In a surprise move, transportation firm ArcBest Corp. announced on Wednesday a reorganization that included the abrupt departures of the founder and CEO of MoLo Solutions Inc., a 6-year-old truckload brokerage business that ArcBest acquired in November 2021 for an upfront $235 million cash payment and an earn-out figure that could have pushed the total to $450 million had MoLo met specific performance criteria between 2023 and 2025.
Fort Smith, Arkansas-based ArcBest (NASDAQ: ARCB) announced that Matt Vogrich, who founded Chicago-based MoLo in 2017, and Andrew Silver, who joined MoLo the following year and was CEO, were no longer with the company, effective immediately.
The internal announcement from Judy R. McReynolds, ArcBest’s chairman, president and CEO, made no mention as to why the two were let go. Two individuals close to the situation said the departures were just a matter of time. One of the individuals said the breakups stemmed largely from ongoing culture clashes between Vogrich and Silver and the ArcBest hierarchy.
There was nothing in the public domain indicating that MoLo was falling short of its performance goals. According to a third individual, MoLo’s 2022 target was to break even, but it actually had $30 million in earnings before interest, taxes, depreciation and amortization. It also expected to exceed very modest EBITDA targets for 2023, according to the individual.
A source close to Silver, son of brokerage industry pioneer Jeffrey Silver, said the younger Silver was shocked by the news. In an online post Wednesday, Silver confirmed the news and said he wasn’t able to bid farewell to his colleagues.
After the 2021 acquisition, MoLo was merged into ArcBest’s existing truckload brokerage arm. ArcBest runs an asset-based, less-than-truckload carrier known as ABF Freight System Inc. and operates an asset-light logistics division.
The MoLo deal advanced a key initiative for ArcBest to grow its asset-light operations to a level equal to its asset-based trucking unit, making ArcBest a top-15 freight broker. For all of 2022, the asset-light operations generated about $2.5 billion in revenue, a 59.7% year-on-year daily increase. The asset-based unit posted full-year revenue of $3 billion.
As part of Wednesday’s broad reorganization, Steven Leonard was named president and chief commercial officer of the asset-light business, effective immediately. Leonard, who had been the company’s chief sales and customer engagement officer, will continue in that role as well, ArcBest said.
Leonard will also oversee the truckload business, which had been MoLo’s legacy, until a permanent leader of the truckload operation is named, the company said.
In addition, Danny Loe, who had headed ArcBest’s asset-light logistics division and had been chief yield officer, will focus all his time as chief yield officer, where he will be devoted to building profitable strategic partnerships, ArcBest said.
In the memo, McReynolds said the company needed to operate in a “tightly-coordinated” manner across all groups, especially in the sales areas for truckload and LTL.