Arkansas Best Corporation Announces Improved Third Quarter 2010 Results
FORT SMITH, Ark., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Arkansas Best Corporation (Nasdaq:ABFS - News) 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
(benefit)
provision 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 $(0.30) $(0.23) $(1.18) $(1.58)
Diluted (0.30) (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 - $1,286; 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 provision
(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, taxes 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 $21.4 million for the nine
months ended September 30, 2010.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA
AND OPERATING RATIOS
Three Months Ended
September 30
2010 2009
(Unaudited)
($ thousands)
OPERATING
REVENUES
ABF Freight
System, Inc.(1) $409,916 $369,763
Other revenues
and
eliminations 35,615 29,194
Total
consolidated
operating
revenues $445,531 $398,957
OPERATING
EXPENSES AND
COSTS
ABF Freight
System, Inc.(1)
Salaries, wages
and
benefits $259,613 63.3% $248,093 67.1%
Fuel, supplies
and expenses 67,045 16.4 58,758 15.9
Operating taxes
and
licenses 11,229 2.7 10,590 2.9
Insurance 4,870 1.2 6,129 1.7
Communications
and
utilities 3,830 0.9 3,455 0.9
Depreciation and
amortization 16,992 4.2 17,638 4.8
Rents and
purchased
transportation 46,830 11.4 37,576 10.2
Gain on sale of
property
and equipment (74) - (254) (0.1)
Other 2,141 0.5 1,768 0.4
412,476 100.6% 383,753 103.8%
Other expenses
and
eliminations 34,831 27,441
Total
consolidated
operating
expenses and
costs $447,307 $411,194
OPERATING INCOME
(LOSS)
ABF Freight
System, Inc.(1) $(2,560) $(13,990)
Other income
(loss) and
eliminations 784 1,753
Total
consolidated
operating loss $(1,776) $(12,237)
Nine Months Ended
September 30
2010 2009
(Unaudited)
($ thousands)
OPERATING
REVENUES
ABF Freight
System, Inc.(1) $1,122,384 $1,036,681
Other revenues
and
eliminations 94,384 64,588
Total
consolidated
operating
revenues $1,216,768 $1,101,269
OPERATING
EXPENSES AND
COSTS
ABF Freight
System, Inc.(1)
Salaries, wages
and
benefits $745,037 66.4% $726,817 70.1%
Fuel, supplies
and expenses 192,686 17.2 162,019 15.6
Operating taxes
and
licenses 32,438 2.9 31,657 3.1
Insurance 14,981 1.3 16,049 1.5
Communications
and
utilities 11,008 1.0 10,989 1.1
Depreciation and
amortization 51,698 4.6 54,109 5.2
Rents and
purchased
transportation 120,771 10.7 97,819 9.4
Gain on sale of
property
and equipment (498) - (1,215) (0.1)
Other 5,101 0.4 6,092 0.6
1,173,222 104.5% 1,104,336 106.5%
Other expenses
and
eliminations 91,397 65,069
Total
consolidated
operating
expenses and
costs $1,264,619 $1,169,405
OPERATING INCOME
(LOSS)
ABF Freight
System, Inc.(1) $(50,838) $(67,655)
Other income
(loss) and
eliminations 2,987 (481)
Total
consolidated
operating loss $(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.
Contact: Mr. David Humphrey, Vice President Investor Relations and Corporate Communications
Telephone (479) 785-6200