Arcbest Corporation · NASDAQ:ARCB
Arcbest — Q3 2022 Earnings Presentation
50 slides from Arcbest's earnings presentation, November 2022
Slide 1: Investor Presentation
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, including, among others, statements regarding (i) our expectations about our intrinsic value or o
Slide 3: Profile of an Industry Leader
PROFILE OF AN INDUSTRY LEADER 99+ #1 >98% ~240 27K+ TOP 15 80K+ Years of Safety award Coverage of Asset-Based Owned U.S. Approved transportation winner in the United States North American revenue Truckload contract and logistics industry service centers equipment Broker carriers experience 3
Slide 4: Broad Suite of Logistics Solutions
Premium Less-than- Managed Broad Truckload Logistics Truckload Transportation Suite of Logistics Solutions Expedite & Time Critical International Air & Ocean Supply Chain Optimization Product Launch and Services Final Retail Trade Show Warehousing Mile Logistics Shipping 4
Slide 5: An Integrated Logistics Company
A N I N T E G R AT E D L O G I S T I C S C O M PA N Y Ongoing investment in technology and of revenue from equipment 45% logistics YTD (through 3Q’22) versus 7% in 2009 Realignment and enhanced market approach under the ArcBest Five key logistics brand in 2017 5 acquisitions since 2012 Opportunistic
Slide 6: MoLo Acquisition Advances Strategy
(1) M O L O A C Q U I S I T I O N A D VA N C E S S T R AT E G Y Top 15 U.S. Truckload Broker in the Growing Domestic Transportation Management Marketplace [$139 Billion(2)] + Revenue(3) $5.3B Customers ~30,000 ~500 ~30,500 Employees ~14,700 ~700 15,000+ Carriers ~40,000 ~45,000 80,000+ (Net of overl
Slide 7: Strategy in Action
Strategy in Action Our strategy is delivering solid results Revenues ($B) Operating Income ($M) Earnings Per Share (Non-GAAP) (Non-GAAP) (1) (1) +96% +811% +1136% $13.97 $5.3 $492 $8.52 $4.0 $318 $3.1 $3.0 $2.8 $2.9 $4.22 $2.7 $160 $3.42 $3.14 $118 $128 $76 $1.13 $1.61 $54 2016 2017 2018 2019 2020 2
Slide 8: Strategy in Action: Asset-Based Operating Ratio Improvement
Strategy in Action 97.9% 96.9% 94.5% 94.2% 93.3% Improvement in Asset-Based 88.8% Operating 86.0% Ratio* 2016 2017 2018 2019 2020 2021 3Q'22 TTM (Non-GAAP) FREIGHT RECESSION COVID-19 IMPACTS *Operating Ratio adjusted for certain unusual items. See Reconciliations of GAAP to non-GAAP Financial Measur
Slide 9: A Values-Driven Culture
At the Center of our Company: A VALUES-DRIVEN CULTURE Creativity Integrity Collaboration We create We do the We work solutions right thing together Growth Excellence Wellness We grow our We exceed We embrace people and our expectations total health business 9
Slide 10: Environmental, Social and Corporate Governance
ESG Environmental, Social And Corporate Governance ESG HIGHLIGHTS • AA rating by MSCI distinguishes ArcBest as a leader in ESG among • Member of FreightWaves Carbon Emissions cohort transportation and logistics peers • Signed DOT’s Transportation Leaders Against Human • Recognized as one of America’
Slide 11: Leveraging a Differentiated Business Model
L E V E R A G I N G A D I F F E R E N T I AT E D B U S I N E S S M O D E L 11
Slide 12: Positioned in Large Markets
Positioned in Large Markets Domestic Less-than- Expedite Transportation Truckload Shipping Management TARGET LARGE ATTRACTIVE MARKETS $53B $5B $139B DEEPEN CUST O M ER RELAT IO NS HI PS Premium International Warehousing Logistics & Distribution $20B $127B $55B DEVELO P INNO V AT I VE SO LUT IO NS Mo
Slide 13: Positioning Us for the Future
STRONG PERFORMANCE ENABLES INVESTMENT FOR GROWTH Customers continue to choose ArcBest as their ...Transforming Asset-Based / Asset-Light preferred partner for solving complex logistics Mix Over Time our business to challenges... better align with 18% 45% Revenue CAGR (2012-2021) our customer needs 8
Slide 14: Large Cross-Sell Opportunity
Large Cross-Sell Opportunity T ARG ET LARG E 40% AT T R ACT IVE M ARKET S 78% Opportunity DEEPEN CUSTOMER RELATIONSHIPS 78% percent of customers 40% percent of customers DEVELO P INNO V AT I VE SO LUT IO NS indicate a need of leverage more than one more than one logistics service offered logistics s
Slide 15: Deepening Customer Relationships
Our Deepening Focus: Customer Relationships T ARG ET LARG E AT T R ACT IVE M ARKET S DEEPEN CUSTOMER ✓ Higher customer retention rates RELATIONSHIPS Profitability Recommend ✓ Higher profitability DEVELO P INNO V AT I VE SO LUT IO NS Advise & Cross-Sell ✓ Greater share of customer business W INNING C
Slide 16: ArcBest's Customer-led Approach
ArcBest’s Customer-led Approach Retention rates are 9 percentage 9% points higher on cross-sold T ARG ET LARG E AT T R ACT IVE M ARKET S DEEPEN CUSTOMER 5x Revenue per account accounts RELATIONSHIPS is over 5X higher on >75% cross-sold accounts 4x DEVELO P INNO V AT I VE SO LUT IO NS Over 75% of rev
