Arcbest Corporation · NASDAQ:ARCB
Arcbest — Q2 2021 Earnings Presentation
55 slides from Arcbest's earnings presentation, August 2021
Slide 1: Investor Presentation Q2 2021
INVESTOR PRESENTATION Q2 | 2021
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: A Transformed Company
A Transformed Company The ArcBest Story A Differentiated Business Model A TRANSFORMED The Future: Performance Accelerating COMPANY. PERFORMANCE ACCELERATING. 3
Slide 4: Profile of an Industry Leader
Profile of an Industry Leader 95+ Years of ≈240 Asset-Based North transportation and logistics experience American service centers 25,000+ #1 Safety award Owned and operated assets winner in the industry >98% 40,000+ Coverage of United States Approved contract carriers 4
Slide 5: ArcBest Today: Broad Suite of Logistics Solutions and Services
ArcBest Today BROAD SUITE OF LOGISTICS SOLUTIONS AND SERVICES 5
Slide 6: A Transformed Company: From LTL Trucking to Innovative Logistics
A TRANSFORMED To an COMPANY. From an LTL TRUCKING INNOVATIVE COMPANY LOGISTICS COMPANY 34% of revenue from logistics versus 7% in 2012 Four key acquisitions since 2012 Realignment and enhanced market approach under the ArcBest brand in 2017 Innovative asset-based space-based pricing and opportunisti
Slide 7: Our Strategy is Delivering Solid Results
Strategy in Action Our Strategy is Delivering Solid Results ArcBest Revenues ($B) ArcBest Operating Income ($M) +26% +302% $3.4 $3.1 $197 $3.0 $2.9 $2.8 $153 $2.7 $121 $109 $70 $49 2016 2017 2018 2019 2020 2Q'21 2016 2017 2018 2019 2020 2Q'21 TTM TTM 7 *Operating Income adjusted for certain unusual
Slide 8: 590 bps Improvement in Asset-Based Operating Ratio
Strategy in Action 97.9% 96.9% IMPROVEMENT IN 94.5% 94.2% ASSET-BASED 93.3% 92.0% OPERATING RATIO* 2016 2017 2018 2019 2020 2Q'21 TTM FREIGHT RECESSION and COVID-19 IMPACTS 590 bps IMPROVEMENT Compared to 2016 *Operating Ratio adjusted for certain unusual items. See Reconciliations of GAAP to non- G
Slide 9: A Differentiated Business Model
A Transformed Company. The ArcBest Story A Differentiated Business Model. A TRANSFORMED The Future: Performance Accelerating. COMPANY. PERFORMANCE ACCELERATING. 9
Slide 10: Leveraging a Differentiated Business Model
LEVERAGING A DIFFERENTIATED BUSINESS MODEL 10
Slide 11: A Values-Driven Culture
At the Center of our Company: A VALUES-DRIVEN CULTURE CREATIVITY We create solutions. INTEGRITY We do the right thing. COLLABORATION We work together. GROWTH We grow our people and our business. EXCELLENCE We exceed expectations. WELLNESS We embrace total health. 11
Slide 12: Environmental, Social and Corporate Governance (ESG)
▪ ArcBest strives to be a responsible corporate citizen — investing in the ENVIRONMENTAL, overall well-being of our employees, being mindful of our environmental impact, supporting our communities and acting with integrity in all SOCIAL aspects of our business. ▪ Beginning in 2019, we increased the
Slide 13: Positioned in Large Markets
POSITIONED IN LARGE MARKETS Less-Than- Expedite Domestic Truckload Shipping Transportation Management BUSINESS MODEL#1 $43B $5B $83B TA R G E T L A R G E A TTR A C TI V E MA R K E TS Premium International Warehousing Logistics & Distribution B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R $20
Slide 14: Large Cross-Sell Opportunity
LARGE CROSS-SELL OPPORTUNITY 38% BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS 78% OPPORTUNITY B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S Percent of customers Percent of customers using BUSINESS MODEL#3 D E V E L O P I N N O V A TI V E indica
Slide 15: Our Deepening Focus: Customer Relationships
OUR DEEPENING FOCUS: CUSTOMER BUSINESS MODEL#1 RELATIONSHIPS TA R G E T L A R G E A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 Recommend ✓ Higher customer retention rates ✓ Higher profitability D E E P E N C U S TO ME R Profitability R E L A TI O N S H I P S Advise & Cross-Sell BUSINESS
