ArcBest(US:ARCB)2021-09-30 19:48Summary of ArcBest Corporation's Acquisition of MoLo Solutions Conference Call Company and Industry - Company: ArcBest Corporation (NASDAQ:ARCB) - Acquisition Target: MoLo Solutions, a rapidly growing truckload brokerage based in Chicago - Industry: Transportation and Logistics Core Points and Arguments 1. Acquisition Announcement: ArcBest announced a definitive agreement to acquire MoLo Solutions, which is expected to significantly enhance growth and value creation for ArcBest by expanding its truckload brokerage services [7][16][27] 2. Financial Performance: ArcBest reported a preliminary expected consolidated revenue growth of 32% through Q3 2021, with asset-based revenue growth of 24% and 55% growth in the asset-light segment [8][9] 3. Strong Financial Position: As of mid-2021, ArcBest had a cash balance of nearly $425 million and total liquidity exceeding $660 million, positioning the company well for the acquisition [9][10] 4. Employee Growth: ArcBest added over 1,000 new employees in 2021, contributing to growth in its asset-light business [10] 5. Strategic Rationale: The acquisition is expected to nearly double ArcBest's capacity and enhance its ability to serve larger customers, thereby improving revenue growth in the truckload brokerage segment [11][12][13] 6. Market Opportunity: ArcBest operates in a market with $330 billion of available spend, with identified opportunities exceeding $3 billion among current customers [13][14] 7. Digital Capabilities: The combination of ArcBest and MoLo is expected to enhance digital business capabilities, providing better access to customer shipments and improving operational efficiencies [14][30][31] 8. Earnings Accretion: MoLo is expected to generate earnings accretion by Q4 2022, with a target of $25 million in annual adjusted EBITDA by 2023 [16][22] 9. Integration Plans: The integration of MoLo into ArcBest's operations will focus on creating a seamless solution for customers and carriers, leveraging MoLo's existing technology platform [41][44] 10. Revenue Mix Improvement: The acquisition is projected to increase ArcBest's asset-light revenue mix by 10 percentage points to 44% [25] Additional Important Content 1. MoLo's Background: Founded in 2017, MoLo has rapidly grown to become one of the fastest-growing truckload brokerages, recognized for its customer service and operational excellence [17][18] 2. Leadership Retention: MoLo's CEO and President will remain with ArcBest, ensuring continuity in leadership and operational strategy [18] 3. Synergy Potential: The acquisition is expected to create significant synergies in carrier procurement and cross-selling opportunities, enhancing overall service offerings [22][52] 4. Contract vs. Spot Business: MoLo's business is primarily contract-based (50-60%), compared to ArcBest's lower contract percentage (10-20%), which is expected to improve overall margins [70][71] 5. Long-term Strategy: The acquisition aligns with ArcBest's long-term strategy to balance asset-light and asset-based revenue, enhancing overall profitability and shareholder value [27][33] This summary encapsulates the key points discussed during the conference call regarding ArcBest's acquisition of MoLo Solutions, highlighting the strategic importance, financial implications, and operational synergies expected from the transaction.