Arcbest Corporation · NASDAQ:ARCB
Arcbest — Investor Presentation (May 2018)
40 slides from Arcbest's investor presentation, May 2018
Slide 1: ArcBest 1Q'18
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Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements and information in this presentation may constitute “forward-looking statements.” Terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “predict,” “project,” “scheduled,” “should,” “would,”
Slide 3: Logistics Leader
Logistics Leader $2.8 billion 13,000 1923 Revenue in 2017 Employees Founded 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: Our Vision
OUR VISION ArcBest
Slide 6: We grow our people and our business
We grow our people and our business
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: Increasing Supply Chain Complexity
Increasing Supply Chain Complexity As a fully integrated logistics enterprise, ArcBest provides our customers with a superior, industry leading total customer experience. Objectives: Ensure ease of doing business Ensure customers feel good about their experience Deliver product benefits and fe
Slide 10: Powerfully Positioned Differentiators
Powerfully Positioned Differentiators 1 Deep Spirit of Long-Lasting Assured Understanding Pragmatic and Values-Driven Customer Capacity of Profitability Disruptive Culture Relationships Options Drivers Innovation 10
Slide 11: Increasing Supply Chain Complexity: Customers are asking for
Increasing Supply Chain Complexity Customers are asking for: Seamless access to solutions through a single provider Expertise through a strategic business partner who is able to address complex challenges with clarity and simplicity Capabilities that open up unique supply chain design options and
Slide 12: 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 12
Slide 13: Optimal Conditions for Growth
Optimal Conditions for Growth Market Potential Approximate ArcBest Opportunity: $286B ® $38 B $5 B $62 B Domestic Transportation Less-Than-Truckload Expedite Shipping Management $20 B $49 B $39 B Premium Logistics International Warehousing & Distribution $17 B $13 B $43 B Moving Services Final Mile
Slide 14: Optimal Conditions for Growth: Steps Taken for Future 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 15: Optimal Conditions for Growth
Optimal Conditions for Growth Existing Opportunities: Research indicates that nearly 75% of our customers have two or more logistics needs offered by ArcBest. Nearly 85% of our customers would consider or strongly consider sourcing one or more of those additional logistics services from ArcBest. As
Slide 16: Optimal Conditions for Growth: Asset-Based Customers
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 17: Optimal Conditions for Growth: Expedite Customers
Optimal Conditions for Growth ArcBest Expedite Customers: Expedite & Premium Logistics 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 Pro
Slide 18: 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: • Continuing enhancements and redesign to further optimize the less-than-truckload linehaul
Slide 19: New Pricing Initiative
New Pricing Initiative Space-Based Pricing – LTL Shipments • Effective August 1, 2017, ArcBest began applying 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 provide freight
Slide 20: Consolidated Revenue & Operating Income
Powerfully Positioned Consolidated Revenue & Operating Income* $3,000 $120 $2,826 $2,875 $2,667 $2,700 Revenue $2,613 Adjusted Operating Income* ( millions) Operating Income* $2,300 $81 $76 $70 $2,066 $63 Revenue (millions) $1,908 $43 $1,658 $21 $11 -$12 -$54 $0 2010 2011 2012 2013 2014 2015 2016 20
Slide 21: Historical Financial Results
Historical Financial Results As of March 31, 2018 Powerfully Positioned Net Cash (Debt) ($73) Million Total Debt to LTM EBITDAR* 1.14X Total Debt to Capitalization 0.28X $700 Equity, Cash & Outstanding Debt Total Equity $666 Million $600 $500 $400 Millions $300 $200 $100 $0 Dec. '10 Dec. '11 Dec. '1
Slide 22: 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 23: Growth of the Asset-Light Businesses
