Arcbest Corporation · NASDAQ:ARCB
Arcbest — Q1 2021 Earnings Presentation
56 slides from Arcbest's earnings presentation, May 4, 2021
Slide 1: Investor Presentation Q1 2021
INVESTOR PRESENTATION Q1 | 2021
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: A Transformed Company
A Transformed Company The ArcBest Story A Differentiated Business Model A TRANSFORMED The Future: Performance Accelerating COMPANY. PERFORMANCE ACCELERATING. 3
Slide 4: Profile of an Industry Leader
Profile of an Industry Leader 95+ Years of ≈240 Asset-Based North transportation and logistics experience American service centers 25,000+ #1 Safety award Owned and operated assets winner in the industry >98% 40,000+ Coverage of United States Approved contract carriers 4
Slide 5: ArcBest Today: Broad Suite of Logistics Solutions and Services
ArcBest Today BROAD SUITE OF LOGISTICS SOLUTIONS AND SERVICES 5
Slide 6: A Transformed Company: From LTL Trucking to Innovative Logistics
A TRANSFORMED To an COMPANY. From an LTL TRUCKING INNOVATIVE COMPANY LOGISTICS COMPANY 36% of revenue from logistics versus 7% in 2012 Four key acquisitions since 2012 Realignment and enhanced market approach under the ArcBest brand in 2017 Innovative asset-based space-based pricing and opportunisti
Slide 7: Our Strategy is Delivering Solid Results
Strategy in Action Our Strategy is Delivering Solid Results ArcBest Revenues ($B) ArcBest Operating Income ($M) +15% +202% $3.1 $3.1 $3.0 $2.9 $2.8 $153 $2.7 $148 $121 $109 $70 $49 2016 2017 2018 2019 2020 1Q'21 2016 2017 2018 2019 2020 1Q'21 TTM TTM 7 *Operating Income adjusted for certain unusual
Slide 8: 450 bps Improvement in Asset-Based Operating Ratio
Strategy in Action 97.9% 96.9% IMPROVEMENT IN FREIGHT RECESSION 94.5% 94.2% ASSET-BASED 93.3% 93.4% OPERATING RATIO* 2016 2017 2018 2019 2020 1Q'21 TTM FREIGHT RECESSION and COVID-19 IMPACTS 450 bps IMPROVEMENT Compared to the previous freight recession. *Operating Ratio adjusted for certain unusual
Slide 9: A Differentiated Business Model
A Transformed Company. The ArcBest Story A Differentiated Business Model. A TRANSFORMED The Future: Performance Accelerating. COMPANY. PERFORMANCE ACCELERATING. 9
Slide 10: Leveraging a Differentiated Business Model
LEVERAGING A DIFFERENTIATED BUSINESS MODEL 10
Slide 11: A Values-Driven Culture
At the Center of our Company: A VALUES-DRIVEN CULTURE 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. 11
Slide 12: Environmental, Social and Corporate Governance (ESG)
ENVIRONMENTAL, ▪ ArcBest strives to be a responsible corporate citizen — investing in the overall well-being of our employees, being mindful of our SOCIAL environmental impact, supporting our communities and acting with integrity in all aspects of our business. ▪ Beginning in 2019, we increased the
Slide 13: Positioned in Large Markets
POSITIONED IN LARGE MARKETS Less-Than- Expedite Domestic Truckload Shipping Transportation Management BUSINESS MODEL#1 $43B $5B $83B TA R G E T L A R G E A TTR A C TI V E MA R K E TS Premium International Warehousing Logistics & Distribution B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R $20
Slide 14: Large Cross-Sell Opportunity
LARGE CROSS-SELL OPPORTUNITY 38% BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS 78% OPPORTUNITY B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S Percent of customers Percent of customers using BUSINESS MODEL#3 D E V E L O P I N N O V A TI V E indica
Slide 15: Our Deepening Focus: Customer Relationships
OUR DEEPENING FOCUS: CUSTOMER BUSINESS MODEL#1 RELATIONSHIPS TA R G E T L A R G E A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 Recommend ✓ Higher customer retention rates ✓ Higher profitability D E E P E N C U S TO ME R Profitability R E L A TI O N S H I P S Advise & Cross-Sell BUSINESS
Slide 16: Cross-Sell Opportunity: Loyal Customer
CROSS-SELL OPPORTUNITY BUSINESS MODEL#1 LOYAL TA R G E T L A R G E A TTR A C TI V E MA R K E TS CUSTOMER B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S SPEND ON >$3.5B BUSINESS MODEL#3 D E V E L O P I N N O V A TI V E S O L U TI O N S ASSET-LIGHT BUSINESS MODEL#4 W I
Slide 17: Cross-Sell Case Study
CROSS-SELL CASE STUDY DEMONSTRATES SUCCESS OF OUR APPROACH SITUATION RESULTS/BENEFITS BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS CLIENT INCREASED MONTHLY REVENUES High-end home appliance manufacturer, $1.8M/mo B U S I N E S S M OD E L # 2 revenues >$15B D E E P E N C U S TO M
Slide 18: Working with ArcBest Has Been a Wonderful Experience
“WORKING WITH ARCBEST HAS BEEN A WONDERFUL EXPERIENCE.” CLIENT COMMENT (ArcBest has been given the opportunity to work on solutions for a second online retail customer of this manufacturer.)
