Arcbest Corporation · NASDAQ:ARCB
Arcbest — Stephens Fall Investment Conference 2015
48 slides from Arcbest's conference presentation, Nov 11, 2015
Slide 1: Stephens 2015 Fall Investment Conference
Stephens 2015 Fall Investment Conference November 11, 2015 1
Slide 2: ArcBest Corporation
ArcBest Corporation SM Post Office Box 10048 (72917-0048) 3801 Old Greenwood Road Fort Smith, Arkansas 72903 Judy R. McReynolds President & Chief Executive Officer David R. Cobb Vice President, Chief Financial Officer David Humphrey Vice President, Investor Relations Phone: 479-785-6200 Email: dhump
Slide 3: 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 4: Web Site: arcb.com
Web Site: arcb.com ArcBest DISCOVER ARCBEST / SUBSIDIARIES / CUSTOMER SOLUTIONS / INVESTOR RELATIONS / NEWS & EVENTS EE Corporation Skills moving somiethi Willis fin « ArcBest ArcBest ‘Corporation (Corporation ArcBest Corporation (ARCB :NASDAQ) Last Price Day's Change Volume 25.90 0 Low High 473000
Slide 5: We are Tactical Problem Solvers
We are Tactical Problem Solvers Deliver creative solutions to transportation and logistics challenges Provide knowledge, expertise and a “can-do” attitude Offer a personal touch that sets us apart We are Empathetic Business Partners Listen and understand our customers’ challenges Care for
Slide 6: 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 7: Revenue Mix
Revenue Mix Premium Emergency & Transport Preventative Moving Freight Logistics Mgmt. Maintenance Services Transport Asset-Based Revenue Asset-light Logistics Revenue ArcBest Total Revenue 3Q’15 TTM – $1.94 Billion 3Q’15 TTM – $787 Million 3Q’15 TTM – $2.68 Billion FY2014 – $1.93 Billion FY2014 – $7
Slide 8: ABF Freight
One of North America’s largest and most- trusted less-than-truckload (LTL) carriers Operational infrastructure includes an innovative dual network for regional and national transportation Offers services that include Time-Critical & Expedited, White Glove & Final Mile, Tradeshow, Flatbed and M
Slide 9: ABF Logistics
ABF Logistics houses several growing asset-light businesses that provide customers with end-to-end solutions to complex supply chain needs, including: Ground transportation solutions through freight brokerage and intermodal services Worldwide ocean shipping services in either full- container (FC
Slide 10: Panther Premium Logistics
Largest independent full-service Premium Logistics® provider Customer verticals served include: 3PL, auto, manufacturing, high-value products, life sciences and government Panther meets extremely specific linehaul requirements such as temperature control, hazardous materials, geofencing, speci
Slide 11: FleetNet
Provides vehicle maintenance and repair management of emergency roadside events and fleet maintenance programs Services offered to commercial carriers and private fleets with medium and heavy duty equipment FleetNet is the largest independent manager of maintenance events and third party maint
Slide 12: ABF Moving
ABF Moving SM SM As part of ABF Logistics , ABF Moving offers moving and storage services to the following markets: − Employee relocations for corporate accounts − Military family members for the Department of Defense − Individual “do it yourself” consumers through our U-Pack® service The only c
Slide 13: Springboard for Growth
SPRINGBOARD FOR GROWTH ArcBest | 13
Slide 14: Springboard for Growth
Springboard for Growth The U.S. freight transportation market is $855 billion. Excluding private fleets, rail carload, parcel, water, and freight moving via pipeline, 46% of the market – nearly $390 billion – is available to us. Truckload $308B – 36% LTL $37B – 4% Air $29B – 3% Rail Intermodal $16B
Slide 15: Market Potential
Market Potential Approximate ArcBest Opportunity: $266B $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 Household Goods Moving & Storage White G
Slide 16: Market Opportunity
Market Opportunity Research indicates that nearly 75% of ABF and Panther customers have two or more logistics needs offered within our family of companies. Nearly 85% of current ABF and Panther customers would consider or strongly consider sourcing one or more of those additional logistics servi
Slide 17: How will ArcBest seek to grow the revenue of its asset-light logistics businesses?
