Arkansas Best Corporation Announces Improved Third Quarter 2010 Results
FORT SMITH, Ark., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced a third quarter 2010 net loss of $0.7 million, or $0.03 per share compared to a net loss of $5.6 million, or $0.23 per share in the third quarter of 2009.
"Continuing improvements in ABF's year-over-year and sequential tonnage trends contributed to better operating results and a reduction in our third quarter loss versus last year and last quarter," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer. "Throughout the third quarter, the monthly rate of increase in ABF's year-over-year tonnage improved. In addition, sequential monthly tonnage trends during the quarter were strong compared to recent history. Going forward, ABF must maintain freight growth combined with continued improvements in pricing in order to achieve acceptable levels of profitability."
Arkansas Best Corporation
Third Quarter 2010
- Revenue of $445.5 million, a per day increase of 11.7% from prior year quarter of $399.0 million
- Net loss of $0.03 per share compared to a net loss of $0.23 per share in the prior year period
ABF Freight System, Inc.®
Third Quarter 2010
- Revenue of $409.9 million compared to $369.8 million in third quarter of 2009, a per-day increase of 10.9%
- Total tonnage per day increase of 13.9% versus third quarter 2009 and a sequential increase of 6.9% versus second quarter 2010
- Total billed revenue per hundredweight of $23.38 compared to $23.98 in third quarter 2009, a decrease of 2.5%
- Operating loss of $2.6 million compared to an operating loss of $14.0 million in third quarter 2009
- Operating ratio of 100.6% compared to 103.8% in third quarter 2009
"The recent additions in shipments and tonnage that resulted in profitability improvements reflect the benefits of ABF's consultative approach with customers, leveraging the wide range of services we offer in the marketplace. ABF's experienced employees understand our customers' supply chains and respond by applying customized solutions to meet specific needs," said Ms. McReynolds. "In addition, consistent with the past, ABF's customers are benefiting from exceptional cargo care. ABF's third quarter cargo claim costs, as a percent of revenue, improved versus last year, and they are on pace to be below 2009's record-setting level. Customers value our careful handling of their shipments, making it an important element of developing long-term relationships."
"As market conditions have improved, the commentary on LTL pricing is more positive. ABF is focused on increasing yields by capitalizing on opportunities to improve individual account pricing," said Ms. McReynolds. "It is important to remember that industry pricing is at a historically low point and a return to consistent, adequate levels will take time. Recently, ABF implemented a general rate increase and others in our industry have also announced price increases. Though ABF's rate increase only began a little over one month ago, so far we are pleased with its level of customer acceptance. We believe that ABF's commitment to providing high quality logistics services will result in sustained pricing improvements and the opportunity to return to consistent profitability."
Late-2009 changes made to various nonunion fringe benefit costs had a positive impact on third quarter 2010 results. Arkansas Best continues to be on track to experience annual savings at the high end of the previously disclosed $15 - $18 million range. "Again, I want to express my appreciation to our nonunion employees who have made the necessary financial sacrifices during these challenging times," said Ms. McReynolds.
Recently Announced Litigation
This past Monday, ABF filed a lawsuit against the International Brotherhood of Teamsters ("IBT") and YRC Inc., New Penn Motor Express, Inc. and USF Holland, Inc. ("YRCW subsidiaries") seeking to declare the recently-announced ratification of modifications to the National Master Freight Agreement ("NMFA") null and void. In addition, ABF is seeking payment for damages associated with this recent NMFA modification and two other modifications that were granted to the YRC subsidiaries in 2009. Approximately 75% of ABF's employees are covered under the NMFA. ABF is an equal signatory to the NMFA which, as a national collective bargaining agreement, is designed to establish a single national standard for wages and other employment terms for all employers who are parties to the agreement.
"The purpose of Monday's lawsuit is to enforce the terms of the NMFA to ensure changes in wages, employment terms and conditions are not made for the exclusive benefit of one signatory party. ABF must have an equitable cost structure and a fair opportunity to compete effectively in the LTL marketplace. The terms of the recently approved side deal between the YRC subsidiaries and the IBT violate the provisions of the NMFA and they do not represent changes to the NMFA that are acceptable to ABF," said Ms. McReynolds.
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2010 third quarter results. The call will be today, Wednesday, November 3, at 11:00 a.m. ET (10:00 a.m. CT). Interested parties are invited to listen by calling (888) 221-6234. Following the call, a recorded playback will be available through the end of the day on November 17, 2010. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21484807. The conference call and playback can also be accessed, through December 3, on Arkansas Best's website at arkbest.com.
Company Description
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a transportation holding company. ABF Freight System, Inc., Arkansas Best's largest subsidiary, has been in continuous service since 1923. ABF provides transportation of less-than-truckload ("LTL") general commodities throughout North America. More information is available at arkbest.com and abf.com.