Slide 16: Cross-Sell Opportunity: Loyal Customer
CROSS-SELL OPPORTUNITY BUSINESS MODEL#1 LOYAL TA R G E T L A R G E A TTR A C TI V E MA R K E TS CUSTOMER B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S SPEND ON >$3.5B BUSINESS MODEL#3 D E V E L O P I N N O V A TI V E S O L U TI O N S ASSET-LIGHT BUSINESS MODEL#4 W I
Slide 17: Cross-Sell Case Study
CROSS-SELL CASE STUDY DEMONSTRATES SUCCESS OF OUR APPROACH SITUATION RESULTS BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS CLIENT INCREASED REVENUES Fitness equipment supplier B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R EXPANSION OF BUSINESS 287% R E L A TI O N S H I
Slide 18: Investments in Innovation
INVESTMENTS IN INNOVATION CUSTOMER EXPERIENCE ARCBEST CAPACITY BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 • Customer engagement • Serving shippers and • Digital connectivity to D E E P E N C U S TO ME R R E L A TI O N S H I P S focus: capacity pro
Slide 19: Investments in Innovation: Pilot Test Program at ABF Freight
INVESTMENTS IN INNOVATION PILOT TEST PROGRAM AT ABF FREIGHT Patented handling equipment, BUSINESS MODEL#1 TA R G E T L A R G E A TTR A C TI V E MA R K E TS software and a patented process to load and unload trailers Potential Benefits: • Improved transit performance B U S I N E S S M OD E L # 2 D E
Slide 20: Integrated Logistics Provider
INTEGRATED LOGISTICS PROVIDER FULL SUPPLY CHAIN SOLUTIONS BUSINESS MODEL#1 International shipping from TA R G E T L A R G E A TTR A C TI V E MA R K E TS 1 warehouse to port Managed transportation B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S 2 options for vendor con
Slide 21: Winning Customer Proposition
WINNING CUSTOMER PROPOSITION Solves my logistics and Is a trusted provider Makes it easy BUSINESS MODEL#1 TA R G E T L A R G E transportation challenges and partner to do business A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 Customer visibility Unmatched Digital D E E P E N C U S TO ME
Slide 22: Customer Experience Improvement
CUSTOMER EXPERIENCE IMPROVEMENT BUSINESS MODEL#1 TA R G E T L A R G E +3% +2% +5% +41% A TTR A C TI V E MA R K E TS B U S I N E S S M OD E L # 2 D E E P E N C U S TO ME R R E L A TI O N S H I P S Solves my Is a trusted Makes it easy to Net promoter logistics and provider and do business Score BUSINE
Slide 23: Pension Relief Act
PENSION RELIEF ACT Butch Lewis Emergency Pension Plan Relief Act of 2021 • The Butch Lewis Emergency Pension Plan Relief Act of • This is not a loan to these plans and there is no 2021 was included in the pandemic-relief American obligation for it to be paid back. It is an infusion of cash Rescue Pl
Slide 24: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION GROWTH AND OPERATING INITIATIVES • Capital investments consistent with service initiatives and strategy • Invest in operational efficiencies and innovation BUSINESS MODEL#1 • Selective tuck-in and strategic acquisitions TA R G E T L A R G E A TTR A C TI V E MA R K E TS SO
Slide 25: The Future: Performance Accelerating
A Transformed Company The ArcBest Story A Differentiated Business Model A TRANSFORMED The Future: Performance Accelerating COMPANY. PERFORMANCE ACCELERATING. 25
Slide 26: Continuing to Execute Three-Point Strategy
CONTINUING TO EXECUTE THREE-POINT STRATEGY A MULTI-YEAR PROFIT IMPROVEMENT PLAN 3 2 Optimize Cost Structure 1 More Balanced Advance adoption of Business Mix innovative technologies Expand Revenue Accelerate asset-light growth Opportunities Continue to grow Deepen customer asset-based business relati
Slide 27: Clear Long-Term Financial Goals
CLEAR LONG-TERM FINANCIAL GOALS Low 90s 50% Expanded Asset-Based Of Revenues From Earnings Asset-Light Business Operating Ratio (currently 34% in 2Q’21) Multiple 27
Slide 28: Current Initiatives & Priorities
