Arcbest Corporation · NASDAQ:ARCB
Arcbest — Q3 2023 Earnings Presentation
53 slides from Arcbest's earnings presentation, October 2023
Slide 1: Investor Presentation 3Q'23
Investor Presentation 3Q’23
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 100 #1 >98% ~240 ~29K TOP 15 95K+ 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: Our 100th Anniversary: The Heart of 100
Our 100th Anniversary: The Heart of 100
Slide 5: Broad Suite of Logistics Solutions and Services
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 5
Slide 6: 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 in 2022 versus 7% in 2009 Realignment and enhanced market approach under the ArcBest Five key logistics brand in 2017 5 acquisitions since 2012 Opportunistic addition of
Slide 7: Strategy in Action
Strategy in Action Our strategy is delivering solid results Revenues ($B) Operating Income ($M) Earnings Per Share (Unaudited)(1) (Non-GAAP, Unaudited)(1)(2) (Non-GAAP, Unaudited)(1)(2) +55% +68% +122% $13.52 $468 $5.0 $4.5 $9.00 $8.40 $314 $3.8 $258 $2.9 $2.8 $4.05 $2.8 $154 $123 $2.96 $3.28 $112 2
Slide 8: Strategy in Action: Asset-Based Operating Ratio Improvement
Strategy in Action 97.9% 96.9% 94.5% 94.2% Improvement 93.3% in Asset-Based 88.8% 90.6% Operating 86.4% Ratio (1) 2016 2017 2018 2019 2020 2021 2022 3Q'23 TTM (Non-GAAP) FREIGHT RECESSION COVID-19 IMPACTS FREIGHT RECESSION (1) Operating Ratio adjusted for certain unusual items. See Reconciliations o
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: 2023 Awards
2023 Awards Vaux recognized by Named to 2023 Forbes list of America’s Fast Company with an Best-in-State Employers for 4th “Innovation By Design” consecutive year Honorable Mention in #1 Transportation and Logistics Employer the Enterprise category in Arkansas Awarded five Earned third Named to Ques
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 Less-than- Expedite Domestic Transportation Warehousing Truckload Shipping Management & Distribution $60B $5B $159B $67B Premium International Moving Final Logistics Shipping Services Mile $20B $146B $24B $13B ArcBest Opportunity: ~$494B 12 Source: Armstrong & Associates,
Slide 13: 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 14: Our Focus: 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 15: ArcBest's Customer-Led Strategy Yields Results
A R C B E S T ’ S C U S T O M E R - L E D S T R AT E G Y Y I E L D S R E S U LT S 9% Retention rates are 9 percentage points >5x higher on cross-sold accounts Revenue per account is over 5X Over 75% of >75% higher on cross- revenue came from >4x digitally connected sold accounts customers Profit per
Slide 16: 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 17: 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 18: 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 19: 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 20: Balanced Approach to Capital Allocation
B A L A N C E D A P P R O A C H T O C A P I TA L A L L O C AT I O N 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. Dividends & Share Repurchases • Increased share
Slide 21: Three-Point Strategy Continues to Deliver Shareholder Value
Three-Point Strategy Continues to Deliver Shareholder Value & Drive Business Growth 1 2 3 Accelerate Growth Increase Efficiency Drive Innovation Optimize ABF network Develop and implement Secure new customers disruptive and game changing ENHANCED Drive scale and productivity to innovations Expand wi
Slide 22: Accelerating Performance Over Sustained Period
A C C E L E R AT I N G P E R F O R M A N C E O V E R S U S TA I N E D P E R I O D 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $5.3B Revenue $4.0B up 261% $2.3B $2.6B $2.7B $2.7B $2.8B $3.1B $3.0B $2.9B $1.9B $2.1B $1.5B $1.7B $473M Operating $318M Income $159M $118M $128M (
Slide 23: The ArcBest Advantage Drives Superior Results
