Arkansas Best Corporation Announces Second Quarter 2009 Results
FOR IMMEDIATE RELEASE
ARKANSAS BEST CORPORATION ANNOUNCES SECOND QUARTER 2009 RESULTS
(Fort Smith, Arkansas, July 22, 2009) – Arkansas Best Corporation (Nasdaq: ABFS) today announced a second quarter 2009 net loss of $15.4 million, or $0.62 per diluted share, compared to net income of $16.2 million, or $0.63 per diluted share, in the second quarter of 2008.
“The effects of lower freight levels and a competitive pricing environment that has intensified since the first quarter were the main challenges faced by our company in the second quarter. In addition, our results were affected by unusual increases in nonunion healthcare and pension, workers’ compensation and third-party casualty insurance claims costs versus last year,” said Robert A. Davidson, Arkansas Best President and Chief Executive Officer. “However, despite the continuation of the severe economic recession that is unlike any we have seen before, we remain focused on cost control, managing yields in a difficult environment and maintaining the high level of overall customer service that will ensure our long-term success.”
Arkansas Best Corporation
Second Quarter 2009
- Revenue of $362.6 million, a per day decrease of 26.7% from prior year quarter of $498.5 million
- Net loss of $0.62 per diluted share compared to net income of $0.63 per diluted share in the prior year period.
- Includes $0.12 per share of additional costs associated with nonunion healthcare and pension, workers’ compensation and third-party casualty insurance claims compared to prior year quarter.
ABF Freight System, Inc.®
Second Quarter 2009
- Revenue of $343.8 million compared to $479.5 million in 2008, a per-day decrease of 27.7%
- Tonnage per day decrease of 17.0% versus 2008
- Total billed revenue per hundredweight of $23.81 compared to $27.40, a decrease of 13.1%, that is mainly attributable to the steep decline in fuel surcharge compared to the second quarter of 2008
- Operating loss of $26.8 million compared to operating income of $25.5 million in 2008
- Operating ratio of 107.8% compared to 94.7% in 2008
- Nonunion healthcare and pension, workers’ compensation and third-party casualty insurance claims added 3.0 points to the operating ratio compared to the prior year period
“ABF continues to manage its network resources, especially labor and equipment, to the level of freight moving throughout its network. As needed, additional reductions in system resources and costs have been made in the last few months,” said Mr. Davidson. “Though success in our business requires us to efficiently manage costs, we do so carefully in order to preserve our ability to meet specific customer requirements and to offer unique value in the marketplace. Our solid financial position provides the necessary flexibility to take a long-term approach to customer relationships, even in the midst of the current, challenging environment.”
The recessionary economy and lower freight levels have resulted in increased pressure on industry pricing during the second quarter. In every pricing decision, ABF seeks to be reasonably compensated for the high level of service and safe, dependable cargo care it offers. The current economic environment makes that challenging. As it has always done, ABF continues to make pricing decisions on the basis of individual account profitability.
“We are fortunate to have a solid financial position during this prolonged recessionary period. Our on-going financial strength gives us the foundation to navigate through this difficult time while offering the opportunity to achieve our long-term goals when things finally improve,” said Mr. Davidson. “In the meantime, we will strive to weather this storm while serving our customers with a high level of service that distinguishes us throughout the LTL industry.”
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2009 second quarter results. The call will be today, Wednesday, July 22, 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 Friday, August 14, 2009. To listen to the playback, dial (800) 642-1687 or (706) 645-9291 (for international callers). The conference call ID for the playback is 18323953. The conference call and playback can also be accessed, through Friday, August 14, 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, current adverse economic conditions; 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 nonunion employee wages and benefits, including changes in required contributions to multiemployer pension plans; governmental regulations and policies; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; competitive initiatives, pricing pressures and the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates; 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
2009 2008 2009 2008
(Unaudited)
($ thousands, except share and per share data)
OPERATING REVENUES.................................................................. $ 362,635 $ 498,514 $ 702,312 $ 946,025
OPERATING EXPENSES AND COSTS .......................................... 389,932 472,832 758,211 907,191
OPERATING INCOME (LOSS) ........................................................ (27,297) 25,682 (55,899) 38,834
OTHER INCOME (EXPENSE)
... Interest and dividend income................................................................ 803 1,448 1,733 3,267
... Interest expense and other related financing costs ................................ (344) (336) (685) (675)
... Other, net ............................................................................................. 1,313 18 232 (493)
1,772 1,130 1,280 2,099
INCOME (LOSS) BEFORE INCOME TAXES ................................ (25,525) 26,812 (54,619) 40,933
FEDERAL AND STATE INCOME TAXES
... Current (benefit) provision................................................................... (2,805) 15,040 (22,213) 20,241
... Deferred (benefit) provision................................................................. (7,277) (4,383) 1,194 (4,007)
