Arkansas Best Corporation Announces Improved Second Quarter 2010 Results
FORT SMITH, Ark., July 21 /PRNewswire-FirstCall/ -- Arkansas Best Corporation (Nasdaq:ABFS - News) today announced a second quarter 2010 net loss of $7.4 million, or $0.30 per share, compared to a net loss of $15.4 million, or $0.62 per share, in the second quarter of 2009.
"An improvement in daily tonnage levels at ABF was the major reason our second quarter loss narrowed compared to last year," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer. "We have been encouraged by the modest, but positive, pricing trend during the quarter and the fact that our customers continue to benefit from the traditional level of superior service for which ABF is known. However, overall freight levels and yields need to continue to improve in order for ABF to return to consistent profitability."
Arkansas Best Corporation
Second Quarter 2010
Revenue of $411.3 million, a per day increase of 13.4% from prior year quarter of $362.6 million
Net loss of $0.30 per share compared to a net loss of $0.62 per share in the prior year period
ABF Freight System, Inc.®
Second Quarter 2010
Revenue of $379.4 million compared to $343.8 million in 2009, a per-day increase of 10.4%
Total tonnage per day increase of 11.9% versus second quarter 2009 and a sequential increase of 14.0% versus first quarter 2010
Total billed revenue per hundredweight of $23.59 compared to $23.81 in second quarter 2009, a decrease of 0.9%
Operating loss of $12.6 million compared to an operating loss of $26.8 million in second quarter 2009
Operating ratio of 103.3% compared to 107.8% in second quarter 2009
"Though some additional labor and equipment have been required as a result of the recent tonnage increases, this quarter's improved operating ratio illustrates the operating leverage that is achieved from greater freight levels moving through the ABF network," said Ms. McReynolds.
"Compared to second quarter last year, ABF benefited from lower nonunion fringe benefit costs which remain on track to produce yearly savings at the high end of the previously discussed $15 – $18 million range. Additionally, workers' compensation and third-party casualty insurance claim costs, as a percent of revenue, were below the unusually high levels of last year's second quarter, though somewhat above longer-term historical averages."
"Recent competitor commentary suggests that there is a renewed industry focus on improved pricing and better operating margins," said Ms. McReynolds. "ABF has traditionally focused on individual account profitability by offering a high level of value to its customers in return for compensatory revenues. ABF's localized, personal service and its unique ability to 'do the difficult things well' results in a distinctive customer experience. We are finding that this level of service is once again valued in the marketplace."
"We have been encouraged by the improved economy so far this year and its resulting positive impact on our business. However, the economy remains fragile and we are therefore prepared for a modest rate of recovery. Our corporate strategy is designed to effectively manage through all market conditions," said Ms. McReynolds.
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2010 second quarter results. The call will be today, Wednesday, July 21, at 11:00 a.m. ET (10:00 a.m. CT). Interested parties are invited to listen by calling (877) 275-1257 or (706) 634-6529 (for international callers). Following the call, a recorded playback will be available through the end of the day on Thursday, August 12, 2010. To listen to the playback, dial (800) 642-1687 or (706) 645-9291 (for international callers). The conference call ID for the playback is 84971448. The conference call and playback can also be accessed, through Thursday, August 12, 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 Six Months Ended
June 30 June 30
2010 2009 2010 2009
(Unaudited)
($ thousands, except share and per share data)
OPERATING
REVENUES $411,347 $362,635 $771,237 $702,312
OPERATING
EXPENSES AND
COSTS 422,157 389,932 817,313 758,211
OPERATING
LOSS (10,810) (27,297) (46,076) (55,899)
OTHER INCOME
(EXPENSE)
Interest and
dividend
income 274 803 608 1,733
Interest
expense and
other
related
financing
costs (434) (344) (999) (685)
Other, net (457) 1,392 211 311
(617) 1,851 (180) 1,359
LOSS BEFORE
INCOME TAXES (11,427) (25,446) (46,256) (54,540)
FEDERAL AND
STATE INCOME
TAXES
Current
benefit (847) (2,805) (9,336) (22,213)
Deferred
(benefit)
provision (3,232) (7,277) (8,200) 1,194
(4,079) (10,082) (17,536) (21,019)
NET LOSS (7,348) (15,364) (28,720) (33,521)
LESS:
NONCONTROLLING
INTEREST IN
NET INCOME OF
SUBSIDIARY 96 79 116 79
NET LOSS
ATTRIBUTABLE
TO
ARKANSAS BEST
CORPORATION $(7,444) $(15,443) $(28,836) $(33,600)
LOSS PER
SHARE
