Arkansas Best Corporation's Third Quarter Net Income Increases 45%; ABF'S Operating Ratio is 88.5%
FORT SMITH, Ark., Oct. 17 -- Arkansas Best Corporation (Nasdaq: ABFS) today announced third quarter 2000 net income of $23.3 million, or $0.97 per diluted common share, compared to third quarter 1999 net income of $16.1 million, or $0.67 per diluted common share. Once again, this is the highest net income for any quarter in Arkansas Best's history, exceeding the previous record, set in this year's second quarter, by 31%. This year's third quarter net income increased 45% over net income during 1999's third quarter. Arkansas Best's third quarter 2000 revenue of $488.5 million reflects a per day increase of 9.6% over the third quarter of 1999.
``Arkansas Best Corporation, led by ABF Freight System, Inc., produced another outstanding quarter,'' said Robert A. Young, III, Arkansas Best President and Chief Executive Officer. ``ABF continues to perform extremely well as reflected by its third quarter operating ratio of 88.5%. For two of the last four quarters, ABF's operating ratio was below 90%,'' said Mr. Young. ``G.I. Trucking showed significant improvement in its third quarter operating results versus last year. Treadco had a solid performance during the quarter despite being impacted by high fuel prices. Clipper improved its operating income while continuing to experience strong revenue growth.''
ABF Freight System, Inc.
Third quarter operating income at ABF was $41.2 million, an increase of 34.7% over its 1999 third quarter operating income of $30.6 million. ABF's operating ratio of 88.5% reflects an improvement of 2.3 points versus its third quarter 1999 operating ratio of 90.8%. ``ABF continues to maintain its disciplined pricing philosophy while focusing on operational cost savings. The combination of these two factors has resulted in ABF's best third quarter operating ratio in nearly thirty years. I am very proud of the distinctive position of profitability that ABF continues to maintain in the long-haul, LTL industry,'' said Mr. Young.
ABF's third quarter 2000 revenue was $357.8 million, a per day increase of 9.4% versus the third quarter of 1999. Third quarter LTL revenue per hundredweight, including fuel surcharge, was $21.69 versus $19.45 during the third quarter of 1999. LTL tonnage per day during the third quarter declined slightly by 0.8% when compared to last year. In the third quarter of 2000, per day LTL shipments in two-day transit time lanes decreased 0.6% compared to a 0.3% shipment decrease in ABF's longer haul business. The productivity of ABF's dock and city driver employees continues to meet management's expectations.
As previously announced in July, ABF's Web site was named by CIO magazine as a Web Business 50/50 Award winner, placing abf.com among the best 50 of all Web sites. Even after receiving this prestigious honor, ABF continues to refine and distribute its innovative eCommerce tools in ways that help lower the administrative costs of transportation. The principal opportunity associated with ABF's eCommerce expertise lies in making existing and new LTL customers more effective in tackling the challenges of their own business-to- business (B2B) channels.
G.I. Trucking Company
G.I.'s third quarter revenue was $41.2 million, a per day increase of 19.9% over third quarter 1999 revenue of $34.9 million. G.I.'s third quarter operating ratio of 96.7% reflects a 2.4 point improvement compared to the 99.1% operating ratio of last year's third quarter. G.I.'s third quarter revenue per hundredweight, including fuel surcharge, increased 6.1% over the third quarter of 1999. Total pounds per day increased 13.0% over the third quarter of 1999. ``This reflects the positive impact of shipments that were added to G.I.'s Midwest region during the first quarter. Freight lane density in this region has improved as a result of these additional shipments,'' said Mr. Young.
``During the quarter, G.I. benefited from changes previously made in the areas of purchased transportation and sales supervision,'' said Mr. Young. ``G.I. is doing a better job of analyzing freight movement in important linehaul lanes in order to choose the most optimum transportation mode, considering both cost and service. As a result, G.I. has significantly lowered purchased transportation costs while improving linehaul efficiencies and equipment utilization. Sales managers placed throughout the G.I. system earlier in the year have been instrumental in training local account representatives and helping them to identify selling opportunities that are consistent with G.I.'s overall marketing plan. G.I.'s sales and purchased transportation personnel are now working together to add profitable shipments in the traffic lanes where they are most needed.''