Slide 19: Investments in Innovation
INVESTMENTS IN INNOVATION CUSTOMER EXPERIENCE ARCBEST CAPACITY BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 • Customer engagement • Serving shippers and • Digital connectivity to D E E P E N C U S TO ME R R E L A TI O N S H I P S focus: capacity pro
Slide 20: Investments in Innovation: Pilot Test Program at ABF Freight
INVESTMENTS IN INNOVATION PILOT TEST PROGRAM AT ABF FREIGHT Patented handling equipment, BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS software and a patented process to load and unload trailers Potential Benefits: • Improved transit performance B U S I N E S S M OD E L # 2 D E
Slide 21: Integrated Logistics Provider
INTEGRATED LOGISTICS PROVIDER FULL SUPPLY CHAIN SOLUTIONS BUSINESS MODEL#1 International shipping from TA R G E T L A R G E A TTR A C TI V E MA R K E TS 1 warehouse to port Managed transportation B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S 2 options for vendor con
Slide 22: Winning Customer Proposition
WINNING CUSTOMER PROPOSITION Solves my logistics and Is a trusted provider Makes it easy BUSINESS MODEL#1 TA R G E T L A R G E transportation challenges and partner to do business A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 Customer visibility Unmatched Digital D E E P E N C U S TO ME
Slide 23: Customer Experience Improvement
CUSTOMER EXPERIENCE IMPROVEMENT BUSINESS MODEL#1 TA R G E T L A R G E +4% +4% +7% +54% A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S Solves my Is a trusted Makes it easy to Net promoter logistics and provider and do business Score BUSINE
Slide 24: Pension Relief Act
PENSION RELIEF ACT Butch Lewis Emergency Pension Plan Relief Act of 2021 • The Butch Lewis Emergency Pension Plan Relief Act of • This is not a loan to these plans and there is no 2021 was included in the pandemic-relief American obligation for it to be paid back. It is an infusion of cash Rescue Pl
Slide 25: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION GROWTH AND OPERATING INITIATIVES • Capital investments consistent with service initiatives and strategy • Invest in operational efficiencies and innovation BUSINESS MODEL#1 • Selective tuck-in and strategic acquisitions TA R G E T L A R G E A TTR A C TI V E MA R K E TS SO
Slide 26: A Transformed Company
A Transformed Company The ArcBest Story A Differentiated Business Model A TRANSFORMED The Future: Performance Accelerating COMPANY. PERFORMANCE ACCELERATING. 26
Slide 27: Continuing to Execute Three-Point Strategy
CONTINUING TO EXECUTE THREE-POINT STRATEGY A MULTI-YEAR PROFIT IMPROVEMENT PLAN 3 2 Optimize Cost Structure 1 More Balanced Advance adoption of Business Mix innovative technologies Expand Revenue Accelerate asset-light growth Opportunities Continue to grow Deepen customer asset-based business relati
Slide 28: Clear Long-Term Financial Goals
CLEAR LONG-TERM FINANCIAL GOALS Low 90s 50% Expanded Asset-Based Of Revenues From Earnings Asset-Light Business Operating Ratio (currently 36% in 1Q’21) Multiple 28
Slide 29: Current Initiatives & Priorities
CURRENT • Efficiently meet customers where they want to do business with us INITIATIVES & while insuring the financial strength of ArcBest PRIORITIES • Deepen customer relationships – increase the number of customers using multiple ArcBest services • Advance supply chain conversations addressing sig
Slide 30: Current Low Valuation Set to Improve
P/E March 2021 CURRENT LOW (BASED ON FY2021 CONSENSUS ESTIMATES) VALUATION Asset-Based 32.1X SET TO Peer Avg IMPROVE AS Logistics Peer Avg 18.9X STRATEGY 14.0X EXECUTION ADVANCES ASSET-BASED LOGISTICS PEERS INCLUDE PEERS INCLUDE • Old Dominion • Landstar • C.H. Robinson • J.B. Hunt • Saia • Echo • H