CURRENT • Efficiently meet customers where they want to do business with us INITIATIVES & while insuring the financial strength of ArcBest PRIORITIES • Deepen customer relationships – increase the number of customers using multiple ArcBest services • Advance supply chain conversations addressing sig
Slide 29: Current Low Valuation Set to Improve
P/E June 2021 CURRENT LOW (BASED ON FY2021 CONSENSUS ESTIMATES) VALUATION Asset-Based 30.8X SET TO Peer Avg IMPROVE AS Logistics Peer Avg 18.0X STRATEGY 11.0X EXECUTION ADVANCES ASSET-BASED LOGISTICS PEERS INCLUDE PEERS INCLUDE • Old Dominion • Landstar • C.H. Robinson • J.B. Hunt • Saia • Echo • Hu
Slide 30: Why ArcBest Will Continue to Outperform
IN SUMMARY WHY ARCBEST WILL CONTINUE TO OUTPERFORM Strong financial profile Winning customer proposition Develop innovative solutions Deepen customer relationships Target large attractive markets 30
Slide 31: Additional Information
ArcBest ADDITIONAL INFORMATION
Slide 32: ArcBest Consolidated
ARCBEST CONSOLIDATED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/21 6/30/20 % Change 12/31/20 12/31/19 % Change Revenue $ 949.0 $ 627.4 51.3% $2,940.2 $2,988.3 (2.2%) Operating Income* 74.8 25.1 120.8 109.0 Net Income* $ 53.1
Slide 33: ArcBest Consolidated
ARCBEST CONSOLIDATED Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended Millions ($000,000) 6/30/2021 6/30/2020 12/31/2020 12/31/2019 Operating Income Amounts on a GAAP basis $ 74.3 $ 20.4 $ 98.3 $ 63.8 Innovative technology costs, pre-tax (1) 7.4 4.7 22.6 15.7 Gain on sal
Slide 34: ArcBest Consolidated: Notes to Non-GAAP Financial Tables
ARCBEST CONSOLIDATED NOTES TO NON-GAAP FINANCIAL TABLES The following footnotes apply to the non-GAAP financial tables in the previous slide. 1) Represents costs associated with the freight handling pilot test program at ABF Freight. 2) Gain recognized for the three months ended June 30, 2021 relate
Slide 35: ArcBest Consolidated Cash Flow
ARCBEST CONSOLIDATED In Millions TTM Consolidated Cash Flow 6/30/21 Cash and Short-term Investments, beginning of period $ 574 Net Income 137 Depreciation and amortization (a) 121 Pension settlement expense and amortization of actuarial losses 9 on benefit plans and share-based compensation Net chan
Slide 36: Asset-Based
ASSET-BASED Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 6/30/21 6/30/20 % Change 12/31/20 12/31/19 % Change Revenue $ 652.8 $ 460.1 41.9% $2,092.0 $2,144.7 (3.0%) Operating Income* 71.4 25.8 121.3 118.8 Operating Ratio* 89.0% 94.4
Slide 37: Asset-Light
ASSET-LIGHT Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Millions ($000,000) 6/30/21 6/30/20 % Change 12/31/20 12/31/19 % Change ArcBest Revenue $ 270.7 $ 151.5 78.7% $ 779.1 $ 738.4 5.5% Operating Income* 8.2 1.3 9.6 6.3 FleetNet Revenue $ 59.5 $ 46.4 28.2% $ 205.0
Slide 38: Net Capital Expenditures vs. Operating Cash
NET CAPITAL EXPENDITURES VS. OPERATING CASH 300 250 $255 200 $206 Millions $170 150 $152 $152 $147 $144 $146 $143 $146 $134 100 $112 $101 $94 $92 $85 $86 $77 $69 50 $42 $26 $24 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net Capex Cash Provided by Operations Note: Capital expenditures a
Slide 39: 2021 Net Capital Expenditures (Estimated)
2021 NET CAPITAL EXPENDITURES (ESTIMATED) $200 $180 $160 $160 - $170 $140 $120 Millions $115 - $120 $100 $100 $80 $60 $40 $20 $4 $0 Revenue Equipment Total Net Capital Depreciation and Intangible Asset Expenditures Amortization Amortization • Total Net Capital Expenditures, including financed equipm
Slide 40: Asset-Based Billed Revenue per Hundredweight
ASSET-BASED BILLED REVENUE PER HUNDRED WEIGHT (INCLUDING FSC) $40.00 August 2017 implementation $38.00 of space-based pricing $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 Decrease reflects lower fuel surcharge and freight mix $24.00 changes related to the addition of transactional shipments $22.00 $20.