Basic $(0.30) $(0.62) $(1.15) $(1.35)
Diluted (0.30) (0.62) (1.15) (1.35)
AVERAGE
COMMON
SHARES
OUTSTANDING
Basic 25,182,579 25,043,815 25,137,886 25,042,874
Diluted 25,182,579 25,043,815 25,137,886 25,042,874
CASH
DIVIDENDS
DECLARED PER
COMMON SHARE $0.03 $0.15 $0.06 $0.30
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30 December 31
2010 2009
(Unaudited) Note
($ thousands, except
share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $80,457 $39,332
Short-term investment securities 63,487 93,861
Restricted cash equivalents and short-term
investments 51,840 50,857
Accounts receivable, less allowances (2010
- $3,303; 2009 - $3,470) 135,627 115,459
Other accounts receivable, less allowances
(2010 - $1,324; 2009 - $1,149) 8,113 6,749
Prepaid expenses 9,003 10,390
Deferred income taxes 33,427 39,035
Prepaid and refundable income taxes 3,643 24,726
Other 4,850 4,333
TOTAL CURRENT ASSETS 390,447 384,742
PROPERTY, PLANT AND EQUIPMENT
Land and structures 240,316 240,185
Revenue equipment 516,115 514,481
Service, office and other equipment 158,833 157,885
Leasehold improvements 22,108 21,839
937,372 934,390
Less allowances for depreciation and
amortization 528,362 505,538
409,010 428,852
OTHER ASSETS 52,376 55,952
$851,833 $869,546
Note: The balance sheet at December 31, 2009 has been derived from
the audited financial
statements at that date but does not include all of the information
and footnotes required by
generally accepted accounting principles for complete financial
statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS - continued
June 30 December 31
2010 2009
(Unaudited) Note
($ thousands, except
share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable $10,097 $21,941
Accounts payable 72,477 59,386
Income taxes payable 106 826
Accrued expenses 153,176 150,799
Current portion of long-term debt 7,396 3,603
TOTAL CURRENT LIABILITIES 243,252 236,555
LONG-TERM DEBT, less current portion 22,764 13,373
PENSION AND POSTRETIREMENT LIABILITIES 71,563 67,445
OTHER LIABILITIES 19,734 20,254
DEFERRED INCOME TAXES 20,013 31,023
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized
70,000,000 shares;
issued 2010: 26,873,851 shares; 2009:
26,749,265 shares 269 267
Additional paid-in capital 276,450 274,663
Retained earnings 297,558 327,948
Treasury stock, at cost, 1,677,932 shares (57,770) (57,770)
Accumulated other comprehensive loss (42,000) (44,212)
TOTAL STOCKHOLDERS' EQUITY 474,507 500,896
$851,833 $869,546
Note: The balance sheet at December 31, 2009 has been derived from
the audited financial
statements at that date but does not include all of the information
and footnotes required by
generally accepted accounting principles for complete financial
statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30
2010 2009
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net loss $(28,720) $(33,521)
Adjustments to reconcile net loss to
net cash
provided by operating activities:
Depreciation and amortization 36,096 37,916
Other amortization 133 147
Pension settlement expense 178 158
Share-based compensation expense 2,158 3,173
Provision for losses on accounts
receivable 303 1,911
Deferred income tax provision
(benefit) (8,200) 1,194
Gain on sales of assets (72) (961)
Excess tax benefits from share-based
compensation (83) -
Changes in operating assets and
liabilities:
Receivables (20,857) (7,620)
Prepaid expenses 1,399 926
Other assets 706 534
Accounts payable, taxes payable,
accrued expenses and other
liabilities(1)(2) 36,187 (1,740)
NET CASH PROVIDED BY OPERATING
ACTIVITIES 19,228 2,117
INVESTING ACTIVITIES
Purchases of property, plant and
equipment, net of capital leases(1) (3,399) (12,730)
Proceeds from asset sales 2,676 2,922
Purchases of short-term investment
securities (27,542) (75,288)
Proceeds from sales of short-term
investment securities 57,916 64,095
Business acquisition, net of cash
acquired - (4,873)
Capitalization of internally developed
software and other (2,293) (2,621)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 27,358 (28,495)
FINANCING ACTIVITIES
Payments on long-term debt (3,011) (1,360)
Proceeds from issuance of long-term
debt 11,416 -
Net change in bank overdraft (11,844) (3,236)
Change in restricted cash equivalents
and short-term investments (983) -
Payment of common stock dividends (1,554) (7,740)
Excess tax benefits from share-based
compensation 83 -
Proceeds from the exercise of stock
options and other 432 152
NET CASH USED IN FINANCING ACTIVITIES (5,461) (12,184)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 41,125 (38,562)
Cash and cash equivalents at beginning
of period 39,332 100,880
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $80,457 $62,318
(1) Does not include $6.0 million and $5.4 million of equipment
which was received but not
yet paid for at June 30, 2010 and 2009, respectively.