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 $2,826 $2,875 1Q’18 TTM $2,613 $2,667 $2,700 $2,300 Asset-Light $2,066 31% $1,908 Asset-Based $1,658 69% $1,473 Millions 2009 7% 200
Slide 24: 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 25: 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 26: Q&A
Q&A SKIL iLL ; ArcBest | x
Slide 27: Additional Information
ADDITIONAL INFORMATION SKILL AbcBest | ~
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) 3/31/18 3/31/17 % Change 12/31/17 12/31/16 % Change Revenue $ 700.0 $ 651.1 8.4% $ 2,826.5 $ 2,700.2 5.1% (1) Operating Income 13.1 (8.3) 62.6 43.0 (1) Net Income $
Slide 29: ArcBest Consolidated
ArcBest Consolidated Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 3/31/18 3/31/17 12/31/17 12/31/16 Operating Income (Loss) Amounts on a GAAP basis (1) $ 12.7 $ (9.9) $ 53.5 $ 29.0 Restructuring charges, pre-tax (2) 0.4 1.6 3.0 10.3 Nonunion pensi
Slide 30: Consolidated Cash Flow
ArcBest Consolidated Trailing Twelve Month – March 31, 2018 In Millions Consolidated Cash Flow TTM 3/31/18 Cash and Short-term Investments, beginning of period $ 140 Net Income 77 Depreciation and amortization (a) 104 Pension settlement expense and amortization of actuarial losses on benefit plans a
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) 3/31/18 3/31/17 % Change 12/31/17 12/31/16 % Change Revenue $ 482.1 $ 464.4 4.6% $ 1,993.3 $ 1,916.4 4.4% Operating Income 13.4 (8.2) 57.0 37.1 Operating Ratio 97.2% 101.8% 9
Slide 32: Asset-Light
Asset-Light Three MonthsThree Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 3/31/18 3/31/17 % Change 12/31/17 12/31/16 % Change ArcBest Revenue $ 181.9 $ 152.9 19.0% $ 706.7 $ 640.7 10.3% Oper. Inc. 3.2 1.9 20.1 15.0 FleetNet Revenue $ 47.8 $ 40.2 18.9% $ 156.3 $ 162
Slide 33: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 160 $152 $152 140 $143 $144 $146 $143 $146 120 $112 100 Millions $105 $101 $94 80 $86 $85 $86 $77 $69 60 40 $44 $42 $42 20 $26 $24 $12 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Capex Cash Provided by Operations Note: Capital expenditures
Slide 34: 2018 Net Capital Expenditures (estimated)
2018 Net Capital Expenditures (estimated) $200.0 $180.0 $160.0 $155 - $165 Millions $140.0 $120.0 $100.0 $100 - $105 $100 $80.0 $60.0 $40.0 $48 $20.0 $17 $0.0 Revenue (1)(4) Real Estate (2) Other (6) Total Net Capital(5) Depreciation and (3) Equipment Expenditures Amortization Expenditures 1. Revenu
Slide 35: Asset-Based Billed Revenue per Hundredweight
Asset-Based Billed Revenue per Hundredweight (including FSC) $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 Revenue per Hundredweight, Including Fuel Surcharge 35
Slide 36: 2018 Information Provided on May 10, 2018
2018 Information Provided on May 10, 2018 • Pension expense, including settlement charges, for 2Q’18 is currently estimated to be approximately $2 million, pre-tax, or $1.5 million after-tax. We estimate cash funding of approximately $10 million and a pre-tax settlement termination charge of approxi
Slide 37: 2018 Information Provided on May 10, 2018
2018 Information Provided on May 10, 2018 • Our first quarter effective tax rate was a benefit rate of 10.7%. As we saw in the fourth quarter, our financial results and tax rate continued to be impacted by the Tax Reform Act that became law in late December. As mentioned last quarter, we recorded a
Slide 38: 2018 Information Provided on January 31, 2018
2018 Information Provided on January 31, 2018 • For 2018, total net capital expenditures, including equipment expected to be financed, are estimated to range from $155 million to $165 million. This includes revenue equipment purchases of approximately $100 million, primarily for ArcBest’s Asset-Base
Slide 39: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CONSOLIDATED (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL 1Q’18 MEASURES 2010 2011 2012 2013 2014 2015 2016 2017 TTM (5) ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis $ (54.5) $ 9.8 $ (14.6) $ 19.1 $ 69.2 $ 75.5 $ 29.0 $ 53.5 $ 68.3 Res
Slide 40: ArcBest
» ArcBest pew, ARCBEST"° 1Q'18 SKILLQ iy ILL