Arkansas Best Corporation Second Quarter Net Income Increases 60% To $17.7 Million
FORT SMITH, Ark., July 20 -- Arkansas Best Corporation today announced second quarter 2000 net income of $17.7 million, or $0.74 per diluted common share, compared to second quarter 1999 net income of $11.1 million, or $0.47 per diluted common share. This is the highest net income for any quarter in Arkansas Best's history. This year's second quarter figure represents a 60% increase over net income during 1999's second quarter. Arkansas Best's second quarter 2000 revenue of $472.0 million represents a 12.7% increase over revenue in the second quarter of 1999.
``Arkansas Best Corporation continues to set new records with its performance,'' said Robert A. Young, III, Arkansas Best President and Chief Executive Officer. ``ABF's second quarter operating ratio of 90.5% is the best for this quarter in twenty-two years. ABF's year-to-date operating ratio of 91.2% is its best since 1976. The company's three other subsidiaries each showed marked improvement and contributed significant earnings to the bottom line. Treadco set the tone with a 183% improvement in operating income over the second quarter last year,'' said Mr. Young.
ABF Freight System, Inc.
ABF's second quarter 2000 revenue increased 11.7% versus the second quarter of 1999. ABF's operating ratio of 90.5% represents an improvement of two full points versus 92.5% during last year's second quarter. ABF's second quarter operating income increased 40% to $32.6 million versus 1999 second quarter operating income of $23.3 million. Second quarter LTL revenue per hundredweight, including fuel surcharge, was $20.70, an increase of 7.4% over the same period in 1999. LTL tonnage per day during the second quarter increased by 4.4% over last year. ABF's average LTL shipment weighed 1,001 pounds compared to 994 pounds per shipment during the second quarter of 1999. Dock and city driver productivity during the second quarter remained at acceptable levels.
``ABF's quarterly results represent a significant improvement over a very good 1999 second quarter,'' said Mr. Young. ``ABF is currently experiencing double-digit revenue growth and has made further improvements on the rate of LTL tonnage growth seen earlier this year. During a period of strong freight demand and corresponding pricing levels, ABF has maintained tight operational cost controls, resulting in a superior bottom line,'' said Mr. Young. ``The employees of ABF are to be commended for making considerable improvements to results that had already set the standard in the long-haul, LTL industry.''
This year's second quarter represented the one-year anniversary of operational changes that reduced, by one-third, the cycle time of shipments moving through ABF's distribution centers. These changes resulted in standard second-morning service in over 12,000 new lanes. The growth rate of this freight remains at a higher level than that of ABF's longer haul business. In the second quarter of 2000, two-day transit time lanes experienced an 8.8% increase in tonnage versus a 3.0% tonnage increase in ABF's longer haul business.
Earlier this month, ABF was named a Web Business 50/50 Award winner, placing www.abfs.com among the best 50 of all Web sites. Sponsored by CIO magazine, this award recognizes Internet leadership and innovation among organizations around the world. In a July 5 press release announcing this honor, ABF's President and CEO, David Stubblefield, was quoted as saying that ``This award's recognition of ABF's eCommerce leadership across all industries, not just transportation, is gratifying. However, our best is yet to come. We will remain customer-focused, and we will continue to innovate.'' Consistent with this statement, the July 5 press release also announced a comprehensive redesign of the ABF Web site. The site design now offers a streamlined user interface and faster access to the most frequently used ABF eCenter® tools.
G.I. Trucking Company
During the second quarter, G.I.'s revenue was $42.8 million, an increase of 22.6% over $34.9 million during the second quarter of 1999. G.I.'s second quarter operating ratio was 95.7% compared to 95.9% during last year's second quarter and 99.98% during the first quarter of 2000. Total pounds per day increased 18.8% over the second quarter of 1999.
``In the second quarter, G.I. began to see the positive effects of costs incurred earlier in the year to significantly increase its sales personnel and to prepare for the addition of new, midwestern business from an existing carrier partner,'' said Mr.Young. ``Though these expenditures negatively impacted G.I.'s first quarter operating ratio, this new business generated steady revenue growth throughout the second quarter and, due to improved freight density in linehaul lanes, helped lower G.I.'s operating ratio to 95.7%. As this new freight is brought into the G.I. system, individual account profitability and improved control of costs, such as purchased transportation, remain the primary focus of G.I.'s management team,'' said Mr. Young.
Treadco, Inc.
Revenue for Treadco during the second quarter of 2000 was $48.3 million, which was 3.4% higher than second quarter 1999 revenue of $46.7 million. Treadco's revenue improvement was the result of a 4.2% increase in new tire sales and a 15.5% increase in truck tire service revenues. ``Treadco's focus on service is starting to pay dividends,'' said Mr. Young. ``By offering a complete package of new and retreaded tires, in-house alignment and wheel balancing services, and 24-hour road service, Treadco is providing overall value to its customers.''