Slide 31: Why ArcBest Will Continue to Outperform
IN SUMMARY WHY ARCBEST WILL CONTINUE TO OUTPERFORM Strong financial profile Winning customer proposition Develop innovative solutions Deepen customer relationships Target large attractive markets 31
Slide 32: Additional Information
ArcBest ADDITIONAL INFORMATION
Slide 33: ArcBest Consolidated
ARCBEST CONSOLIDATED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 3/31/21 3/31/20 % Change 12/31/20 12/31/19 % Change Revenue $ 829.2 $ 701.4 20.1% $2,940.2 $2,988.3 (2.2%) Operating Income* 39.1 12.4 120.8 109.0 Net Income* $ 27.2
Slide 34: ArcBest Consolidated
ARCBEST CONSOLIDATED Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 3/31/2021 3/31/2020 12/31/2020 12/31/2019 Operating Income Amounts on a GAAP basis $ 32.2 $ 7.8 $ 98.3 $ 63.8 Innovative technology costs, pre-tax (1) 6.9 4.6 22.6 15.7 Asset impair
Slide 35: Notes to Non-GAAP Financial Tables
ARCBEST CONSOLIDATED NOTES TO NON-GAAP FINANCIAL TABLES The following footnotes apply to the non-GAAP financial tables in the previous slide. 1) Represents costs associated with the freight handling pilot test program at ABF Freight. 2) Noncash impairment charge recognized in fourth quarter 2019 rel
Slide 36: ArcBest Consolidated Cash Flow
ARCBEST CONSOLIDATED In Millions TTM Consolidated Cash Flow 3/31/21 Cash and Short-term Investments, beginning of period $ 531 Net Income 92 Depreciation and amortization (a) 119 Pension settlement expense and amortization of actuarial losses 9 on benefit plans and share-based compensation Net chang
Slide 37: Asset-Based
ASSET-BASED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 3/31/21 3/31/20 % Change 12/31/20 12/31/19 % Change Revenue $ 556.3 $ 515.7 9.6% $2,092.0 $2,144.7 (3.0%) Operating Income* 36.9 17.8 121.3 118.8 Operating Ratio* 93.4% 96.5%
Slide 38: Asset-Light
ASSET-LIGHT Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 3/31/21 3/31/20 % Change 12/31/20 12/31/19 % Change ArcBest Revenue $ 252.3 $ 164.8 53.1% $ 779.1 $ 738.4 5.5% Operating Income* 8.3 (1.4) 9.6 6.3 FleetNet Revenue $ 59.2 $ 5
Slide 39: Net Capital Expenditures vs. Operating Cash
NET CAPITAL EXPENDITURES VS. OPERATING CASH 300 250 $255 200 $206 Millions $170 150 $152 $152 $147 $144 $146 $143 $146 $134 100 $112 $101 $94 $92 $85 $86 $77 $69 50 $42 $26 $24 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net Capex Cash Provided by Operations Note: Capital expenditures a
Slide 40: 2021 Net Capital Expenditures (Estimated)
2021 NET CAPITAL EXPENDITURES (ESTIMATED) $200 $180 $160 $140 $150 - $160 $120 Millions $115 - $120 $100 $100 $80 $60 $40 $20 $4 $0 Revenue Equipment Total Net Capital Depreciation and Intangible Asset Expenditures Amortization Amortization • Total Net Capital Expenditures, including financed equipm
Slide 41: Asset-Based Billed Revenue per Hundredweight
ASSET-BASED BILLED REVENUE PER HUNDRED WEIGHT (INCLUDING FSC) $38.00 August 2017 implementation $36.00 of space-based pricing $34.00 $32.00 $30.00 $28.00 $26.00 Decrease reflects lower fuel surcharge and freight mix $24.00 changes related to the addition of transactional shipments $22.00 $20.00 Reve
Slide 42: Additional Information: Asset-Based Yield Metrics
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment 1Q’21 Year-over-Year Yield Metrics • Billed Rev/Cwt on LTL-rated freight, excluding fuel surcharges, decreased by a percentage in
Slide 43: Additional Information: April 2021 Business Update