Slide 17: Investments in Innovation
Investments in Innovation CUSTOMER CAPABILITIES CAPACITY EXPERIENCE T ARG ET LARG E AT T R ACT IVE M ARKET S DEEPEN CUST O M ER RELAT IO NS HI PS • Customer engagement • Serving shippers and • Digital connectivity to focus: capacity providers in capacity sources DEVELOP INNOVATIVE - Voice of the cus
Slide 18: Pilot Test Program at ABF Freight
Investments in Innovation P I L O T T E S T P R O G R A M AT A B F F R E I G H T WHAT IT IS T ARG ET LARG E AT T R ACT IVE M ARKET S Patented handling equipment, software and a Potential patented process to load and unload trailers Benefits: DEEPEN CUST O M ER RELAT IO NS HI PS ✓ Improved transit pe
Slide 19: ArcBest Investment in Phantom Auto
ArcBest Investment in Phantom Auto ABOUT PHANTOM AUTO T ARG ET LARG E AT T R ACT IVE M ARKET S $25M Phantom Auto is solving fundamental challenges facing the On January 19, 2022, supply chain industry, and this investment aligns perfectly with ArcBest announced our ArcBest’s commitment to advancing
Slide 20: Winning Customer Proposition
Winning Customer Proposition T ARG ET LARG E AT T R ACT IVE M ARKET S Solves my logistics and Is a trusted provider Makes it easy transportation challenges and partner to do business DEEPEN CUST O M ER RELAT IO NS HI PS Customer visibility Unmatched Digital DEVELO P INNO V AT I VE SO LUT IO NS and a
Slide 21: Integrated Logistics Provider
Integrated Logistics Provider T ARG ET LARG E FULL SUPPLY CHAIN SOLUTIONS AT T R ACT IVE M ARKET S International shipping from DEEPEN CUST O M ER 1 warehouse to port RELAT IO NS HI PS Managed transportation 2 options for vendor consolidation at port DEVELO P INNO V AT I VE 3 Multiple transportation
Slide 22: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation Strong business performance enables ArcBest to reinvest in the business and provide returns to shareholders while maintaining a solid balance sheet and investment-grade credit metrics. T ARG ET LARG E Dividends & Share Repurchases AT T R ACT IVE M ARKET S • Sh
Slide 23: Three-Point Strategy Continues to Deliver Shareholder Value
Three-Point Strategy Continues to Deliver Shareholder Value & Drive Business Growth 3 2 Optimize Cost 1 More Balanced Structure Business Mix Advance adoption of Expand Revenue innovative technologies ENHANCED Accelerate SHAREHOLDER Opportunities Asset-Light growth VALUE Deepen customer relationships
Slide 24: Long-Term Financial Targets
(1) L O N G - T E R M F I N A N C I A L TA R G E T S (2) 2025 REVENUE O P E R AT I N G M A R G I N ROCE (Return on Capital Employed) ArcBest: 10%-15% ArcBest: Exceed Long-Term $7B-$8B Asset-Based Average 4%-6% (3) of S&P 500 Asset-Light (excluding FleetNet) Driving Growth, Enhancing Efficiency, and
Slide 25: Current Low Valuation Set to Improve as Strategy Execution Advances
Current Low Valuation Price to Earnings (BASED ON FY2023 CONSENSUS ESTIMATES) Set to Improve as Asset-Based Peer Avg 13.4X Strategy Execution Logistics Peer Avg 13.0X Advances 6.4X • Asset-Based peers include Old Dominion, Saia and Yellow • Logistics peers include C.H. Robinson, Hub Group, J.B. Hunt
Slide 26: Why ArcBest Will Continue to Outperform
IN SU MMA RY Why ArcBest Will Continue to Outperform Strong financial profile Winning customer proposition Develop innovative solutions Deepen customer relationships Target large attractive markets 26
Slide 27: Additional Information
ADDITIONAL INFORMATION ArcBest
Slide 28: ArcBest Consolidated
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/22 9/30/21 % Change 12/31/21 12/31/20 % Change Revenue $1,351.8 $1,016.7 33.0% $3,980.1 $2,940.2 35.9% Operating Income* 131.1 98.4 318.1 127.6 Net Income* $ 96
Slide 29: Reconciliations of GAAP to Non-GAAP Financial Measures
Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) Three Months Three Months Twelve Months Twelve Months ARCBEST CORPORATION - CONSOLIDATED Ended Ended Ended Ended Millions ($000,000), except per share data 9/30/2022 9/30/2021 12/31/2021 12/31/2020 Operating Income Amounts on a GAAP
Slide 30: ArcBest Consolidated Cash Flow
ArcBest Consolidated In Millions TTM Consolidated Cash Flow 9/30/22 Cash and Short-term Investments, beginning of period $ 468 Net Income 327 Depreciation and amortization (a) 138 Amortization of actuarial losses on benefit plans and share-based 12 compensation Net change in other assets and liabili
Slide 31: Asset-Based
Asset-Based Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/22 9/30/21 % Change 12/31/21 12/31/20 % Change Revenue $ 791.5 $ 681.2 16.2% $2,573.8 $2,092.0 23.5% Operating Income* 116.6 90.5 288.3 121.3 Operating Ratio* 85.3% 86.7
Slide 32: Asset-Light