(10,082) 10,657 (21,019) 16,234
NET INCOME (LOSS)......................................................................... $ (15,443) $ 16,155 $ (33,600) $ 24,699
EARNINGS (LOSS) PER SHARE(1)
Basic.................................................................................................... $ (0.62) $ 0.63 $ (1.35) $ 0.97
Diluted................................................................................................. (0.62) 0.63 (1.35) 0.96
AVERAGE COMMON SHARES OUTSTANDING
... Basic..................................................................................................... 25,043,815 24,968,217 25,042,874 24,923,105
... Diluted.................................................................................................. 25,043,815 25,146,822 25,042,874 25,070,722
CASH DIVIDENDS DECLARED AND PAID
PER COMMON SHARE ................................................................. $ 0.15 $ 0.15 $ 0.30 $ 0.30
(1) Effective January 1, 2009, the Company adopted FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which required retrospective adjustment of earnings per share for prior periods.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30 December 31
2009 2008
(Unaudited) Note
($ thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................................................................................... $ 62,318 $ 100,880
Short-term investment securities................................................................................. 129,049 117,855
Accounts receivable, less allowances (2009 – $3,676; 2008 – $3,513)............... 120,226 111,452
Other accounts receivable, less allowances (2009 – $978; 2008 – $1,001)........ 6,006 6,611
Prepaid expenses............................................................................................................ 9,907 10,670
Deferred income taxes.................................................................................................. 36,967 36,079
Prepaid and refundable income taxes........................................................................ 24,214 17,661
Other................................................................................................................................. 6,610 6,982
TOTAL CURRENT ASSETS 395,297 408,190
PROPERTY, PLANT AND EQUIPMENT
Land and structures....................................................................................................... 239,849 235,861
Revenue equipment....................................................................................................... 504,357 514,503
Service, office and other equipment........................................................................... 154,412 150,524
Leasehold improvements............................................................................................. 21,625 21,697
920,243 922,585
Less allowances for depreciation and amortization................................................ 486,484 473,010
433,759 449,575
OTHER ASSETS.............................................................................................................. 52,843 50,636
GOODWILL...................................................................................................................... 66,530 63,897
$ 948,429 $ 972,298
Note: The balance sheet at December 31, 2008 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
2009 2008
(Unaudited) Note
($ thousands, except share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable............................................................................ $ 11,953 $ 15,189
Accounts payable.......................................................................................................... 63,991 51,646
Income taxes payable................................................................................................... 164 758
Accrued expenses........................................................................................................... 155,183 147,540
Current portion of long-term debt............................................................................... 139 159
TOTAL CURRENT LIABILITIES................................................................... 231,430 215,292
LONG-TERM DEBT, less current portion................................................................ 1,657 1,457
PENSION AND POSTRETIREMENT LIABILITIES............................................ 77,966 89,472
OTHER LIABILITIES................................................................................................... 18,773 17,314
DEFERRED INCOME TAXES..................................................................................... 28,338 24,017
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, authorized 70,000,000 shares;
issued 2009: 26,722,086 shares; 2008: 26,702,222 shares.............................. 267 267
Additional paid-in capital............................................................................................. 271,454 268,396
Retained earnings........................................................................................................... 430,020 471,360
Treasury stock, at cost, 1,677,932 shares.................................................................. (57,770) (57,770)
Accumulated other comprehensive loss.................................................................... (53,706) (57,507)
TOTAL STOCKHOLDERS’ EQUITY............................................................. 590,265 624,746
$ 948,429 $ 972,298
Note: The balance sheet at December 31, 2008 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
2009 2008
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income (loss)........................................................................................................... $ (33,600) $ 24,699
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:..............................................................................
