Arkansas Best Corporation First Quarter Net Income Increases 93%
FORT SMITH, Ark., April 18 -- Arkansas Best Corporation today announced net income for the first quarter of 2000 of $13.2 million, or $0.55 per diluted common share, compared to 1999 first quarter income from continuing operations of $7.5 million, or $0.32 per diluted common share. For the second consecutive year, Arkansas Best produced the highest first quarter net income in its history. This year's figure of $13.2 million represents a 93% increase over net income of $6.8 million earned during last year's first quarter.
``I am pleased to report another strong quarterly performance for Arkansas Best Corporation,'' said Robert A. Young III, Arkansas Best President and Chief Executive Officer. ``ABF's 91.8% operating ratio this quarter is 1.9 points better than last year's first quarter and four points better than the first quarter of 1998. It is the best first quarter operating ratio for ABF since 1976. Clipper and Treadco returned to first quarter profitability with improvements in operating income of $357,000 and $258,000, respectively. G.I. Trucking's operating income declined from the first quarter of last year due to start-up costs associated with business expansion and planned increases in G.I.'s sales force,'' said Mr. Young.
ABF Freight System, Inc.
ABF's first quarter 2000 revenue increased 12.3% versus the first quarter of 1999. ABF's first quarter 2000 operating ratio was 91.8% compared to 93.7% during the same period last year. ABF's operating income during the first three months of this year was $27.2 million versus 1999 first quarter operating income of $18.7 million. First quarter LTL revenue per hundredweight including fuel surcharge was $20.20, an increase of 5.3% over the same period in 1999. This year's first quarter LTL tonnage per day increased by 3.5% when compared to the same period a year ago. Dock and city driver cost per shipment at ABF remains at efficient levels.
``ABF begins the new year maintaining its leading position in the long- haul, LTL industry with additional improvements in its bottom line operating performance,'' said Mr. Young. ``The LTL pricing environment remains positive and business levels are strong as ABF continues its recent quarterly trend of significant increases in LTL tonnage,'' said Mr. Young. ``These trends combined to produce another record-breaking first quarter at ABF.''
ABF continues to experience success in the two-day transit time lanes. In the 2000 first quarter, two-day transit time lanes had a 6.0% increase in tonnage versus a 2.2% tonnage increase in ABF's longer haul business.
On April 10, executives at Arkansas Best and ABF hosted an Internet-based conference call, describing ABF's strategies for providing two-day freight delivery and discussing innovations offered on ABF's Internet site that provide opportunities in business-to-business eCommerce. As discussed above, by offering two-day service between numerous large and small communities within its standard operating network, ABF has experienced growth in these lanes that is significantly better than its standard long-haul lanes. Registered users of ABF's Internet site are responsible for approximately one- half of ABF's total system revenue. Each day, ABF's Internet site has over 5,000 user sessions, with the average lasting over nine minutes. This illustrates that ABF's customers are finding value and useful information during their visits. ABF's industry-leading Internet site, along with its established terminal network covering the United States and Canada, provides the perfect opportunity for ABF to participate in new business-to-business eCommerce. The replay of the conference call describing two-day service and ABF's Internet offerings will be available on the web sites of Arkansas Best (http://www.arkbest.com/) and ABF (http://www.abfs.com/).
G.I. Trucking Company
G.I.'s revenue during this year's first quarter increased 19.6% over the same period last year to $37.7 million. During the quarter, G.I. generated a slight operating profit compared to $564,000 of operating income during the first quarter of last year. Total pounds per day increased 14.1% over the first quarter of 1999.
During the first part of the quarter, G.I. expanded its operational capabilities in the states of Texas, New Mexico, Oklahoma, Kansas and parts of Missouri in preparation for adding new business from an existing carrier partner. This business began on February 1 and steadily grew through the month of March, thus improving the overall margins of these shipments. ``As the revenues from this influx of business continue to match and exceed the initial start-up costs G.I. has expended, this business should contribute positively to G.I.'s bottom line. These shipments provide G.I. with much needed freight density in this geographic area,'' said Mr. Young. ``Likewise, G.I. has increased the sales management and sales staff throughout its system by nearly 50% over 1999 levels. Future revenues generated by these new personnel should enhance operating performance throughout the remainder of the year,'' said Mr. Young.
G.I. will continue to focus on improving its profitability by increasing revenue yields while reducing operational costs in purchased transportation through development of a more efficient linehaul structure. With the new sales personnel and the addition of midwestern freight discussed above, G.I. will emphasize increasing shipment density in existing transportation lanes, thereby increasing profit margins.
