ArcBest announced a restructuring Thursday that will reduce its workforce by approximately 2%. It will also consolidate some less-than-truckload terminals, shedding roughly 1% of the doors from its network.
The Fort Smith, Arkansas-based transportation and logistics provider has over 14,000 employees.
“The reductions include employee separations, the elimination of certain open positions, and the non-replacement of certain positions vacated through retirements and other attrition,” a filing with the Securities and Exchange Commission said.
Its LTL business, ABF Freight, operates approximately 240 terminals with 9,600 doors. The filing said it would close 10 locations in small markets. The affected operations will be rolled into other nearby service centers. This change of operations has to be approved by the Teamsters per the National Master Freight Agreement.
ArcBest (NASDAQ: ARCB) also said it is 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.
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