How will ArcBest seek to grow the revenue of its asset-light logistics businesses? Sustained growth through new customer additions and cross-selling with established base of over 40,000 active ABF/Panther customers Continued development of services and resources to enhance growth in the fleet ma
Slide 18: Growth of the Asset-light Logistics Businesses
Growth of the Asset-light Logistics Businesses (1) (1) 2014 Revenue Growth 2014 EBITDA (in millions) (3) 31.9% $ 9.4 (2) 28.3% $ 27.0 15.3% $ 4.1 26.4% $ 40.5 (1)(2) (1)(2) Year % Revenue Growth EBITDA 2014 26.4% $ 40.5 2013 17.1% $ 28.0 2012 12.3% $ 20.9 (1) Amounts shown are before intersegment el
Slide 19: 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 $2,684 $2,613 3Q’15 LTM $2,300 $2,066 $1,908 Asset-Light Logistics 29% $1,658 ABF Freight $1,473 71% 2009 7% 2009 2010 201
Slide 20: Success Factors
SUCCESS FACTORS ArcBest | 20
Slide 21: Labor Contract - Annual Increases
AG. Labor Contract - Annual Increases 9 Freight Prior Contract Current Contract 2008-2013 November 2013-March 2018 Years 1-5 Years 2-5 Wages & Benefits Wages & Benefits 3.5 2.3-3% Compounded Annual Growth Rate Compounded Annual Year 1 Growth Rate Wages & Benefits -4.4 (Includes a 7% reduction in wag
Slide 22: Strong Industry Brands
Strong Industry Brands The ABF Freight brand is highly recognized and well-respected across the logistics space. There is also a tremendous amount of confidence and equity in the Panther brand. Research shows that creative problem- solving is viewed as the common DNA of both the ABF Freight an
Slide 23: Employee Excellence
Winner of 2014 President’s Trophy Employee Excellence American Trucking Associations: President’s Trophy for Safety, only seven-time winner – announced October 31, 2014 Excellence in Security Award, only six-time winner Claims & Loss Prevention Award, only six-time winner America’s Road Team
Slide 24: Innovative Technology Drives Success
Innovative Technology Drives Success Industry leading technology facilitates the success of all ArcBest companies Since January 1, 2015, the former ArcBest CFO has been leading ArcBest’s technology initiatives as Chief Innovation Officer, and as President of IT subsidiary ArcBest Technologies
Slide 25: Seamless Delivery of Customer Solutions
Seamless Delivery of Customer Solutions Enterprise-wide focus on providing the best answer for customers seeking multiple solutions from: ABF Logistics and Panther each offer services that complement both ABF Freight and each other, giving us the needed capabilities to be a holistic solutions pr
Slide 26: Historical & Current Financial Performance
HISTORICAL & CURRENT FINANCIAL PERFORMANCE 26
Slide 27: Financial Performance
Financial Performance $2,700 $200 $2,684 $2,613 $2,300 Recessionary Period Net Income reflects adjustments included in Non-GAAP reconciliation tables reported $2,066 in earnings press releases (primarily pension settlement charges and tax items). $1,882 $1,908 $1,837 $1,833 $1,770 Net Income (loss)
Slide 28: Revenue & Adjusted EBITDA
Revenue & Adjusted EBITDA $2,700 $400 $2,684 $2,613 $2,300 Recessionary Period $2,066 $1,882 $1,908 $1,837 $1,833 Adjusted EBITDA ( millions) $1,770 $1,635 $1,658 Revenue (millions) $1,473 $242 $217 $196 $190 $181 $176 $139 $128 $101 $96 $34 -$71 $0 -$100 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 29: Financial Statistics
Financial Statistics ABF Freight 2014 2013 % Change/Difference Revenue $ 1.93 billion $ 1.76 billion 9.6 % Operating Income (1) $ 55.4 million $ 11.9 million $ 43.5 million EBITDA $ 129.4 million $ 93.8 million $ 35.6 million Asset-light Logistics Businesses 2014 2013 % Change/Difference Revenue $ 7
Slide 30: Cash and Borrowing Availability
On October 22, 2015, ArcBest announced an increase in its quarterly cash dividend to $0.08/share (from the previous $0.06/share). 1Q’15 updated banking agreements provide ArcBest with total, maximum borrowing availability of $350 million. Potential Uses of Available Cash To fund ArcBest’s corporat
Slide 31: Investor Takeaways
Investor Takeaways History of growth of logistical services in our legacy business and in asset- light logistics businesses in response to customer needs and demands Strategy of profitable growth through comprehensive service offerings and organic investment in people and resources Opportuniti