Treadco, Inc.
Treadco's revenue for the first quarter of 2000 was $41.3 million, which represents a slight increase over the same period of 1999. ``During the first quarter, Treadco had minimal revenue growth due, in large part, to the reluctance of its customers to purchase tires during the current period of high fuel prices,'' said Mr. Young. Treadco's operating income improvements during the first quarter were primarily related to disciplined selling with an emphasis on account profitability. ``In spite of minor increases in quarter- to-quarter revenues, Treadco produced a small operating profit during the first quarter which, for the last several years, has been a consistently unprofitable quarter.''
Clipper
For the second quarter in a row, Clipper experienced an increase in year- over-year revenue. Clipper's first quarter 2000 revenue of $29.6 million represented an impressive increase of 21.1% over last year's first quarter. ``Clipper's increase in first quarter revenue of over 21% reflects its success in adding new customers and regaining some former customers,'' said Mr. Young.
``Following cost reductions taken during the last couple of years, Clipper has recently been concentrating on increasing its top line revenues.'' Clipper's first quarter 2000 operating ratio improved to 99.9% compared to a 1999 first quarter operating ratio of 101.3%. ``While Clipper's revenue increased significantly, operating margins were improved as a result of management's focus on adding new business that is profitable while maximizing cost savings through the utilization of more reliable rail service,'' said Mr. Young.
Credit Ratings Improvement
On March 15, Standard and Poor's raised their corporate credit and bank loan ratings for Arkansas Best Corporation to BBB-, investment grade. On April 5, Moody's Investors Service upgraded Arkansas Best's senior implied rating to Ba1, the same rating as the company's senior revolving credit facility. Additionally, as of April 1, 2000, the company's $250 million senior revolving credit facility became unsecured.
Conference Call
Arkansas Best Corporation will be hosting a conference call with company executives to discuss the 2000 first quarter results. The call will be today, Tuesday, April 18, at 10:00 a.m. CDT. Interested parties are invited to listen by calling (800) 967-7185. Following the call, a recorded playback will be available for one week. To listen to the playback, dial (888) 203-1112. The passcode for the playback is 356519. The conference call and playback can also be accessed on Arkansas Best's Internet web site at www.arkbest.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 ``estimate,'' ``expect,'' ``predict,'' ``plan,'' ``anticipate,'' ``believe,'' ``intend,'' ``should,'' ``would,'' ``scheduled,'' 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, union relations; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best's subsidiaries; actual future costs of operating expenses such as fuel and related taxes; self-insurance claims and employee wages and benefits; actual costs of continuing investments in technology, the timing and amount of capital expenditures; competitive initiatives and pricing pressures; general economic conditions; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's SEC public filings.
The tables on the following pages show financial data on Arkansas Best Corporation and its subsidiary companies.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31
2000 1999
($ thousands, except
per share data)
CONTINUING OPERATIONS:
OPERATING REVENUES
Transportation operations $397,714 $350,402
Tire operations 40,771 40,460
Service and other 4,530 3,512
443,015 394,374
OPERATING EXPENSES AND COSTS
Transportation operations 370,938 331,993
Tire operations 40,961 40,927
Service and other 4,835 3,747
416,734 376,667
OPERATING INCOME 26,281 17,707
OTHER INCOME (EXPENSE)
Net gains on sales of property
and non-revenue equipment 1,317 496
Interest expense (4,521) (4,543)
Minority interest in Treadco, Inc. --- 245
Other, net (522) (1,019)
(3,726) (4,821)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 22,555 12,886
FEDERAL AND STATE INCOME TAXES 9,383 5,408
INCOME FROM CONTINUING OPERATIONS 13,172 7,478
DISCONTINUED OPERATIONS:
Loss from discontinued operations (net of
tax benefits of $394 for the three months
ended March 31, 1999) --- (664)
LOSS FROM DISCONTINUED OPERATIONS --- (664)
NET INCOME 13,172 6,814
Preferred stock dividends 1,074 1,075
NET INCOME FOR COMMON SHAREHOLDERS $12,098 $5,739
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) -- Continued
Three Months Ended
March 31
2000 1999
($ thousands, except
per share data)
NET INCOME (LOSS) PER COMMON SHARE
Basic:
Continuing operations (A) $0.61 $0.32
Discontinued operations --- (0.03)
NET INCOME (A) $0.61 $0.29
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 19,763,133 19,613,653
Diluted:
Continuing operations (B) $0.55 $0.32
Discontinued operations --- (0.03)
NET INCOME (B) $0.55 $0.29
AVERAGE COMMON SHARES OUTSTANDING (DILUTED) 24,088,802 23,582,137
CASH DIVIDENDS PAID PER COMMON SHARE $--- $---
(A)Gives consideration to preferred stock dividends of $1.1 million per
quarter.
