Arkansas Best Corporation Announces Third Quarter 2009 Results
FOR IMMEDIATE RELEASE
ARKANSAS BEST CORPORATION ANNOUNCES THIRD QUARTER 2009 RESULTS
(Fort Smith, Arkansas, October 21, 2009) – Arkansas Best Corporation (Nasdaq: ABFS) today announced a third quarter 2009 net loss of $5.6 million, or $0.23 per diluted share, compared to net income of $15.4 million, or $0.60 per diluted share, in the third quarter of 2008.
“Our third quarter results reflect the on-going impact of lower freight levels and competitive industry pricing that deteriorated further compared to the first half of the year,” said Robert A. Davidson, Arkansas Best President and Chief Executive Officer. “We are now entering the fourth year of a severe freight decline that is unprecedented in our company’s history. It is unclear when business levels will benefit from a significant improvement in our nation’s economy. In the meantime, our company’s emphasis will remain on providing a high level of value-added service to our customers while managing our business, for the long-term, through diligent cost control and disciplined pricing.”
Arkansas Best Corporation
Third Quarter 2009
- Revenue of $399.0 million, a per day decrease of 19.5% from prior year quarter of $495.8 million
- Net loss of $0.23 per diluted share compared to net income of $0.60 per diluted share in the prior year period
ABF Freight System, Inc.®
Third Quarter 2009
- Revenue of $369.8 million compared to $476.3 million in third quarter of 2008, a per-day decrease of 22.4%
- Tonnage per day decrease of 10.1% versus third quarter of 2008
- Total billed revenue per hundredweight of $23.98 compared to $27.75, a decrease of 13.6%, that is mainly attributable to the steep decline in fuel surcharge compared to the third quarter of 2008
- Operating loss of $14.0 million compared to operating income of $25.2 million in third quarter of 2008
- Operating ratio of 103.8% compared to 94.7% in third quarter of 2008
“The smaller decline in ABF’s third quarter tonnage implies an improving freight environment compared to the first half of the year. However, this year-over-year trend is primarily related to comparisons back to last year’s third quarter when business levels fell sharply. Nevertheless, this quarter’s tonnage also benefitted from modest market share gains from our LTL competitors,” said Mr. Davidson. “On a sequential basis, ABF’s third quarter tonnage trends were slightly better than normal, seasonal expectations. Though that trend has weakened somewhat since the last full week of September, we continue to add freight previously handled by other carriers. Regardless of business levels, we continue to manage the costs of the ABF network each day in line with the amount of available freight, while striving to maintain the high level of customized service that is important to ABF’s customers.”
“Industry LTL pricing further weakened during the third quarter. Declining yields, worsened by the recessionary economy, have made it more difficult to cover normal cost increases,” said Mr. Davidson. “Despite a more price-sensitive environment, ABF has maintained its traditional emphasis on offering each customer a fair, competitive rate. ABF’s history of pricing discipline has contributed to our current financial strength, and Arkansas Best’s financial stability allows us to maintain high service levels and manage the company for the long-term benefit of our shareholders, employees and customers.”
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2009 third quarter results. The call will be today, Wednesday, October 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 Saturday, November 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 33767405. The conference call and playback can also be accessed, through Saturday, November 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 non-union 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 Nine Months Ended
September 30 September 30
2009 2008 2009 2008
(Unaudited)
($ thousands, except share and per share data)
OPERATING REVENUES.................................................................. $ 398,957 $ 495,815 $ 1,101,269 $ 1,441,840
OPERATING EXPENSES AND COSTS .......................................... 411,194 470,323 1,169,405 1,377,514
OPERATING INCOME (LOSS) ........................................................ (12,237) 25,492 (68,136) 64,326
OTHER INCOME (EXPENSE)
... Interest and dividend income................................................................ 666 1,492 2,399 4,759
... Interest expense and other related financing costs ................................ (357) (206) (1,041) (881)
... Other, net ............................................................................................. 2,035 (681) 2,345 (1,174)
2,344 605 3,703 2,704
INCOME (LOSS) BEFORE INCOME TAXES ................................ (9,893) 26,097 (64,433) 67,030
FEDERAL AND STATE INCOME TAXES
... Current (benefit) provision................................................................... (3,302) 8,469 (25,515) 28,709
... Deferred (benefit) provision................................................................. (1,263) 2,186 (69) (1,821)
(4,565) 10,655 (25,584) 26,888
NET INCOME (LOSS)......................................................................... (5,328) 15,442 (38,849) 40,142
LESS: NONCONTROLLING INTEREST IN
NET INCOME OF SUBSIDIARY................................................ 245 – 324 –
NET INCOME (LOSS) ATTRIBUTABLE TO
ARKANSAS BEST CORPORATION ........................................... $ (5,573) $ 15,442 $ (39,173) $ 40,142
EARNINGS (LOSS) PER SHARE(1)
Basic.................................................................................................... $ (0.23) $ 0.60 $ (1.58) $ 1.57
Diluted................................................................................................. (0.23) 0.60 (1.58) 1.56