Asset-Light Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 9/30/22 9/30/21 % Change 12/31/21 12/31/20 % Change ArcBest Revenue $ 515.2 $ 305.2 68.8% $1,300.6 $ 779.1 66.9% Operating Income* 18.9 11.1 44.7 13.4 FleetNet Revenue $ 89.3 $ 66.5 34.3% $
Slide 33: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 350 $324 300 250 $255 Millions 200 $206 $170 150 $152 $152 $147 $144 $146 $143 $146 $134 100 $112 $101 $104 $94 $92 $85 $86 $77 $69 50 $42 $26 $24 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Net Capex Cash Provided by Operations Note: Cap
Slide 34: 2022 Net Capital Expenditures (estimated)
2022 Net Capital Expenditures (estimated) $300 • Total Net Capital Expenditures, including financed equipment: $200 million to $210 million (lowered from the previously estimated range of $240 million to $250 million due to shifts in $250 expected timing of equipment related to manufacturers’ delays
Slide 35: Asset-Based Billed Revenue Per Hundredweight
Asset-Based Billed Revenue Per Hundredweight (including FSC) $50.00 $45.00 August 2017 implementation $40.00 of space-based pricing $35.00 $30.00 Decrease reflects lower fuel $25.00 surcharge and freight mix changes related to the addition of transactional shipments $20.00 Revenue per Hundredweight,
Slide 36: Additional Information
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated On a preliminary basis, October 2022 consolidated revenues grew approximately 18% on a per day basis compared to October 2021.
Slide 37: Additional Information: Capital Expenditures
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated Capital Expenditures FY’22 – Projected • Total Net Capital Expenditures, including financed equipment: $200 million to $210 mil
Slide 38: Additional Information: Asset-Based Yield Metrics
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment 3Q’22 Year-over-Year Yield Metrics • Billed Rev/Cwt on LTL-rated freight, excluding fuel surcharges, increased by a percentage i
Slide 39: Additional Information: October 2022 Business Update
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment October 2022 Business Update Statistics for October 2022 have not been finalized. Preliminary Asset-Based financial metrics and
Slide 40: Additional Information: October 2022 Business Update (cont.)
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment October 2022 Business Update (cont.) Excluding periods impacted by the pandemic, the average sequential change in ArcBest’s Asse
Slide 41: Additional Information: Asset-Light Business Trends
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Light ArcBest Operating Segment [Excluding FleetNet] 3Q’22 and October 2022 Monthly Total Daily Business Trends 1) Includes revenue of the acq
Slide 42: Additional Information: Annual Union Profit-Sharing Bonus
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. 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 202
Slide 43: Additional Information: Tax Rate
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated Tax Rate • ArcBest’s third quarter 2022 effective GAAP tax rate was 22.7%. • The “Effective Tax Rate Reconciliation” table of ArcBest’s
Slide 44: Additional Information: Other and Eliminations
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated “Other and eliminations” within Operating Income on the Operating Segment Data and Operating Ratios statement • The “Other and eliminat
Slide 45: Additional Information: Other, net
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 11/1/22. 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
Slide 46: ArcBest Consolidated Operating Income Reconciliation
ArcBest Consolidated (Unaudited) 3Q’22 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2016 2017 2018 2019 2020 2021 TTM ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis (1) $ 34.1 $ 61.3 $ 109.1 $ 63.8 $ 98.3 $ 281.0 $ 435.0 Restructuring charges, pre-
Slide 47: ArcBest Consolidated Diluted EPS Reconciliation
ArcBest Consolidated (Unaudited) 3Q’22 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2016 2017 2018 2019 2020 2021 TTM ArcBest Corporation - Consolidated ($ millions) Diluted Earnings Per Share Amounts on a GAAP basis $ 0.71 $ 2.25 $ 2.51 $ 1.51 $ 2.69 $ 7.98 $ 12.66 Restructuring charges,
Slide 48: Reconciliations: Consolidated Adjusted EBITDA
Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) Twelve Months Ended CONSOLIDATED ADJUSTED EBITDA (1) September 30, 2022 ($ millions) Net Income $ 326.4 Interest and other related financing costs 7.7 Income tax provision 100.1 Depreciation and amortization (2) 138.1 Amortization of
Slide 49: Asset-Based Reconciliation
Asset-Based (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL 3Q’22 MEASURES 2016 2017 2018 2019 2020 2021 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% $ 260.7 89.9%
Slide 50: Investor Presentation
Investor Presentation