Forward-Looking Statements
The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this press release that are not based on historical facts are "forward-looking statements." Terms such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "plan," "predict," "prospects," "scheduled," "should," "would," and similar expressions and the negatives of such terms are intended to identify forward-looking statements. Such statements are by their nature subject to uncertainties and risk including, but not limited to, recessionary economic conditions; competitive initiatives, pricing pressures and effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates, the impact of any limitations on our customers' access to adequate financial resources; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best Corporation's subsidiaries; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; relationships with employees, including unions; union and non-union employee wages and benefits, including changes in required contributions to multiemployer pension plans; governmental regulations and policies; future climate change legislation; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; and other financial, operational and legal risks and uncertainties detailed from time to time in Arkansas Best Corporation's Securities and Exchange Commission ("SEC") public filings.
The following tables show financial data and operating statistics on Arkansas Best Corporation and its subsidiary companies.
ARKANSAS BEST CORPORATION |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
Three Months Ended |
Nine Months Ended |
||||
September 30 |
September 30 |
||||
2010 |
2009 |
2010 |
2009 |
||
(Unaudited) |
|||||
($ thousands, except share and per share data) |
|||||
OPERATING REVENUES |
$445,531 |
$398,957 |
$1,216,768 |
$1,101,269 |
|
OPERATING EXPENSES AND COSTS |
447,307 |
411,194 |
1,264,619 |
1,169,405 |
|
OPERATING LOSS |
(1,776) |
(12,237) |
(47,851) |
(68,136) |
|
OTHER INCOME (EXPENSE) |
|||||
Interest and dividend income |
313 |
666 |
920 |
2,399 |
|
Interest expense and other related financing costs |
(853) |
(357) |
(1,853) |
(1,041) |
|
Other, net |
1,346 |
2,035 |
1,558 |
2,345 |
|
806 |
2,344 |
625 |
3,703 |
||
LOSS BEFORE INCOME TAXES |
(970) |
(9,893) |
(47,226) |
(64,433) |
|
FEDERAL AND STATE INCOME TAXES |
|||||
Current benefit |
(1,864) |
(3,302) |
(11,199) |
(25,515) |
|
Deferred provision (benefit) |
1,479 |
(1,263) |
(6,722) |
(69) |
|
(385) |
(4,565) |
(17,921) |
(25,584) |
||
NET LOSS |
(585) |
(5,328) |
(29,305) |
(38,849) |
|
LESS: NONCONTROLLING INTEREST IN |
|||||
NET INCOME OF SUBSIDIARY |
164 |
245 |
280 |
324 |
|
NET LOSS ATTRIBUTABLE TO |
|||||
ARKANSAS BEST CORPORATION |
$(749) |
$(5,573) |
$(29,585) |
$(39,173) |
|
LOSS PER SHARE |
|||||
Basic |
$(0.03) |
$(0.23) |
$(1.18) |
$(1.58) |
|
Diluted |
(0.03) |
(0.23) |
(1.18) |
(1.58) |
|
AVERAGE COMMON SHARES OUTSTANDING |
|||||
Basic |
25,199,123 |
25,047,975 |
25,166,678 |
25,047,270 |
|
Diluted |
25,199,123 |
25,047,975 |
25,166,678 |
25,047,270 |
|
CASH DIVIDENDS DECLARED PER COMMON SHARE |
$0.03 |
$0.15 |
$0.09 |
$0.45 |
|
ARKANSAS BEST CORPORATION |
|||
CONSOLIDATED BALANCE SHEETS |
|||
September 30 |
December 31 |
||
2010 |
2009 |
||
(Unaudited) |
Note |
||
($ thousands, except share data) |
|||
ASSETS |
|||
CURRENT ASSETS |
|||
Cash and cash equivalents |
$99,506 |
$39,332 |
|
Short-term investment securities |
45,751 |
93,861 |
|
Restricted cash equivalents and short-term investments |
50,755 |
50,857 |
|
Accounts receivable, less allowances (2010 – $3,378; 2009 – $3,470) |
145,812 |
115,459 |
|
Other accounts receivable, less allowances (2010 – $1,283; 2009 – $1,149) |
7,542 |
6,749 |
|
Prepaid expenses |
8,678 |
10,390 |
|
Deferred income taxes |
32,817 |
39,035 |
|
Prepaid and refundable income taxes |
6,994 |
24,726 |
|
Other |
4,532 |
4,333 |
|
TOTAL CURRENT ASSETS |
402,387 |
384,742 |
