 $-60 2010 2011 2012 2013 2014 2015 3Q'16 TTM *Operati
Slide 26: Historical Financial Results: Equity, Cash & Outstanding Debt
Historical Financial Results As of September 30, 2016 Equity, Cash & Outstanding Debt Net Cash (Debt) ($48) Million Total Debt to LTM EBITDAR* 1.35X $700 Total Debt to Capitalization 0.29X Total Equity $595 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '09 Dec. '10 Dec. '11 Dec. '12 Dec. '1
Slide 27: Strategic and Operating Initiatives
Strategic and Operating Initiatives Powerfully Positioned Growth and Operating Initiatives • Capital investments consistent with service initiatives and strategy • Invest in operational efficiencies and innovation • Selective tuck-in and strategic acquisitions Balanced Maintain Strong Balance Sheet
Slide 28: Strategies for Growth
Strategies for Growth Work toward strengthening ABF Freight as the asset- 1 based foundation of ArcBest Sustained growth through new customer additions 2 and cross-selling with established base of over How will ArcBest 40,000 active ABF Freight/Panther customers seek to grow its Continued developmen
Slide 29: Key Takeaways
Key Takeaways • ArcBest is a logistics company with The Skill & The Will to grow – we have assets and offer solutions through guaranteed capacity and flexible options. • We are trusted logistics experts at a company powerfully positioned as the best place for our customers to receive answers to thei
Slide 30: Q&A
Q&A SKIL VILL ArcBest |
Slide 31: Additional Information
ADDITIONAL INFORMATION SKIL VILL ArcBest | 31
Slide 32: Revenue and Non-GAAP Operating Profit
Revenue Non-GAAP Operating Profit (2) ($M) ($M) CAGR(1) 9% $2,667 $2,660 $81.0 $2,613 $75.8 $2,300 $40.9 $2,066 $21.2 -$12.4 2012 2013 2014 2015 3Q'16 2012 2013 2014 2015 3Q'16 TTM TTM (1) CAGR over the 3 year period from 2012 to 2015. (2) Non-GAAP operating profit excludes pension settlement expens
Slide 33: Acquisition of Logistics & Distribution Services
Acquisition of Logistics & Distribution Services Quick Facts Rationale • $60 M annual revenue • Unique mix of dedicated brokerage (utilizing captive trailers) and traditional brokerage • Transaction valued at $25 M • Opportunity to market their service platform • $17 M cash purchase price to ArcBest
Slide 34: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/16 9/30/15 % Change 12/31/15 12/31/14 % Change Revenue $ 713.9 $ 709.4 0.6% $ 2,666.9 $ 2,612.7 2.1% Operating Income (1) 21.7 34.2 81.0 75.8 (1) Net Income $ 12
Slide 35: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 9/30/16 9/30/15 12/31/15 12/31/14 Operating Income Amounts on a GAAP basis $ 20.4 $ 33.4 $ 75.5 $ 69.2 Transaction costs (1) 0.5 - 1.4 - Third-party casualty expense (3) - - 0.9 - Pe
Slide 36: Consolidated Cash Flow
Consolidated Cash Flow Millions ($000,000) Cash and Short-term Investments, as of Dec 31, 2015 $ 227 Net Income 17 Depreciation and amortization (a) 77 Amortization of actuarial losses on benefit plans and pension settlement expense 6 Net change in other assets and liabilities (b) (13) Cash from ope
Slide 37: ABF Freight
ABF Freight Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/16 9/30/15 % Change 12/31/15 12/31/14 % Change Revenue $ 509.5 $ 511.3 (0.4%) $ 1,918.5 $ 1,931.0 (0.7%) Operating Income 18.7 27.1 64.8 55.4 Operating Ratio 96.4% 94.7%
Slide 38: Asset-light Logistics Segment Data
ArcBest Corporation Asset-light Logistics Segment Data Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 9/30/16 9/30/15 % Change 12/31/15 12/31/14 % Change Premium Logistics (Panther) Revenue $ 75.4 $ 73.6 2.5% $ 300.4 $ 316.7 (5.1%) Oper. Inc. 4.0 2.
Slide 39: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 180.0 160.0 $168 $152 140.0 $148 $143 $144 $146 $136 120.0 Millions 100.0 $105 $101 $94 80.0 $86 $85 $86 $77 60.0 $69 $64 40.0 $42 $44 $42 20.0 $26 $24 $12 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Net Capex Cash Provided by Operations Not
Slide 40: 2016 Net Capital Expenditures
2016 Net Capital Expenditures $200.0 $180.0 $160.0 $140.0 $140 - $150 Millions $120.0 $100.0 $100 - $105 $95 $80.0 $60.0 $40.0 $34 $20.0 $21 $0.0 Revenue (1)(4) Real Estate (2) Other (6) Total Net Capital (5) Depreciation and (3) Equipment Expenditures Amortization Expenditures 1. Revenue equipment
Slide 41: ABF Freight Billed Revenue per Hundredweight
ABF Freight Billed Revenue per Hundredweight (including FSC) $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 41
Slide 42: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CORPORATION (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2010 2011 2012 2013 2014 2015 2016(1) ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis $ (54.5) $ 9.8 $ (14.6) $ 19.1 $ 69.2 $ 75.5 $ 35.1 Transaction costs, pre-tax (2) - -
Slide 43: ArcBest Corporation
® ARCBEST CORPORATION November 8, 2016 Stephens Fall Investment Conference