The ArcBest Advantage … … Drives Superior Results Unmatched Market Visibility Shipment-level visibility to $25+ billion of annualized customer spend True integrated logistics allows for intelligent pricing and network and mode optimization partner in a growing $400B+ transportation Integrated & logi
Slide 24: Compelling Investment Opportunity
Compelling Competitive Moat Investment 100 Years of Logistics Experience Opportunity Sustainability Leader Effective Capital Allocation Strategy Significant Growth and Efficiency Opportunities Attractive Valuation 24
Slide 25: Current Low Valuation Set to Improve as Strategy Advances
Current Low Valuation Price to Earnings (BASED ON FY2024 CONSENSUS ESTIMATES) Set to Asset-Based 25.6X Improve as Peer Avg Strategy Logistics Peer Avg 17.3X Execution Advances 10.9X • Asset-Based peers include Old Dominion, Saia and XPO • 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 AWCBOSE yy) — ccc n sarin soe rans __ 2m
Slide 28: ArcBest Consolidated
ArcBest Consolidated (continuing operations)(1) (Unaudited) Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/23 9/30/22 % Change 12/31/22 12/31/21 % Change Revenue $1,128.4 $1,275.7 (9.4%) $5,029.0 $3,766.2 33.5% Non-GAAP Operatin
Slide 29: Reconciliations of GAAP to Non-GAAP Financial Measures
ARCBEST CORPORATION - CONSOLIDATED Three Months Ended Twelve Months Ended Millions ($000,000), except per share data 9/30/2023 9/30/2022 12/31/2022 12/31/2021 Reconciliations of Operating Income from Continuing Operations GAAP to Non-GAAP Amounts on a GAAP basis Innovative technology costs, pre-tax
Slide 30: ArcBest Consolidated Cash Flow
ArcBest Consolidated In Millions TTM Consolidated Cash Flow 9/30/23 Cash and Short-term Investments, beginning of period $ 301 Net Income 184 Depreciation and amortization (a) 143 Gain on sale of discontinued operations, net of taxes (52) Lease-related impairment charges 30 Change in fair value of c
Slide 31: Business Segments
Business Segments Three Months Three Months Twelve Months Twelve Months Ended Ended Per Day Ended Ended Per Day Millions ($000,000) 9/30/23 9/30/22 % Change 12/31/22 12/31/21 % Change Asset-Based Revenue $ 741.2 $ 791.5 (4.1%) $3,010.9 $2,573.8 17.0% Non-GAAP Operating Income(1) 82.8 116.6 409.6 288
Slide 32: Reconciliations of GAAP to Non-GAAP Financial Measures
Reconciliations of Three Months Ended Twelve Months Ended GAAP to Non-GAAP Millions ($000,000) 9/30/2023 9/30/2022 12/31/2022 12/31/2021 ASSET-BASED Financial Measures (Unaudited) Operating Income Amounts on a GAAP basis $ 74.8 89.9% $ 109.3 86.2% $ 381.1 87.3% $ 260.7 89.9% 1) Represents costs asso
Slide 33: Net Capital Expenditures vs. Operating Cash
Net Capital Expenditures vs. Operating Cash 500 450 $471 400 350 Millions 300 $324 250 $255 200 $211 $206 150 $170 $144 $152 $146 $146 $152 $147 $143 $134 100 $112 $101 $104 $94 $86 $92 $77 $85 50 $69 $42 $26 $24 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net Capex Cash Provi
Slide 34: 2023 Net Capital Expenditures (estimated)
2023 Net Capital Expenditures (estimated) $350 • Total Net Capital Expenditures, including financed equipment: $270 million to $285 million (from the previous $270 million to $295 million) $300 $270 - $285 • Approximately $60 million of previously planned 2022 net capital expenditures, associated wi
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 $25.00 Decrease reflects lower fuel surcharge and freight mix changes related to the addition of transactional shipments $20.00 Revenue per Hundredweight,
Slide 36: Additional Information: Asset-Based Yield Metrics
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Operating Segment 3Q’23 Year-over-Year Yield Metrics • Billed Rev/Cwt on core LTL-rated business, excluding fuel surcharges, increased
Slide 37: Additional Information: October 2023 Business Update
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Operating Segment October 2023 Business Update Statistics for October 2023 have not been finalized. Preliminary Asset-Based financial m
Slide 38: Additional Information: October 2023 Update (cont.)