AVERAGE COMMON SHARES OUTSTANDING
... Basic..................................................................................................... 25,047,975 25,013,314 25,047,270 24,956,205
... Diluted.................................................................................................. 25,047,975 25,174,345 25,047,270 25,109,963
CASH DIVIDENDS DECLARED AND PAID
PER COMMON SHARE ................................................................. $ 0.15 $ 0.15 $ 0.45 $ 0.45
(1) Effective January 1, 2009, the Company adopted new accounting guidance that requires an allocation of dividends paid and a portion of undistributed net income to unvested restricted stock. As a result, earnings per share for periods prior to 2009 have been retrospectively adjusted to be consistent with the 2009 presentation.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30 December 31
2009 2008
(Unaudited) Note
($ thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................................................................................... $ 58,887 $ 100,880
Short-term investment securities................................................................................. 131,365 117,855
Accounts receivable, less allowances (2009 – $3,910; 2008 – $3,513)............... 124,773 111,452
Other accounts receivable, less allowances (2009 – $1,033; 2008 – $1,001).... 7,426 6,611
Prepaid expenses............................................................................................................ 8,512 10,670
Deferred income taxes.................................................................................................. 35,799 36,079
Prepaid and refundable income taxes........................................................................ 16,408 17,661
Other................................................................................................................................. 6,688 6,982
TOTAL CURRENT ASSETS 389,858 408,190
PROPERTY, PLANT AND EQUIPMENT
Land and structures....................................................................................................... 239,799 235,861
Revenue equipment....................................................................................................... 512,114 514,503
Service, office and other equipment........................................................................... 155,934 150,524
Leasehold improvements............................................................................................. 21,647 21,697
929,494 922,585
Less allowances for depreciation and amortization................................................ 497,434 473,010
432,060 449,575
OTHER ASSETS.............................................................................................................. 53,185 50,636
GOODWILL...................................................................................................................... 66,655 63,897
$ 941,758 $ 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
September 30 December 31
2009 2008
(Unaudited) Note
($ thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable............................................................................ $ 13,969 $ 15,189
Accounts payable.......................................................................................................... 60,666 51,646
Income taxes payable................................................................................................... 340 758
Accrued expenses........................................................................................................... 152,619 147,540
Current portion of long-term debt............................................................................... 138 159
TOTAL CURRENT LIABILITIES................................................................... 227,732 215,292
LONG-TERM DEBT, less current portion................................................................ 1,618 1,457
PENSION AND POSTRETIREMENT LIABILITIES............................................ 81,432 89,472
OTHER LIABILITIES................................................................................................... 19,822 17,314
DEFERRED INCOME TAXES..................................................................................... 26,847 24,017
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, authorized 70,000,000 shares;
issued 2009: 26,726,216 shares; 2008: 26,702,222 shares.............................. 267 267
Additional paid-in capital............................................................................................. 273,097 268,396
Retained earnings........................................................................................................... 420,555 471,360
Treasury stock, at cost, 1,677,932 shares.................................................................. (57,770) (57,770)
Accumulated other comprehensive loss.................................................................... (51,842) (57,507)
TOTAL STOCKHOLDERS’ EQUITY............................................................. 584,307 624,746
$ 941,758 $ 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
Nine Months Ended
September 30
2009 2008
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income (loss)........................................................................................................... $ (38,849) $ 40,142
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ............................................................................ 56,348 57,469
Other amortization ................................................................................................. 220 220
Pension settlement expense .................................................................................. 158 1,540
Share-based compensation expense ................................................................... 4,777 4,523
