Arcbest Corporation · NASDAQ:ARCB
Arcbest — Morgan Stanley 4th Annual Laguna Conference (September 2016)
44 slides from Arcbest's conference presentation, Sep 15, 2016
Slide 1: ArcBest Corporation – Morgan Stanley 4th Annual Laguna Conference
® ARCBEST CORPORATION September 15, 2016 Morgan Stanley 4th Annual Laguna Conference
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements and information in this Quarterly Report on Form 10-Q 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,
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 Commercial Shippers Commercial Consumers and Consumers of Logistics Solutions Carriers of Household Goods and Private
Slide 6: ArcBest Corporation
ArcBest Corporation A Logistics Company with The Skill and The Will” to Solve Complex Supply Chain Challenges Supply Chain Services Expedited/ Maintenance Truck Brokerage Ocean Warehousing Moving LTL Time-Definite | Forwarding and Repair » ap SE a Mee ABF ABF Panther FleetNet eee Logistics Asset-Lig
Slide 7: Vision
Vision 7
Slide 8: 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 9: 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 9
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 $2,656 2Q’16 $2,300 Asset-Light Logistics $2,066 30% $1,908 ABF Freight $1,658 70% $1,473 2009 7% 2009 2010
Slide 19: 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 20: 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 21: Historical Financial Results: Revenue & Operating Income
Historical Financial Results Consolidated Revenue & Operating Income $2,700 $120 $2,667 $2,656 $2,613 Adjusted Operating Income* ( millions) $2,300 $81 Revenue $76 $2,066 Revenue (millions) Operating Income* $1,908 $53 $1,658 $21 $11 -$12 -$54 $0 $-60 2010 2011 2012 2013 2014 2015 2Q'16 TTM *Operati
Slide 22: Historical Financial Results: Equity, Cash & Debt
Historical Financial Results As of June 30, 2016 Equity, Cash & Outstanding Debt Net Cash (Debt) ($9) Million Total Debt to LTM EBITDAR* 1.23X $700 Total Debt to Capitalization 0.28X Total Equity $582 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '09 Dec. '10 Dec. '11 Dec. '12 Dec. '13 Dec.
Slide 23: 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 24: 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 25: 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 26: Q&A
Q&A SKIL VILL ArcBest | 2
Slide 27: Additional Information
ADDITIONAL INFORMATION SKIL VILL ArcBest | 27
Slide 28: ArcBest Corporation Subsidiaries: ABF Freight
ArcBest Corporation Subsidiaries ABF Freight® operates the core less-than-truckload network for North American shippers of all sizes who value quality and the exceptional experience we provide every day. Our customers know we’ll find a way to deliver superior regional and long-haul LTL solutions and
Slide 29: ArcBest Corporation Subsidiaries: Panther
ArcBest Corporation Subsidiaries Panther Premium Logistics® is one of the best-known providers of premium logistics services including time-sensitive, mission- critical and white-glove delivery. We solve the toughest shipping and logistics challenges our customers face through our global network of
Slide 30: ArcBest Corporation Subsidiaries: ABF Moving and ArcBest Technologies
ArcBest Corporation Subsidiaries ABF Moving® offers a wide range of customizable moving solutions for consumer, military and corporate customers. Services include “do-it-yourself” consumer moves through U-Pack®, government employee relocation through Albert Moving® and corporate account employee rel
Slide 31: Revenue and Non-GAAP Operating Profit
Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) 9% $75.8 $81.0 $2,613 $2,667 $2,656 $53.2 $2,300 $21.2 $2,066 -$12.4 2012 2013 2014 2015 2Q'16 2012 2013 2014 2015 2Q'16 TTM TTM Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) 4% $64.8 $1,931 $1,918 $1,899 $55.4 $44.9 $1,762 $1,701 $11.9
Slide 32: ABF Moving Revenue and Non-GAAP Operating Profit
Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) CAGR(1) 46% 25% $241 $5.9 $204 $153 $4.4 $3.9 $105 $3.0 $3.0 $66 2012 2013 2014 2015 2Q'16 2012 2013 2014 2015 2Q'16 TTM TTM Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) CAGR(1) ABF Moving 15% 90% $119 $112 $4.8 $95 $3.2 $3.3 $82 $78 $
Slide 33: Revenue and Non-GAAP Operating Profit by Subsidiary
Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) CAGR(1) 8% 43% $317 $15.6 $300 $281 $10.8 $247 $238 $7.0 $6.1 $3.7 (3) 2012 2013 2014 2015 2Q'16 2012 (3) 2013 2014 2015 2Q'16 TTM TTM Revenue Non-GAAP Operating Profit(2) ($M) ($M) CAGR(1) CAGR(1) 15% 28% $4.0 $175 $176 $3.3 $3.2 $3.1 $159 $138
Slide 34: Acquisition of Logistics & Distribution Services
Acquisition of Logistics & Distribution Services now part of 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 pric
Slide 35: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/16 6/30/15 % Change 12/31/15 12/31/14 % Change Revenue $ 676.6 $ 696.1 (3.6%) $ 2,666.9 $ 2,612.7 2.1% Operating Income (1) 17.2 34.1 81.0 75.8 (1) Net Income $
Slide 36: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 6/30/16 6/30/15 12/31/15 12/31/14 Operating Income Amounts on a GAAP basis $ 16.7 $ 33.5 $ 75.5 $ 69.2 Transaction costs (1) - - 1.4 - Third-party casualty expense (3) - - 0.9 - Pens
Slide 37: Consolidated Cash Flow
Consolidated Cash Flow Millions ($000,000) Cash and Short-term Investments, as of Dec 31, 2015 $ 227 Net Income 4 Depreciation and amortization (a) 51 Amortization of actuarial losses on benefit plans and pension settlement expense 4 Net change in other assets and liabilities (b) (7) Cash from opera
Slide 38: ABF Freight
ABF Freight Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/16 6/30/15 % Change 12/31/15 12/31/14 % Change Revenue $ 486.7 $ 504.4 (4.3%) $ 1,918.5 $ 1,931.0 (0.7%) Operating Income 17.8 28.5 64.8 55.4 Operating Ratio 96.3% 94.3%
Slide 39: 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) 6/30/16 6/30/15 % Change 12/31/15 12/31/14 % Change Premium Logistics (Panther) Revenue $ 69.7 $ 80.3 (13.2%) $ 300.4 $ 316.7 (5.1%) Oper. Inc. 1.1
Slide 40: 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 41: 2016 Net Capital Expenditures
2016 Net Capital Expenditures $200.0 $170 - $190 $180.0 $160.0 $140.0 Millions $120.0 $100.0 $100 - $110 $95 $80.0 $60.0 $50 $40.0 $45 $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
Slide 42: 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 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 42
Slide 43: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CORPORATION (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2010 2011 2012 2013 2014 2015 2016(1) ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis $ (54.5) $ 9.8 $ (14.6) $ 19.1 $ 69.2 $ 75.5 $ 48.1 Transaction costs, pre-tax (2) - -
Slide 44: ArcBest Corporation
® ARCBEST CORPORATION September 15, 2016 Morgan Stanley 4th Annual Laguna Conference
ArcBest — Morgan Stanley 4th Annual Laguna Conference (September 2016) on 6ix