Slide 32: Additional Information
ADDITIONAL INFORMATION ArcBest | 32
Slide 33: ArcBest Corporation Subsidiaries
ArcBest Corporation Subsidiaries ABF FreightSM 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 an
Slide 34: ArcBest Corporation Subsidiaries
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 35: ArcBest Corporation Subsidiaries
ArcBest Corporation Subsidiaries ArcBest Technologies provides our operating companies with in-house, purpose-built digital solutions to complex shipping needs. As the transportation and logistics market continues to change rapidly, our constantly evolving solutions and robust support provide ArcBes
Slide 36: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/15 9/30/14 % Change 12/31/14 12/31/13 % Change Revenue $ 709.4 $ 711.3 -0.3% $ 2,612.7 $ 2,299.5 13.6% Operating Income (1) 34.2 33.7 75.8 21.2 (1) Net Income $
Slide 37: ArcBest Corporation
ArcBest Corporation Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 9/30/15 9/30/14 12/31/14 12/31/13 Operating Income Amounts on a GAAP basis $ 33.4 $ 32.9 $ 69.2 $ 19.1 Pension settlement expense, pre-tax 0.8 0.8 6.6 2.1 Non-GAAP amounts $ 34.2 $ 3
Slide 38: Condensed Cash Flows
Condensed Cash Flows Millions ($000,000) Nine Months Ended September 30, 2015 Condensed Cash Flows (Unaudited) Sources (Uses) of Cash Net Income $ 39.9 Depreciation and Amortization 65.1 Amortization of Intangibles 3.1 Amortization of Actuarial Losses of Benefit Plans and Pension Settlement Expense
Slide 39: ABF Freight
ABF Freight Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/15 9/30/14 % Change 12/31/14 12/31/13 % Change Revenue $ 511.3 $ 523.4 -2.3 % $ 1,931.0 $ 1,761.7 9.6 % Operating Income 27.1 25.4 55.4 11.9 Operating Ratio 94.7% 95.2%
Slide 40: 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) 9/30/15 9/30/14 % Change 12/31/14 12/31/13 % Change Premium Logistics Revenue $ 73.6 $ 82.8 -11.2% $ 316.7 $ 246.8 28.3 % (Panther) Oper. Inc. 2.7
Slide 41: Equity, Cash & Outstanding Debt Position
Equity, Cash & Outstanding Debt Position $700 $600 $500 $400 Millions $300 $200 $100 $0 Dec. '05 Dec. '06 Dec. '07 Dec. '08 Dec. '09 Dec. '10 Dec. '11 Dec. '12 Dec. '13 Dec. '14 Stockholders' Equity Cash & Short-term Investments Total Debt Note: 2009, 2010, 2011 & 2014 increased debt reflects the fi
Slide 42: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 180.0 160.0 $168 140.0 $148 $143 $144 $136 120.0 Millions 100.0 $105 $101 $94 80.0 $85 $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 Net Capex Cash Provided by Operations Note: 2009 - 2014
Slide 43: 2015 Net Capital Expenditures
2015 Net Capital Expenditures $200.0 $180.0 $160.0 $160 $140.0 $120.0 Millions $100.0 $110 $90-$95 $80.0 $60.0 $40.0 $20.0 $30 $20 $0.0 Revenue (1)(4) Real Estate (2) Other Total Net Capital Depreciation and (3) Equipment Expenditures Amortization Expenditures 1. Revenue equipment purchases at ABF F
Slide 44: ABF Freight System Map
ABF Freight System Map 247 Service Centers 98.6% Penetration Service Centers Distribution Centers NOTE: Points in Mexico represent sales offices only. 44
Slide 45: ABF Freight Billed Revenue per Hundredweight (including FSC)
45 '15 3Q 15 ' 2Q 15 ' 1Q '14 4Q 14 ' 3Q '14 2Q 14 ' 1Q 13 ' 4Q 13 ' 3Q 13 ' 2Q 13 ' 1Q 12 ' 4Q 12 Revenue per Hundredweight, Including Fuel Surcharge ' 3Q '12 2Q 12 ' 1Q '11 4Q 11 ABF Freight Billed Revenue per Hundredweight (including FSC) ' 3Q 11 ' 2Q '11 1Q 10 ' 4Q '10 3Q 10 ' 2Q 10 ' 1Q '09 4Q
Slide 46: ABF Freight Cargo Claims Percentage
ABF Freight Cargo Claims Percentage 1.10% 1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Net Cash Payout as a Percent of Total Revenue 46
Slide 47: ABF Freight Total Shipments
47 Sep-15 Sep-15 Jul-15 Jul-15 May-15 May-15 Mar-15 Mar-15 Jan-15 Jan-15 Nov-14 Nov-14 Sep-14 Sep-14 Jul-14 Jul-14 May-14 May-14 Mar-14 Mar-14 Jan-14 Jan-14 Nov-13 Nov-13 Sep-13 Sep-13 Jul-13 May-13 Jul-13 Mar-13 May-13 Jan-13 Mar-13 Nov-12 Total Shipments Jan-13 Month Ending Date Total DSY hours Se
Slide 48: Panther uPack ArcBest
Panther uPack ArCBest Corporation