(2) 2010 includes $31.5 million in federal and state income tax
refunds related to taxes paid
in prior years.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA
AND OPERATING RATIOS
Three Months Ended
June 30
2010 2009
(Unaudited)
($ thousands)
OPERATING
REVENUES
ABF Freight
System, Inc.(1) $379,443 $343,805
Other revenues
and
eliminations 31,904 18,830
Total
consolidated
operating
revenues $411,347 $362,635
OPERATING
EXPENSES AND
COSTS
ABF Freight
System, Inc.(1)
Salaries, wages
and
benefits $248,985 65.6% $245,226 71.3%
Fuel, supplies
and expenses 64,729 17.1 52,733 15.3
Operating taxes
and
licenses 10,718 2.8 10,553 3.1
Insurance 5,929 1.6 6,417 1.9
Communications
and
utilities 3,313 0.9 3,563 1.0
Depreciation and
amortization 16,908 4.5 17,861 5.2
Rents and
purchased
transportation 39,849 10.5 32,357 9.4
Gain on sale of
property
and equipment (126) - (244) (0.1)
Other 1,734 0.3 2,161 0.7
392,039 103.3% 370,627 107.8%
Other expenses
and
eliminations 30,118 19,305
Total
consolidated
operating
expenses and
costs $422,157 $389,932
OPERATING INCOME
(LOSS)
ABF Freight
System, Inc.(1) $(12,596) $(26,822)
Other income
(loss) and
eliminations 1,786 (475)
Total
consolidated
operating loss $(10,810) $(27,297)
Six Months Ended
June 30
2010 2009
(Unaudited)
($ thousands)
OPERATING
REVENUES
ABF Freight
System, Inc.(1) $712,468 $666,918
Other revenues
and
eliminations 58,769 35,394
Total
consolidated
operating
revenues $771,237 $702,312
OPERATING
EXPENSES AND
COSTS
ABF Freight
System, Inc.(1)
Salaries, wages
and
benefits $485,424 68.1% $478,723 71.8%
Fuel, supplies
and expenses 125,641 17.6 103,261 15.5
Operating taxes
and
licenses 21,209 3.0 21,067 3.2
Insurance 10,111 1.4 9,920 1.5
Communications
and
utilities 7,179 1.0 7,534 1.1
Depreciation and
amortization 34,706 4.9 36,471 5.5
Rents and
purchased
transportation 73,941 10.4 60,243 9.0
Gain on sale of
property
and equipment (424) (0.1) (961) (0.1)
Other 2,958 0.5 4,325 0.5
760,745 106.8% 720,583 108.0%
Other expenses
and
eliminations 56,568 37,628
Total
consolidated
operating
expenses and
costs $817,313 $758,211
OPERATING INCOME
(LOSS)
ABF Freight
System, Inc.(1) $(48,277) $(53,665)
Other income
(loss) and
eliminations 2,201 (2,234)
Total
consolidated
operating loss $(46,076) $(55,899)
(1) Includes U.S., Canadian, and Puerto Rican operations of ABF
affiliates.
ABF FREIGHT SYSTEM, INC.
OPERATING STATISTICS
Three Months Ended June 30 Six Months Ended June 30
2010 2009 % Change 2010 2009 % Change
Workdays 63.5 63.5 126.5 126.0
Billed
Revenue
(1) /
CWT $23.59 $23.81 (0.9)% $23.60 $23.83 (1.0)%
Billed
Revenue
(1) /
Shipment $339.17 $310.19 9.3% $331.23 $307.23 7.8%
Shipments 1,130,062 1,114,148 1.4% 2,164,916 2,178,473 (0.6)%
Shipments
/Day 17,796 17,546 1.4% 17,114 17,289 (1.0)%
Tonnage
(tons) 812,355 725,835 11.9% 1,519,354 1,404,532 8.2%
Tons/Day 12,793 11,430 11.9% 12,011 11,147 7.7%
(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.
Contact: Mr. David Humphrey, Vice President Investor Relations and Corporate Communications
Telephone (479) 785-6200