|
PROPERTY, PLANT AND EQUIPMENT |
|||
Land and structures |
239,616 |
240,185 |
|
Revenue equipment |
529,488 |
514,481 |
|
Service, office and other equipment |
159,929 |
157,885 |
|
Leasehold improvements |
22,144 |
21,839 |
|
951,177 |
934,390 |
||
Less allowances for depreciation and amortization |
542,258 |
505,538 |
|
408,919 |
428,852 |
||
OTHER ASSETS |
53,733 |
55,952 |
|
$865,039 |
$869,546 |
||
Note: The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
|||
ARKANSAS BEST CORPORATION |
|||
CONSOLIDATED BALANCE SHEETS – continued |
|||
September 30 |
December 31 |
||
2010 |
2009 |
||
(Unaudited) |
Note |
||
($ thousands, except share data) |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
CURRENT LIABILITIES |
|||
Bank overdraft and drafts payable |
$11,801 |
$21,941 |
|
Accounts payable |
72,652 |
59,386 |
|
Income taxes payable |
409 |
826 |
|
Accrued expenses |
149,193 |
150,799 |
|
Current portion of long-term debt |
10,844 |
3,603 |
|
TOTAL CURRENT LIABILITIES |
244,899 |
236,555 |
|
LONG-TERM DEBT, less current portion |
33,802 |
13,373 |
|
PENSION AND POSTRETIREMENT LIABILITIES |
68,807 |
67,445 |
|
OTHER LIABILITIES |
19,987 |
20,254 |
|
DEFERRED INCOME TAXES |
21,295 |
31,023 |
|
STOCKHOLDERS' EQUITY |
|||
Common stock, $0.01 par value, authorized 70,000,000 shares; |
|||
issued 2010: 26,879,458 shares; 2009: 26,749,265 shares |
269 |
267 |
|
Additional paid-in capital |
278,379 |
274,663 |
|
Retained earnings |
296,023 |
327,948 |
|
Treasury stock, at cost, 1,677,932 shares |
(57,770) |
(57,770) |
|
Accumulated other comprehensive loss |
(40,652) |
(44,212) |
|
TOTAL STOCKHOLDERS' EQUITY |
476,249 |
500,896 |
|
$865,039 |
$869,546 |
||
Note: The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
|||
ARKANSAS BEST CORPORATION |
|||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
Nine Months Ended |
|||
September 30 |
|||
2010 |
2009 |
||
(Unaudited) |
|||
($ thousands) |
|||
OPERATING ACTIVITIES |
|||
Net loss |
$(29,305) |
$(38,849) |
|
Adjustments to reconcile net loss to net cash |
|||
provided by operating activities: |
|||
Depreciation and amortization |
53,771 |
56,348 |
|
Other amortization |
200 |
220 |
|
Pension settlement expense |
178 |
158 |
|
Share-based compensation expense |
4,191 |
4,777 |
|
Provision for losses on accounts receivable |
453 |
2,432 |
|
Deferred income tax benefit |
(6,722) |
(69) |
|
Gain on sales of assets |
(142) |
(1,214) |
|
Excess tax benefits from share-based compensation |
(83) |
– |
|
Changes in operating assets and liabilities: |
|||
Receivables |
(31,595) |
(13,587) |
|
Prepaid expenses |
1,724 |
2,321 |
|
Other assets |
659 |
316 |
|
Income taxes(1) |
18,145 |
542 |
|
Accounts payable, accrued expenses and other liabilities |
10,399 |
10,469 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
21,873 |
23,864 |
|
INVESTING ACTIVITIES |
|||
Purchases of property, plant and equipment, net of capital leases(2) |
(4,322) |
(32,914) |
|
Proceeds from asset sales |
3,393 |
3,714 |
|
Purchases of short-term investment securities |
(51,065) |
(110,198) |
|
Proceeds from sales of short-term investment securities |
99,175 |
96,689 |
|
Business acquisition, net of cash acquired |
– |
(4,873) |
|
Capitalization of internally developed software and other |
(3,265) |
(3,962) |
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
43,916 |
(51,544) |
|
FINANCING ACTIVITIES |
|||
Payments on long-term debt |
(5,167) |
(1,401) |
|
Proceeds from issuance of long-term debt |
11,416 |
– |
|
Net change in bank overdraft |
(10,140) |
(1,220) |
|
Change in restricted cash equivalents and short-term investments |
103 |
– |
|
Deferred financing costs |
(35) |
(300) |
|
Payment of common stock dividends |
(2,340) |
(11,632) |
|
Excess tax benefits from share-based compensation |
83 |
– |
|
Proceeds from the exercise of stock options and other |
465 |
240 |
|
NET CASH USED IN FINANCING ACTIVITIES |
