ArcBest sells FleetNet in a $100 million cash deal

by Michael Tilley ([email protected]) 2,781 views 

Fort Smith-based ArcBest announced Tuesday (Feb. 28) the sale of its FleetNet segment to Cox Automotive in a $100 million cash deal. The maintenance and repair unit of ArcBest generated 6.4% of overall revenue in 2022 and 1.5% of operating income.

Cox Automotive is a division of Atlanta-based Cox Enterprises, which also owns Cox Communications. Cox Enterprises has more than 55,000 employees and more than $20 billion in annual revenue.

“FleetNet has been a valuable part of ArcBest, giving us insight and expertise in equipment maintenance and repair. As an integrated logistics company, it is no longer core to our growth strategy,” said Judy McReynolds, ArcBest chairman, president and CEO, said in a statement. “We’ve enjoyed working with the wonderful team at FleetNet and have benefitted greatly from their innovative mindset.”

FleetNet will continue to provide maintenance and repair services to ArcBest’s asset operations, according to Autumnn Mahar, ArcBest’s senior manager of public relations.

ArcBest acquired what would become FleetNet as part of the 1995 purchase of Worldway Corp. in a $172 million cash and debt deal.

For the full-year 2022, Cherryville, N.C.-based FleetNet had revenue of $343.056 million, up 35% compared with 2021 segment revenue. Operating income in 2022 for Fleetnet was $5.825 million, up 28% compared with the previous year. Total ArcBest operating income in 2022 was $399.269 million.

ArcBest posted record revenue in 2022 of $5.324 billion, up 33.7% compared with 2021 revenue of $3.98 billion. Full-year net income was $298.209 million, up 39.6% compared with the $213.521 million in 2021.

According to ArcBest, the deal closed Tuesday, with ArcBest expected to receive around $75 million and post an after-tax gain of around $50 million. Little Rock-based Stephens Inc. acted as financial advisor to ArcBest, and Vinson & Elkins acted as legal advisor. BakerHostetler acted as legal advisor to Cox Automotive.

FleetNet is the fourth sale of an ArcBest unit in the past seven years. The company sold two military moving businesses in December 2016 and December 2017 and sold a labor services segment in May 2021.

The deal may also improve ArcBest’s cash position. At the end of 2022, the company reported $158.372 million in cash and cash equivalents, more than double the $76.62 million at the end of 2021.

ArcBest also on Tuesday announced an increase in the total amount available under the company’s common stock repurchase program to $125 million.

“The sale of FleetNet and our strong balance sheet puts us in a great position to accelerate our return of capital to ArcBest’s shareholders,” McReynolds noted in the press release.

Full-year revenue was $5.324 billion, up 33.7% compared with 2021 revenue of $3.98 billion. Full-year net income was $298.209 million, up 39.6% compared with the $213.521 million in 2021.

ArcBest shares (NASDAQ: ARCB) closed Tuesday at $96.20, down $1.05 from the previous close. During the past 52 weeks, the share price has ranged between $103.57 and $65.16.