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment April 2021 Business Update Statistics for April 2021 have not been finalized. Preliminary Asset-Based financial metrics and busin
Slide 44: Additional Information: Sequential Monthly Trends
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment Year-over-year comparisons are less meaningful due to the significant impact in 2020 from the pandemic and the related economic s
Slide 45: Additional Information: 2Q'21 Other Items
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment 2Q’21 Other Items • 63.5 Working Days in both 2Q’21 and 2Q’20 • Projected Innovative Technology Costs in our Asset-Based business
Slide 46: Additional Information: Asset-Light Trends
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. Asset-Light ArcBest Operating Segment [Excluding FleetNet] Year-over-Year Monthly Total Daily Business Trends Year-over-year comparisons are less meaningful due to the significant impact in
Slide 47: Additional Information: Consolidated Projections
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated 2Q’21 – Projected • Loss in the “Other and eliminations” segment (non-GAAP basis): $5 million vs. $3 million in 2Q’20 • Interest
Slide 48: Additional Information: Capital Expenditures
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated Capital Expenditures • 2021 Total Net Capital Expenditures, including financed equipment: $150 million to $160 million • Include
Slide 49: Additional Information: Union Profit-Sharing Bonus
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. ADDITIONAL DETAILED INFORMATION Asset-Based Segment Annual Union Profit-Sharing Bonus • As provided in ABF Freight’s current Teamster labor contract, for the full years of 2019 through 2022
Slide 50: Additional Information: Tax Rate
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated Tax Rate • ArcBest’s first quarter 2021 effective GAAP tax rate was 25.5%. • The “Effective Tax Rate Reconciliation” table of ArcBest’s
Slide 51: Additional Information: Other and Eliminations
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated “Other and eliminations” within Operating Income on the Operating Segment Data and Operating Ratios statement • The “Other and eliminati
Slide 52: Additional Information: Other, net
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 5/4/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated “Other, net” line within Other Income (Costs) on the Consolidated Statements of Operations • The “Other, net” line of ArcBest’s income s
Slide 53: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CONSOLIDATED (Unaudited) 1Q’21 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2016 2017 2018 2019 2020 TTM ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis (1) $ 34.1 $ 61.3 $ 109.1 $ 63.8 $ 98.3 $ 122.6 Restructuring charges, pre-tax (2) 10.3
Slide 54: Reconciliations: Consolidated Adjusted EBITDAR
ARCBEST CONSOLIDATED (Unaudited) 1Q’21 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES TTM ArcBest Corporation - Consolidated ($ millions) Consolidated Adjusted EBITDAR Net Income $ 92.6 Interest and other related financing costs 11.2 Income tax provision 28.9 Depreciation and amortization 11
Slide 55: Asset-Based Reconciliations
ASSET-BASED (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP 1Q’21 FINANCIAL MEASURES 2016 2017 2018 2019 2020 TTM ($ millions) ArcBest Corporation – Asset-Based Segment Operating Income Amounts on a GAAP basis (1) $ 37.4 98.0% $ 57.9 97.1% $ 103.9 95.2% $ 102.1 95.2% $ 98.9 95.3% $ 115.7 94.6% Restr
Slide 56: Investor Presentation Q1 2021
INVESTOR PRESENTATION Q1 | 2021 56