(5,615) |
(14,313) |
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
60,174 |
(41,993) |
|
Cash and cash equivalents at beginning of period |
39,332 |
100,880 |
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$99,506 |
$58,887 |
|
(1) 2010 includes $29.3 million in net federal and state income tax refunds. |
|||
(2) Capital lease financing of revenue equipment (primarily road tractors and trailers used in ABF's operations) totaled $21.4 million for the nine months ended September 30, 2010. |
|||
ARKANSAS BEST CORPORATION |
|||||||||
FINANCIAL STATEMENT OPERATING SEGMENT DATA |
|||||||||
AND OPERATING RATIOS |
|||||||||
Three Months Ended |
Nine Months Ended |
||||||||
September 30 |
September 30 |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
(Unaudited) |
|||||||||
($ thousands) |
|||||||||
OPERATING REVENUES |
|||||||||
ABF Freight System, Inc.(1) |
$409,916 |
$369,763 |
$1,122,384 |
$1,036,681 |
|||||
Other revenues and |
|||||||||
eliminations |
35,615 |
29,194 |
94,384 |
64,588 |
|||||
Total consolidated |
|||||||||
operating revenues |
$445,531 |
$398,957 |
$1,216,768 |
$1,101,269 |
|||||
OPERATING EXPENSES AND COSTS |
|||||||||
ABF Freight System, Inc.(1) |
|||||||||
Salaries, wages and |
|||||||||
benefits |
$259,613 |
63.3% |
$248,093 |
67.1% |
$745,037 |
66.4% |
$726,817 |
70.1% |
|
Fuel, supplies and expenses |
67,045 |
16.4 |
58,758 |
15.9 |
192,686 |
17.2 |
162,019 |
15.6 |
|
Operating taxes and |
|||||||||
licenses |
11,229 |
2.7 |
10,590 |
2.9 |
32,438 |
2.9 |
31,657 |
3.1 |
|
Insurance |
4,870 |
1.2 |
6,129 |
1.7 |
14,981 |
1.3 |
16,049 |
1.5 |
|
Communications and |
|||||||||
utilities |
3,830 |
0.9 |
3,455 |
0.9 |
11,008 |
1.0 |
10,989 |
1.1 |
|
Depreciation and |
|||||||||
amortization |
16,992 |
4.2 |
17,638 |
4.8 |
51,698 |
4.6 |
54,109 |
5.2 |
|
Rents and purchased |
|||||||||
transportation |
46,830 |
11.4 |
37,576 |
10.2 |
120,771 |
10.7 |
97,819 |
9.4 |
|
Gain on sale of property |
|||||||||
and equipment |
(74) |
– |
(254) |
(0.1) |
(498) |
– |
(1,215) |
(0.1) |
|
Other |
2,141 |
0.5 |
1,768 |
0.4 |
5,101 |
0.4 |
6,092 |
0.6 |
|
412,476 |
100.6% |
383,753 |
103.8% |
1,173,222 |
104.5% |
1,104,336 |
106.5% |
||
Other expenses and |
|||||||||
eliminations |
34,831 |
27,441 |
91,397 |
65,069 |
|||||
Total consolidated operating |
|||||||||
expenses and costs |
$447,307 |
$411,194 |
$1,264,619 |
$1,169,405 |
|||||
OPERATING INCOME (LOSS) |
|||||||||
ABF Freight System, Inc.(1) |
$(2,560) |
$(13,990) |
$(50,838) |
$(67,655) |
|||||
Other income (loss) and |
|||||||||
eliminations |
784 |
1,753 |
2,987 |
(481) |
|||||
Total consolidated |
|||||||||
operating loss |
$(1,776) |
$(12,237) |
$(47,851) |
$(68,136) |
|||||
(1) Includes U.S., Canadian, and Puerto Rican operations of ABF affiliates. |
|||||||||
ABF FREIGHT SYSTEM, INC. OPERATING STATISTICS |
||||||||
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
|||
Workdays |
64 |
64 |
190.5 |
190.0 |
||||
Billed Revenue (1) / CWT |
$ 23.38 |
$ 23.98 |
(2.5)% |
$ 23.52 |
$ 23.88 |
(1.5)% |
||
Billed Revenue (1) / Shipment |
$ 340.54 |
$ 322.00 |
5.8% |
$ 334.56 |
$ 312.32 |
7.1% |
||
Shipments |
1,201,683 |
1,144,026 |
5.0% |
3,366,599 |
3,322,499 |
1.3% |
||
Shipments / Day |
18,776 |
17,875 |
5.0% |
17,672 |
17,487 |
1.1% |
||
Tonnage (tons) |
875,156 |
768,022 |
13.9% |
2,394,510 |
2,172,555 |
10.2% |
||
Tons/Day |
13,674 |
12,000 |
13.9% |
12,570 |
11,434 |
9.9% |
||
(1) Billed Revenue does not include revenue deferral required for financial statement purposes under the company's revenue recognition policy. Includes U.S., Canadian and Puerto Rican operations of ABF affiliates. |
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Contact: |
Mr. David Humphrey, Vice President, Investor Relations and Corporate Communications |
|
Telephone: (479) 785-6200 |
||
SOURCE Arkansas Best Corporation
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