(B) For the three months ended March 31, 2000 and 1999, conversion of
preferred shares into common is assumed.
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31 December 31
2000 1999
($ thousands)
ASSETS
Current assets $248,779 $243,099
Property, plant and equipment (net) 343,327 337,094
Other assets 47,219 42,351
Goodwill (less amortization) 108,373 109,385
$747,698 $731,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $279,118 $282,139
Long-term debt, less current portion 173,457 173,702
Other liabilities 35,128 29,845
Deferred income taxes 26,735 25,191
Shareholders' equity 233,260 221,052
$747,698 $731,929
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31
2000 1999
($ thousands)
OPERATING ACTIVITIES
Net cash provided by operating activities $11,992 $22,548
INVESTING ACTIVITIES
Purchases of property, plant and equipment
less capitalized leases (19,846) (10,843)
Proceeds from asset sales and other 2,909 3,399
NET CASH USED BY INVESTING ACTIVITIES (16,937) (7,444)
FINANCING ACTIVITIES
Deferred financing costs and expenses --- (125)
Borrowings under revolving credit facilities 74,600 118,450
Payments under revolving credit facilities (64,200) (122,000)
Payments on long-term debt (3,143) (2,959)
Dividends paid (1,074) (1,075)
Net increase (decrease) in bank overdraft 3,346 (7,674)
Repurchase of bonds (4,781) ---
Other, net 110 34
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 4,858 (15,349)
NET DECREASE IN CASH AND CASH EQUIVALENTS (87) (245)
Cash and cash equivalents at
beginning of period 4,319 4,543
CASH AND CASH EQUIVALENTS AT END OF PERIOD $4,232 $4,298
ARKANSAS BEST CORPORATION
REVENUES AND OPERATING RATIOS (Unaudited)
Three Months Ended
March 31
2000 1999
($ thousands)
REVENUES
ABF Freight System, Inc. (A) $331,836 $295,452
G.I. Trucking Company 37,701 31,534
Clipper 29,631 24,465
Treadco, Inc. 41,264 40,944
OPERATING RATIOS
ABF Freight System, Inc. (A) 91.79% 93.68%
G.I. Trucking Company 99.98% 98.21%
Clipper 99.90% 101.34%
Treadco, Inc. 99.99% 100.62%
OPERATING INCOME (LOSS)
ABF Freight System, Inc. (A) $27,241 $18,673
G.I. Trucking Company 8 564
Clipper 30 (327)
Treadco, Inc. 3 (255)
(A)Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
ABF FREIGHT SYSTEM, INC.
COMBINED FINANCIAL INFORMATION
FOR THE QUARTER ENDED March 31, 2000
Three Months Ended March 31
2000 1999 % Change
Operating Revenue* $331,836 $295,452 12.3%
Operating Income* $27,241 $18,673
Operating Ratio 91.79% 93.68%
Revenue* LTL $302,937 $269,344 12.5%
TL 28,899 26,108 10.7%
Total 331,836 295,452 12.3%
Tonnage* LTL 749,917 702,238 6.8%
(tons) TL 181,857 174,863 4.0%
Total 931,774 877,101 6.2%
Shipments LTL 1,484,187 1,417,680 4.7%
TL 22,934 21,870 4.9%
Total 1,507,121 1,439,550 4.7%
Revenue/CWT LTL $20.20 $19.18 5.3%
TL 7.95 $7.47 6.4%
Total $17.81 $16.84 5.8%
Revenue/Shipment Total $220.18 $205.24 7.3%
Cost/Shipment Total $202.10 $192.27 5.1%
*Note: Value rounded to thousands ($000)
There were 65 workdays in the first quarter of 2000 and 63 workdays in the first quarter of 1999.
Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.
Contact: Mr. David E. Loeffler, Vice President, Chief Financial Officer and Treasurer
Telephone: (479) 785-6157
Mr. David Humphrey, Director of Investor Relations
Telephone (479) 785-6200