Provision for losses on accounts receivable ....................................................... 2,432 1,210
Deferred income tax benefit ................................................................................. (69) (1,821)
Gain on sales of assets............................................................................................ (1,214) (2,994)
Excess tax benefits from share-based compensation...................................... – (657)
Changes in operating assets and liabilities:
Receivables .............................................................................................................. (13,587) (6,842)
Prepaid expenses .................................................................................................... 2,321 2,287
Other assets .............................................................................................................. 316 5,914
Accounts payable, taxes payable,
accrued expenses and other liabilities (1) .......................................................... 11,011 2,764
NET CASH PROVIDED BY OPERATING ACTIVITIES .................................... 23,864 103,755
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net of capital leases (1).................. (32,914) (45,425)
Proceeds from asset sales ............................................................................................ 3,714 14,984
Purchases of short-term investment securities ......................................................... (110,198) (80,386)
Proceeds from sales of short-term investment securities ....................................... 96,689 85,004
Business acquisition, net of cash acquired................................................................ (4,873) –
Capitalization of internally developed software and other.................................... (3,962) (4,040)
NET CASH USED BY INVESTING ACTIVITIES .................................................. (51,544) (29,863)
FINANCING ACTIVITIES
Payments on long-term debt ....................................................................................... (1,401) (175)
Net change in bank overdraft...................................................................................... (1,220) (2,135)
Deferred financing costs............................................................................................... (300) –
Payment of common stock dividends ...................................................................... (11,632) (11,497)
Excess tax benefits from share-based compensation............................................. – 657
Proceeds from the exercise of stock options and other .......................................... 240 2,906
NET CASH USED BY FINANCING ACTIVITIES.................................................. (14,313) (10,244)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........... (41,993) 63,648
Cash and cash equivalents at beginning of period ................................................. 100,880 93,805
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 58,887 $ 157,453
(1) Does not include $1.0 million and $3.1 million of equipment which was received but not yet paid for at September 30, 2009 and 2008, respectively.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA,
OPERATING RATIOS AND FINANCIAL STATISTICS
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
(Unaudited)
($ thousands)
OPERATING REVENUES
ABF Freight System, Inc.(1) $ 369,763 $ 476,323 $ 1,036,681 $ 1,383,592
Other revenues and
eliminations...................... 29,194 19,492 64,588 58,248
Total consolidated
operating revenues........... $ 398,957 $ 495,815 $ 1,101,269 $ 1,441,840
OPERATING EXPENSES AND COSTS
ABF Freight System, Inc.(1)
Salaries, wages and
benefits.............................. $ 248,093 67.1% $ 271,138 56.9% $ 726,817 70.1% $ 802,652 58.0%
Fuel, supplies and expenses 58,758 15.9 94,023 19.7 162,019 15.6 272,911 19.7
Operating taxes and
licenses.............................. 10,590 2.9 11,880 2.5 31,657 3.1 35,779 2.6
Insurance............................. 6,129 1.7 5,652 1.2 16,049 1.5 15,899 1.1
Communications and
utilities............................... 3,455 0.9 3,689 0.8 10,989 1.1 11,381 0.8
Depreciation and
amortization....................... 17,638 4.8 18,302 3.8 54,109 5.2 55,319 4.0
Rents and purchased
transportation..................... 37,576 10.2 45,759 9.6 97,819 9.4 124,227 9.0
Gain on sale of property
and equipment................... (254) (0.1) (671) (0.1) (1,215) (0.1) (2,997) (0.2)
Other................................... 1,768 0.4 1,375 0.3 6,092 0.6 4,835 0.4
383,753 103.8% 451,147 94.7% 1,104,336 106.5% 1,320,006 95.4%
Other expenses and
eliminations.......................... 27,441 19,176 65,069 57,508
Total consolidated operating
expenses and costs............... $ 411,194 $ 470,323 $ 1,169,405 $ 1,377,514
OPERATING INCOME (LOSS)
ABF Freight System, Inc.(1)... $ (13,990) $ 25,176 $ (67,655) $ 63,586
Other income (loss) and
eliminations......................... 1,753 316 (481) 740
Total consolidated
operating income (loss)........ $ (12,237) $ 25,492 $ (68,136) $ 64,326
- 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 |
||||
|
|
2009 |
2008 |
% Change |
|
2009 |
2008 |
% Change |
|
|
|
|
|
|
|
|
|
|
Workdays |
64.0 |
64.0 |
|
|
190.0 |
191.5 |
|
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / CWT |
$ 23.98 |
$ 27.75 |
(13.6)% |
|
$ 23.88 |
$ 27.17 |
(12.1)% |
|
|
|
|
|
|
|
|
|
|
Billed Revenue (1) / Shipment |
$ 322.00 |
$ 368.49 |
(12.6)% |
|
$ 312.32 |
$ 356.99 |
(12.5)% |
|
|
|
|
|
|
|
|
|
|
Shipments |
1,144,026 |
1,286,414 |
(11.1)% |
|
3,322,499 |
3,886,612 |
(14.5)% |
|
|
|
|
|
|
|
|
|
|
Tonnage (tons) |
768,022 |
854,037 |
(10.1)% |
|
2,172,555 |
2,553,033 |
(14.9)% |
|
|
|
|
|
|
|
|
|
|
Tons/Day |
12,000 |
13,344 |
(10.1)% |
|
11,434 |
13,332 |
(14.2)% |
- 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