Operating income for the quarter was $1.4 million, an increase of $900,000 over the same period last year. Margins on retread sales improved 8.4% over the second quarter of 1999. As a result, Treadco's operating ratio improved to 97.1% for the second quarter compared with 98.9% during the second quarter of 1999.
Clipper
Clipper's second quarter 2000 revenue was $34.1 million, a 27.3% increase over revenues of $26.8 million during the second quarter of 1999. This quarter's operating income was $809,000, an increase of 63% over the same period last year. As a result of this improvement in operating income, Clipper's second quarter operating ratio was 97.6% compared to 98.1% during the second quarter of 1999. ``Clipper's strong revenue growth, in all business units, has been accompanied by further reductions in operating ratio,'' said Mr. Young. ``This is the result of increased revenues to cover fixed costs and a consistent emphasis on account profitability and improved utilization of equipment. For example, Clipper's temperature-controlled division has focused on adding new business to fill equipment in westbound lanes that are historically empty. In addition to contributing to revenue growth, the new freight has enabled this Clipper division to more efficiently reposition trailers for produce loads traditionally moving in eastbound shipping lanes,'' said Mr. Young.
Russell 2000® Index
On July 10, the Frank Russell Company announced that Arkansas Best has been added to the Russell 2000® Index. This index measures the performance of the smallest 2,000 securities included in the Russell 3000® Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization. As described by the Frank Russell Company, the Russell 2000® Index is widely regarded in the industry as the premier measure of small capitalization stocks.
Conference Call
Arkansas Best Corporation will be hosting a conference call with company executives to discuss the 2000 second quarter results. The call will be today, Thursday, July 20, at 10:00 a.m. CDT. Interested parties are invited to listen by calling (800) 289-0494. 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 492472. The conference call and playback can also be accessed on Arkansas Best's Internet web site at www.arkbest.com through Friday, August 4.
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 Six Months Ended
June 30 June 30
2000 1999 2000 1999
($ thousands, except per share data)
CONTINUING OPERATIONS:
OPERATING REVENUES
Transportation operations $419,975 $369,238 $817,689 $719,639
Tire operations 47,694 46,133 88,465 86,593
Service and other 4,318 3,534 8,848 7,048
471,987 418,905 915,002 813,280
OPERATING EXPENSES AND COSTS
Transportation operations 385,806 344,092 756,743 676,086
Tire operations 46,598 45,807 87,559 86,734
Service and other 4,492 3,701 9,327 7,447
436,896 393,600 853,629 770,267
OPERATING INCOME 35,091 25,305 61,373 43,013
OTHER INCOME (EXPENSE)
Net gains (losses) on
sales of property and
non-revenue equipment 252 (32) 1,569 464
Interest expense (4,342) (4,784) (8,863) (9,327)
Minority interest
in Treadco, Inc. --- --- --- 245
Other, net (609) (1,356) (1,132) (2,376)
(4,699) (6,172) (8,426) (10,994)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 30,392 19,133 52,947 32,019
FEDERAL AND STATE INCOME
TAXES 12,643 8,036 22,026 13,444
INCOME FROM CONTINUING
OPERATIONS 17,749 11,097 30,921 18,575
DISCONTINUED OPERATIONS:
Loss from discontinued
operations (net of tax
benefits of $394 for the
six months ended
June 30,1999) --- --- --- (664)
LOSS FROM DISCONTINUED
OPERATIONS --- --- --- (664)
NET INCOME 17,749 11,097 30,921 17,911
Preferred stock dividends 1,074 1,074 2,149 2,149
NET INCOME FOR COMMON
SHAREHOLDERS $16,675 $10,023 $28,772 $15,762
NET INCOME (LOSS) PER COMMON
SHARE
Basic:
Continuing operations (A) $0.84 $0.51 $1.46 $0.83
Discontinued operations --- --- --- (0.03)
NET INCOME (A) $0.84 $0.51 $1.46 $0.80
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 19,785,000 19,632,533 19,774,067 19,623,093
Diluted:
Continuing operations (B) $0.74 $0.47 $1.28 $0.79
Discontinued operations --- --- --- (0.03)
NET INCOME (B) $0.74 $0.47 $1.28 $0.76
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED) 24,081,375 23,780,913 24,077,569 23,681,525
CASH DIVIDENDS PAID PER
COMMON SHARE $--- $--- $--- $---
(A) Gives consideration to preferred stock dividends of $1.1 million per
quarter.