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Based Operating Segment October 2023 Business Update (cont.) Excluding periods affected by the pandemic, the average sequential change in Arc
Slide 39: Additional Information: Asset-Light Business Trends
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS Asset-Light Operating Segment 3Q’23 and October 2023 Monthly Total Daily Business Trends 1) Statistics for the full month of October 2023 have not
Slide 40: Additional Information: Real Estate Impairment Charges
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated 3Q’23 - Real Estate Impairment Charges As a result of cost control efforts and strategic decisions, noncash lease-related real
Slide 41: Additional Information: 4Q'23 Projected Items
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated On a preliminary basis, October 2023 consolidated revenues decreased approximately 9% on a per-day basis compared to October 2
Slide 42: Additional Information: Other and Eliminations
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated “Other and eliminations” within Operating Income on the Operating Segment Data and Operating Ratios statement The “Other and e
Slide 43: Additional Information: MoLo Contingent Earnout Consideration
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated MoLo Contingent Earnout Consideration As previously disclosed, contingent earnout consideration for the MoLo acquisition will
Slide 44: Additional Information: Capital Expenditures
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated Capital Expenditures FY’23 – Projected • Total Net Capital Expenditures, including financed equipment: $270 million to $285 mi
Slide 45: Additional Information: Share Repurchase and Tax Rate
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated Share Repurchase Program Based on repurchases settled through Thursday, October 26, 2023, $48.2 million remains available unde
Slide 46: Additional Information: Other, net
Additional Information The following information was included in an exhibit of an ArcBest 8-K filed on 10/27/23. SUMMARY OPERATING AND FINANCIAL IMPACTS ArcBest Consolidated •“Other, net” line within Other Income (Costs) on the Consolidated Statements of Operations • The “Other, net” line of ArcBest
Slide 47: ArcBest Consolidated: Operating Income Reconciliation
ArcBest Consolidated (continuing operations)(1) (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2018 2019 2020 2021 2022 3Q’23 TTM ArcBest Corporation – Consolidated ($ millions) Operating Income Amounts on a GAAP basis (1) $ 103.6 $ 57.9 $ 93.7 $ 277.0 $ 394.5 $ 158.6 Restructuri
Slide 48: ArcBest Consolidated: Diluted EPS Reconciliation
ArcBest Consolidated (continuing operations)(1) (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2018 2019 2020 2021 2022 3Q’23 TTM ArcBest Corporation – Consolidated ($ millions) Diluted Earnings Per Share Amounts on a GAAP basis (1) $ 2.35 $ 1.33 $ 2.55 $ 7.86 $ 11.56 $ 5.22 Rest
Slide 49: Reconciliations of GAAP to Non-GAAP Financial Measures
Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) 1) Adjusted EBITDA is a primary component of the financial covenants contained in ArcBest Corporation’s Fourth Amended and Restated Credit Agreement. Twelve Months Ended Management believes Adjusted EBITDA to be relevant and useful i
Slide 50: Asset-Based
Asset-Based (Unaudited) RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES 2016 2017 2018 2019 2020 2021 2022 3Q’23 TTM Asset-Based ($ millions) Operating Income Amounts on a GAAP basis (1) $ 36.9 98.1% $ 57.9 97.1% $ 103.9 95.2% $ 102.1 95.2% $ 98.9 95.3% $ 260.7 89.9% $ 381.1 87.3% $ 240.8 91.
Slide 51: ArcBest Consolidated (including discontinued operations)
ArcBest Consolidated (including discontinued operations) $ millions RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ArcBest Corporation - Consolidated Operating Income Amounts on a GAAP basis (1) $ (147.9) $ (46
Slide 52: Reconciliations of GAAP to Non-GAAP Financial Measures
Reconciliations of RETURN ON CAPITAL EMPLOYED (ROCE)(1) Twelve Months Ended December 31, 2022 GAAP to Non-GAAP ($ millions) Financial Measures Net Income (Amounts on a GAAP basis from continuing operations) $ 294.6 (Unaudited) Non-GAAP Adjustments Gain on sale of subsidiaries, after-tax (2) (0.3) 1)
Slide 53: Investor Presentation
Investor Presentation