Depreciation and amortization ............................................................................ 37,916 38,462
Other amortization ................................................................................................. 147 147
Pension settlement expense .................................................................................. 158 1,093
Share-based compensation expense ................................................................... 3,173 3,006
Provision for losses on accounts receivable ....................................................... 1,911 656
Deferred income tax (benefit) provision............................................................. 1,194 (4,007)
Gain on sales of assets............................................................................................ (961) (2,323)
Excess tax benefits from share-based compensation...................................... – (657)
Changes in operating assets and liabilities:
Receivables .............................................................................................................. (7,620) (14,726)
Prepaid expenses .................................................................................................... 926 1,236
Other assets .............................................................................................................. 534 4,947
Accounts payable, taxes payable,
accrued expenses and other liabilities (1) .......................................................... (1,661) 6,412
NET CASH PROVIDED BY OPERATING ACTIVITIES .................................... 2,117 58,945
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of capital leases (1).................. (12,730) (16,067)
Proceeds from asset sales ............................................................................................ 2,922 12,758
Purchases of short-term investment securities ......................................................... (75,288) (19,225)
Proceeds from sales of short-term investment securities ....................................... 64,095 78,604
Business acquisition, net of cash acquired................................................................ (4,873) –
Capitalization of internally developed software and other.................................... (2,621) (2,547)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES ....................... (28,495) 53,523
FINANCING ACTIVITIES
Payments on long-term debt ....................................................................................... (1,360) (143)
Net change in bank overdraft...................................................................................... (3,236) 3,892
Payment of common stock dividends ...................................................................... (7,740) (7,649)
Excess tax benefits from share-based compensation............................................. – 657
Proceeds from the exercise of stock options and other .......................................... 152 2,870
NET CASH USED BY FINANCING ACTIVITIES.................................................. (12,184) (373)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........... (38,562) 112,095
Cash and cash equivalents at beginning of period ................................................. 100,880 93,805
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 62,318 $ 205,900
(1) Does not include $5.4 million and $7.9 million of equipment which was received but not yet paid for at June 30, 2009 and 2008, respectively.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA,
OPERATING RATIOS
Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
(Unaudited)
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc.(1) $ 343,805 $ 479,522 $ 666,918 $ 907,269
Other revenues and
eliminations...................... 18,830 18,992 35,394 38,756
Total consolidated
operating revenues........... $ 362,635 $ 498,514 $ 702,312 $ 946,025
OPERATING EXPENSES AND COSTS
ABF Freight System, Inc.(1)
Salaries, wages and
benefits.............................. $ 245,226 71.3% $ 273,792 57.1% $ 478,723 71.8% $ 531,515 58.6%
Fuel, supplies and expenses 52,733 15.3 97,030 20.2 103,261 15.5 178,888 19.7
Operating taxes and
licenses.............................. 10,553 3.1 11,959 2.5 21,067 3.2 23,898 2.6
Insurance............................. 6,417 1.9 5,415 1.1 9,920 1.5 10,247 1.1
Communications and
utilities............................... 3,563 1.0 3,682 0.8 7,534 1.1 7,692 0.8
Depreciation and
amortization....................... 17,861 5.2 18,461 3.8 36,471 5.5 37,017 4.1
Rents and purchased
transportation..................... 32,357 9.4 42,448 8.9 60,243 9.0 78,469 8.6
Gain on sale of property
and equipment................... (244) (0.1) (451) (0.1) (961) (0.1) (2,326) (0.3)
Other................................... 2,161 0.7 1,655 0.4 4,325 0.5 3,458 0.6
370,627 107.8% 453,991 94.7% 720,583 108.0% 868,858 95.8%
Other expenses and
eliminations.......................... 19,305 18,841 37,628 38,333
Total consolidated operating
expenses and costs............... $ 389,932 $ 472,832 $ 758,211 $ 907,191
OPERATING INCOME (LOSS)
ABF Freight System, Inc.(1)... $ (26,822) $ 25,531 $ (53,665) $ 38,411
Other income (loss) and
eliminations......................... (475) 151 (2,234) 423
Total consolidated
operating income (loss)........ $ (27,297) $ 25,682 $ (55,899) $ 38,834
- 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 |
||||
|
|
2009 |
2008 |
% Change |
|
2009 |
2008 |
% Change |
|
|
|
|
|
|
|
|
|
|
Workdays |
63.5 |
64.0 |
|
|
126.0 |
127.5 |
|
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / CWT |
$ 23.81 |
$ 27.40 |
(13.1)% |
|
$ 23.83 |
$ 26.88 |
(11.3)% |
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / Shipment |
$ 310.19 |
$ 367.98 |
(15.7)% |
|
$ 307.23 |
$ 351.30 |
(12.5)% |
|
|
|
|
|
|
|
|
|
|
Shipments |
1,114,148 |
1,311,907 |
(15.1)% |
|
2,178,473 |
2,600,198 |
(16.2)% |
|
|
|
|
|
|
|
|
|
|
Tonnage (tons) |
725,835 |
880,865 |
(17.6)% |
|
1,404,532 |
1,698,996 |
(17.3)% |
|
|
|
|
|
|
|
|
|
|
Tons/Day |
11,430 |
13,764 |
(17.0)% |
|
11,147 |
13,325 |
(16.4)% |
- 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: Ms. Judy R. McReynolds, Senior Vice President, Chief Financial Officer and Treasurer
Telephone: (479) 785-6281
Mr. David Humphrey, Director of Investor Relations
Telephone: (479) 785-6200
END OF RELEASE