(B) For the six months ended June 30, 2000 and 1999, conversion of
preferred shares into common is assumed.
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30 December 31
2000 1999
($ thousands)
ASSETS
Current assets $252,623 $243,099
Property, plant and equipment (net) 363,061 337,094
Other assets 49,686 42,351
Goodwill (less amortization) 107,360 109,385
$772,730 $731,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $295,223 $282,139
Long-term debt, less current portion 164,224 173,702
Other liabilities 37,082 29,845
Deferred income taxes 26,113 25,191
Shareholders' equity 250,088 221,052
$772,730 $731,929
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30
2000 1999
($ thousands)
OPERATING ACTIVITIES
Net cash provided by operating activities $53,927 $54,004
INVESTING ACTIVITIES
Purchases of property, plant and equipment
less capitalized leases (54,198) (28,048)
Purchase of Treadco, Inc. stock --- (23,673)
Proceeds from asset sales and other 5,905 8,397
NET CASH USED BY INVESTING ACTIVITIES (48,293) (43,324)
FINANCING ACTIVITIES
Deferred financing costs and expenses --- (125)
Borrowings under revolving credit facilities 89,800 231,250
Payments under revolving credit facilities (81,100) (222,500)
Payments on long-term debt (8,880) (8,641)
Dividends paid (2,149) (2,149)
Net increase (decrease) in bank overdraft 1,366 (4,018)
Retirement of bonds (4,781) (4,768)
Other, net 264 164
NET CASH USED BY FINANCING ACTIVITIES (5,480) (10,787)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 154 (107)
Cash and cash equivalents at beginning of
period 4,319 4,543
CASH AND CASH EQUIVALENTS AT END OF PERIOD $4,473 $4,436
ARKANSAS BEST CORPORATION
REVENUES AND OPERATING RATIOS (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
($ thousands)
REVENUES
ABF Freight System, Inc. (A) $344,671 $308,667 $676,507 $604,119
G.I. Trucking Company 42,795 34,913 80,496 66,447
Clipper Domestic 34,126 26,810 63,757 51,275
Treadco, Inc. 48,292 46,684 89,556 87,629
OPERATING RATIOS
ABF Freight System, Inc. (A) 90.5% 92.5% 91.2% 93.1%
G.I. Trucking Company 95.7% 95.9% 97.7% 97.0%
Clipper Domestic 97.6% 98.1% 98.7% 99.7%
Treadco, Inc. 97.1% 98.9% 98.4% 99.7%
OPERATING INCOME
ABF Freight System, Inc. (A) $32,622 $23,300 $59,863 $41,974
G.I. Trucking Company 1,845 1,415 1,853 1,979
Clipper Domestic 809 497 839 170
Treadco, Inc. 1,393 493 1,397 238
(A) Includes U.S., Canadian and Puerto Rican operations of ABF
affiliates.
ABF FREIGHT SYSTEM, INC.
COMBINED FINANCIAL INFORMATION
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000
Three Months Ended June 30 Six Months Ended June 30
2000 1999 % Change 2000 1999 % Change
Operating Revenue* $344,671 $308,667 11.7% $676,507 $604,119 12.0%
Operating Income* $32,622 $23,300 $59,863 $41,974
Operating Ratio 90.5% 92.5% 91.2% 93.1%
Three Months Ended June 30 Six Months Ended June 30
2000 1999 % Change 2000 1999 % Change
Revenue* LTL $314,954 $281,009 12.1% $617,890 $550,352 12.3%
TL 29,717 27,658 7.4% 58,617 53,767 9.0%
Total 344,671 308,667 11.7% 676,507 604,119 12.0%
Tonnage* LTL 760,879 728,716 4.4% 1,510,796 1,430,954 5.6%
(tons) TL 182,975 183,305 (0.2)% 364,832 358,167 1.9%
Total 943,854 912,021 3.5% 1,875,628 1,789,121 4.8%
Shipments LTL 1,520,758 1,465,524 3.8% 3,004,945 2,883,204 4.2%
TL 23,050 22,904 0.6% 45,984 44,774 2.7%
Total 1,543,808 1,488,428 3.7% 3,050,929 2,927,978 4.2%
Revenue/CWT LTL $20.70 $19.28 7.4% $20.45 $19.23 6.3%
TL 8.12 7.54 7.7% 8.03 7.51 6.9%
Total $18.26 $16.92 7.9% $18.03 $16.88 6.8%
Revenue
/ Shipment Total $223.26 $207.38 7.7% $221.74 $206.33 7.5%
Cost / Shipment $202.13 $191.72 5.4% $202.12 $191.99 5.3%
*Note: Values rounded to thousands ($000)
There were 64 workdays in the second quarter of 2000 and in the second
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