Arcbest Corporation · NASDAQ:ARCB
Arcbest — Investor Presentation (July 2017)
40 slides from Arcbest's investor presentation, July 2017
Slide 1: 2Q'17 Investor Presentation
℠ ARCBEST 2Q’17 Investor Presentation
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 What w in and how we Growth We grow our people and our business Excellence We do the We exceed right thing expectations Collaboration Wellness We work together We embrace total health SKIQ GILL ArcBest | «
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, What We Did
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 Did • We shaped our organization and processes to efficiently pro
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: Cost Savings & Charges
Increasing Supply Chain Complexity Enhanced Market Approach 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.
Slide 13: 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 13
Slide 14: 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 14
Slide 15: Market Potential: ArcBest Opportunity $280B
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 16: 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 17: 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 18: 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 19: 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 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 our opportunities for growth. Current initiatives include: • Enhancements and redesign to further optimize the less-than- truckload linehaul and street
Slide 21: New Pricing Initiative: Space-Based Pricing for LTL
New Pricing Initiative Space-Based Pricing – LTL Shipments • Effective August 1, 2017, ArcBest will apply space-based minimum charges for LTL shipments to better reflect the overall growth and ongoing profile shift of bulkier shipments across the entire supply chain. • Customers will provide freight
Slide 22: Consolidated Revenue & Operating Income
Powerfully Positioned $3,000 Consolidated Revenue & Operating Income* $120 $2,774 $2,667 $2,700 Revenue $2,613 Adjusted Operating Income* ( millions) Operating Income* $2,300 $81 $76 $2,066 Revenue (millions) $1,908 $51 $43 $1,658 $21 $11 -$12 -$54 $0 2010 2011 2012 2013 2014 2015 2016 2Q'17 $-80 TT
Slide 23: Historical Financial Results: Equity, Cash & Debt
Historical Financial Results As of June 30, 2017 Powerfully Positioned Net Cash (Debt) ($101) Million Total Debt to LTM EBITDAR* 1.37X Total Debt to Capitalization 0.30X $700 Equity, Cash & Outstanding Debt Total Equity $602 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '10 Dec. '11 Dec. '1
Slide 24: 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 25: ArcBest Diversification Goal
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 $2,774 $2,700 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 26: 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 27: 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 28: Q&A
Q&A SKIL iLL ; ArcBest | »
Slide 29: Additional Information
ADDITIONAL INFORMATION SKIL LL AtcBest | 2
Slide 30: ArcBest Consolidated
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/17 6/30/16 % Change 12/31/16 12/31/15 % Change Revenue $ 720.4 $ 676.6 7.3% $ 2,700.2 $ 2,666.9 0.8% Operating Income (1) 25.8 17.2 43.1 81.0 (1) Net Income $ 1
Slide 31: ArcBest Consolidated Reconciliation
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 6/30/17 6/30/16 12/31/16 12/31/15 Operating Income Amounts on a GAAP basis $ 24.7 $ 16.7 $ 29.0 $ 75.5 Restructuring charges, pre-tax (1) 0.4 - 10.3 - Transaction costs, pre-tax (2)
Slide 32: Consolidated Cash Flow
ArcBest Consolidated Trailing Twelve Month – June 30, 2017 In Millions Consolidated Cash Flow TTM 6/30/17 Cash and Short-term Investments, July 1, 2016 $ 216 Net Income 23 Depreciation and amortization (a) 103 Amortization of actuarial losses on benefit plans and pension settlement expense 16 Net ch
Slide 33: Asset-Based
Asset-Based Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/17 6/30/16 % Change 12/31/16 12/31/15 % Change Revenue $ 514.5 $ 486.3 6.6% $ 1,916.4 $ 1,916.6 (0.4%) Operating Income 22.7 17.8 37.0 64.8 Operating Ratio 95.6% 96.3% 9
Slide 34: Asset-Light
Asset-Light Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 6/30/17 6/30/16 % Change 12/31/16 12/31/15 % Change ArcBest Revenue $ 175.9 $ 154.3 14.0% $ 640.7 $ 590.4 8.5% Oper. Inc. 5.9 2.2 15.0 20.9 FleetNet Revenue $ 36.5 $ 41.8 (12.7)% $ 162.6 $ 1
Slide 35: 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 100.0 $110 $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 36: 2017 Net Capital Expenditures
2017 Net Capital Expenditures $200.0 $180.0 $160.0 $150 - $165 Millions $140.0 $120.0 $100.0 $105 - $110 $96 $80.0 $60.0 $40.0 $37 $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 p
Slide 37: 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 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 37
Slide 38: 2017 Information Provided on July 28, 2017
2017 Information Provided on July 28, 2017 • Since the implementation of the current labor contract, which provides for the union employees wage rates to increase on July 1 and health, welfare and pension on August 1, our sequential change in ABF Freight's operating ratio in the third quarter versus
Slide 39: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CORPORATION (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL TTM MEASURES 2010 2011 2012 2013 2014 2015 2016 2017 (1) ($ 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 $ 34.1 Restructuring cha
Slide 40: ArcBest
℠ ARCBEST 2Q’17 Investor Presentation