ArcBest cuts workforce and closes terminals in $40m restructuring
The Fort Smith-based carrier will shed approximately 2% of its staff and 10 less-than-truckload doors, incurring $82.3m in combined charges as it streamlines operations under the ArcBest banner.
ArcBest, the transportation and logistics provider based in Fort Smith, Arkansas, announced a restructuring plan on Thursday that will reduce its workforce by approximately 2% and close 10 less-than-truckload (LTL) terminals. The company will consolidate its LTL network, shedding roughly 1% of its doors, with affected operations rolled into nearby service centres. The restructuring also involves retiring the MoLo and Panther brands, discontinuing the Vaux Freight Movement System, and focusing Vaux operations on autonomous products. The changes are expected to generate $40 million in annualised cost savings and result in cash charges of $6 million to $7 million and non-cash impairment charges of $76.5 million. The operational changes require approval from the Teamsters under the National Master Freight Agreement.
The Fort Smith-based carrier, which employs more than 14,000 people, stated in a Securities and Exchange Commission filing that the reductions include employee separations, the elimination of certain open positions, and the non-replacement of roles vacated through attrition. Its LTL business, ABF Freight, operates approximately 240 terminals with 9,600 doors. The filing confirmed that 10 locations in small markets will close, with those operations integrated into other nearby service centres.
ArcBest (NASDAQ: ARCB) is also placing the MoLo Solutions, Panther Premium Logistics and ArcBest Technologies brands under the ArcBest banner. The company will retire the MoLo (truckload brokerage) and Panther (ground expedite services) brands. It is also discontinuing the Vaux Freight Movement System, which configures loading plans for mobile platforms that are loaded onto trailers. It is instead focusing its Vaux operations on the autonomous product line.
The changes are expected to drive approximately $40 million in annualized cost savings (on $286 million in last 12 months' adjusted EBITDA). However, the savings are not incremental, but will "support" the 2028 targets communicated at its investor day last September. The company said on its first-quarter call in April that training programs and various tech tools have already allowed it to significantly cut costs across its LTL network. In aggregate, the restructuring plan is expected to result in cash charges of $6 million to $7 million (mostly severance and benefits payments), and noncash impairment charges of $76.5 million (Panther and Vaux writeoffs). ArcBest also disclosed a separate $8.8 million noncash impairment tied to subleasing an asset-light office.
"Bringing MoLo and Panther capabilities together under one ArcBest brand better unifies us as one team for a more coordinated experience across our solutions," said ArcBest President and CEO Seth Runser in a news release. … "At the same time, streamlining our organization and operating footprint improves efficiency, strengthens profitability and positions us to grow without compromising the service our customers rely on." ArcBest raised second-quarter guidance in early June when it provided results for May. Asset-based margin performance is now expected to be 200 basis points better than its initial guide. The unit's operating ratio (inverse of operating margin) is expected to improve by 600 to 700 bps sequentially in the second quarter, implying a 90.8% adjusted OR (200 bps better year over year). (The unit normally sees 350 bps of sequential margin improvement from the first to the second quarter.) ArcBest's asset-light segment, which includes truck brokerage, is now forecast to record adjusted operating income of $3 million to $5 million in the second quarter. The updated guidance was $2 million higher at each end of the range.