Slide 41: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated On a preliminary basis, July 2021 consolidated revenues grew approximately 33% on a per day basis compared to July 2020, reflect
Slide 42: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment Year-over-Year Monthly Total Daily Business Trends 1) Statistics for the full month of July 2021 have not been finalized and are
Slide 43: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment July 2021 Business Update Statistics for July 2021 have not been finalized. Preliminary Asset-Based financial metrics and busines
Slide 44: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Segment 3Q’21 Other Items • 64 Working Days in both 3Q’21 and 3Q’20 • Projected Innovative Technology Costs in our Asset-Based business a
Slide 45: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Light ArcBest Operating Segment [Excluding FleetNet] Year-over-Year Monthly Total Daily Business Trends 1) Statistics for the full month of Jul
Slide 46: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated 3Q’21 – Projected • Loss in the “Other and eliminations” segment (non-GAAP basis): $5 million vs. $3 million in 3Q’20 • Interest
Slide 47: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated Capital Expenditures • 2021 Total Net Capital Expenditures, including financed equipment: $160 million to $170 million, reflecti
Slide 48: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. ADDITIONAL DETAILED INFORMATION Asset-Based Segment Annual Union Profit-Sharing Bonus • As provided in ABF Freight’s current Teamster labor contract, for the full years of 2019 through 2022
Slide 49: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated Tax Rate • ArcBest’s second quarter 2021 effective GAAP tax rate was 17.0%. • During the second quarter, this rate was impacted by sever
Slide 50: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated “Other and eliminations” within Operating Income on the Operating Segment Data and Operating Ratios statement • The “Other and eliminati
Slide 51: Additional Information
ADDITIONAL INFORMATION The following information was included in an exhibit of an ArcBest 8-K filed on 8/2/21. ADDITIONAL DETAILED INFORMATION ArcBest Consolidated “Other, net” line within Other Income (Costs) on the Consolidated Statements of Operations • The “Other, net” line of ArcBest’s income s
Slide 52: ArcBest Consolidated
ARCBEST CONSOLIDATED (Unaudited) 2Q’21 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2016 2017 2018 2019 2020 TTM ($ millions) ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis (1) $ 34.1 $ 61.3 $ 109.1 $ 63.8 $ 98.3 $ 176.5 Restructuring charges, pre-tax (2) 10.3
Slide 53: ArcBest Consolidated
ARCBEST CONSOLIDATED (Unaudited) 2Q’21 RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES TTM ArcBest Corporation - Consolidated ($ millions) Consolidated Adjusted EBITDAR Net Income $ 137.7 Interest and other related financing costs 10.1 Income tax provision 36.5 Depreciation and amortization 1
Slide 54: Asset-Based
ASSET-BASED (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP 2Q’21 FINANCIAL MEASURES 2016 2017 2018 2019 2020 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% $ 158.6 93.2% Restr
Slide 55: Investor Presentation Q2 2021
INVESTOR PRESENTATION Q2 | 2021 55