ArcBest Corporation

Greetings and welcome to the ARCBES third quarter 2021 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded Tuesday, November 2, 2021. I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead.

Thank you for joining us today. On today's call, we will walk you through the details of our record third quarter earnings. Our presentation this morning will be done by Judy McReynolds, Chairman, President, and CEO of ArcBest, and David Cobb, Chief Financial Officer of ArcBest. Also joining us for the Q&A period will be Danny Lowe, ArcBest President of AssetLight Logistics and Chief Yield Officer. To help you better understand ArcBest and its results, some forward-looking statements could be made during this call. As we all know, Forward-looking statements, by their very nature, are subject to uncertainties and risk. For a more complete discussion of factors that could affect the company's future results, please refer to the forward-looking statements section of the company's press release and the company's most recent SEC public filings. In order to provide meaningful comparisons, certain information discussed in this conference call includes non-GAAP financial measures as outlined and described in the tables in our earnings press release. Reconciliation of the GAAP financial measures to the related non-GAAP measures discussed in this call are also provided in the additional information section of the presentation slides. As a reminder, the slides that Judy and David will be referring to here can be found on the ARCBEST website, arcb.com, in Exhibit 99.3 of the 8K that was filed earlier this morning, or you can follow along with us on the webcast. We will now begin with Judy.

Thank you, David, and good morning, everyone. This quarter, we achieved the highest quarterly revenue and operating income in ARC Best history, demonstrating the success of our growth strategy and cost management efforts and validating our strategic vision for the company. These results further strengthen our record-breaking 2021 performance and bolster our leading position as an integrated logistics powerhouse. I'd like to begin by highlighting some key achievements of our record third quarter performance and continuing business momentum. Then David Cobb will take you through the specifics of this quarter's financials in greater detail. And finally, I'll offer a few additional comments before we open it up for some questions. As noted on slide four, for the last few years, we've been executing on a three-point strategy to drive revenue growth and improve profitability. These efforts are clearly paying off, as underscored by our profit margin improvements and the increased consistency of our financial performance. The strength we are experiencing in our legacy business, combined with the capabilities we gain with the addition of MoLo, ensure we are well-positioned to continue advancing this strategy, meeting the expectations of our customers, and driving growth and creating value for our shareholders and other stakeholders. This quarter, we are proud of the progress we made toward our goal of balancing our revenue mix. Each step of the way, our willingness to listen and our agility allows us to better support customers who often need both asset-based and asset-light solutions. Our asset-based business offers many advantages and resources that allow ArcVest to craft customized solutions using assets we already own and manage. ABF Freight flourishes when utilized alongside solid asset light services because of the options we're able to provide our customers. These capabilities have been invaluable over the last few years as we have worked to make our customer experience truly seamless across the full breadth of our integrated solutions. To advance the third tenet of this strategy, optimizing our cost structure, We're adopting innovative technologies that help us serve our customers in their preferred channels as an industry-leading digital partner and operate our business in a more intelligent fashion. Our digital capabilities continue to provide us with a significant advantage in streamlining processes, reducing costs, and augmenting human expertise. We stay close to our customers and carrier partners to provide them the services and connectivity they need in the way they want to access them. Our efforts to advance our strategy in each of these three areas are instrumental in helping customers drive the economy forward and continuing to unlock incremental value for our shareholders. Turning to slide five, our third quarter performance outpaced our already record-breaking year-to-date revenue and operating income results. For the first time ever, Our consolidated quarterly revenue exceeded $1 billion. We delivered strong revenue growth across the organization, as illustrated by the year-over-year double-digit percentage increases in all of our operating segments. Building on this significant momentum, we are growing and expanding as an integrated logistics leader. We added MOLO solutions to the ArcBest family. We remain laser focused on serving our customers with customized solutions in the midst of very challenging times. We are responding to tight market demands with agility, expanding our capacity and investing in the right solutions to meet our customers' critical needs at a time, a critical time for their business. We are excited that we can profitably flex, growing our company and expanding our offering to better serve our clients, creating new opportunities for employees, and value for our shareholders at the same time. Yesterday, we announced our plans to increase the return of capital to ARCBEST shareholders by entering into a $100 million accelerated share repurchase program. With the strength of our balance sheet and our ability to generate solid cash flows, utilizing a portion of our cash resources in this way allows us to invest in our stock which doesn't reflect ARCBEST's intrinsic value or our prospects for growth and value creation. Along with our dividend program, enhancing our return of capital in this way illustrates the belief we have in our long-term strategy to grow as an integrated logistics company, meeting the needs of our customers and carrier partners each and every day. Turning to slide six, And as I mentioned earlier, yesterday was a monumental day for us in our efforts to best serve our customers across a broad suite of logistics solutions. We successfully closed the previously announced acquisition of Molo Solutions, a Chicago-based company that is one of the fastest-growing truckload brokerages in America. Importantly, this acquisition moves us significantly closer to delivering on the strategic objectives I just discussed. Bringing our two companies together significantly accelerates our growth by increasing the scale of our truckload brokerage services. Together with Molo, ARCVEST is a top 15 U.S. truckload broker with access to over 70,000 carrier partners, solidifying our position in the $91 billion and growing domestic transportation management market. With the transaction now closed, We are embarking on an exciting new chapter in our company's history, driven forward by the innovative thinking of our people. The reaction of all stakeholders, including those at ArcVest and MOLO, has been very positive. We look forward to welcoming members of the MOLO leadership team to create a world-class management team that can bring these two industry leaders together as a people-first integrated logistics powerhouse. As you can see on this slide, the addition of MOLO has already moved us toward a more balanced revenue mix, which better represents customer transportation and logistics spend. The MOLO acquisition is an important step to build and amplify our powerful portfolio of shipping and logistics services and allow us to continue expanding ARCVEST's role in the transportation marketplace. We have an exciting future ahead, and we enthusiastically welcome the MOLO team to our best. Moving to slide seven, we entered this transaction with a strong balance sheet, and after making the closing cash payment and considering our cash investment in the ASR, we remain in a solid financial position. Our cash and total liquidity are at impressive levels, and we are in a reasonable net debt position on a pro forma basis. Though we are currently dealing with some manufacturing delays, we are continuing our investment plans to expand asset-based capacity to support our growth objectives, as well as our programs to return capital to shareholders through dividends and the accelerated share repurchase program we just announced. With our strong balance sheet and resilient and growing free cash flow, we have the flexibility and firepower to simultaneously invest in organic initiatives and external growth opportunities while accelerating returns to shareholders. And now I'd like to turn it over to David Cobb to let him provide more details on our third quarter results.