Treadco, Inc.
During the third quarter of 2000, Treadco had revenues of $52.4 million versus third quarter 1999 revenue of $53.9 million. Operating income for the quarter was $2.7 million versus $2.8 million during the same period last year. Treadco's third quarter 2000 operating ratio was 94.8%. ``Despite the negative effects of rising fuel prices and lower new tire pricing, I am very pleased that Treadco was able to attain this high level of profitability during the third quarter,'' said Mr. Young.
``Because of continued emphasis by management, service revenues at Treadco continue to grow. By adding value through its service offerings, Treadco has enhanced customer loyalty and reduced the effects of customers shopping for tires purely based on price,'' said Mr. Young.
As previously announced last month, Treadco, Inc. has entered into a joint venture agreement with The Goodyear Tire and Rubber Company that will result in the formation of the world's largest network of new truck tire sales, service, and retread manufacturing centers. The joint venture will be called Wingfoot Commercial Tire Systems LLC. Treadco and Goodyear continue to work toward a transaction closing date of October 31, 2000.
Clipper
``Clipper continues to experience significant revenue growth,'' said Mr. Young. Third quarter 2000 revenue was $34.5 million, an 18.5% per day increase over last year's third quarter revenue of $29.6 million. Operating income was $887,654, an increase of 14.1% over the same period last year. Clipper's third quarter operating ratio was 97.4%, which equals its operating ratio during the third quarter of 1999.
``The truckload divisions of Clipper experienced strong revenue growth during the quarter. For instance, intermodal revenues were up sharply due to improved rail services, increased sales focus and greater market share with key accounts,'' said Mr. Young. ``During this period of accelerated revenue growth, Clipper has maintained its profit margin through continual review of individual account performance and the exiting of unprofitable business.''
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the company's third quarter 2000 results. The call will be today, Tuesday, October 17, at 10:00 a.m. CDT. Interested parties are invited to listen by calling (800) 946-0783. 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 557629. The conference call and playback can also be accessed on Arkansas Best's Internet Web site at www.arkbest.com through Tuesday, October 31.
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 Nine Months Ended
September 30 September 30
2000 1999 2000 1999
($ thousands, except per share data)
CONTINUING OPERATIONS:
OPERATING REVENUES
Transportation
operations $ 432,099 $ 395,441 $1,249,788 $1,115,080
Tire operations 51,801 53,299 140,266 139,893
Service and other 4,568 4,110 13,416 11,157
488,468 452,850 1,403,470 1,266,130
OPERATING EXPENSES AND COSTS
Transportation
operations 389,668 364,909 1,146,411 1,040,995
Tire operations 49,372 50,754 136,931 137,488
Service and other 5,033 4,333 14,361 11,780
444,073 419,996 1,297,703 1,190,263
OPERATING INCOME 44,395 32,854 105,767 75,867
OTHER INCOME (EXPENSE)
Net gains on sales of
property and non-revenue
equipment 437 507 2,006 971
Interest expense (4,144) (4,905) (13,007) (14,232)
Minority interest in
Treadco, Inc. --- --- --- 245
Other, net (1,221) (1,047) (2,352) (3,424)
(4,928) (5,445) (13,353) (16,440)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 39,467 27,409 92,414 59,427
FEDERAL AND STATE INCOME
TAXES 16,142 11,333 38,168 24,776
INCOME FROM CONTINUING
OPERATIONS 23,325 16,076 54,246 34,651
DISCONTINUED OPERATIONS:
Loss from discontinued
operations (net of tax
benefits of $394 for the
nine months ended
September 30,1999) --- --- --- (664)
LOSS FROM DISCONTINUED
OPERATIONS --- --- --- (664)
NET INCOME 23,325 16,076 54,246 33,987
Preferred stock dividends 999 1,075 3,123 3,224
NET INCOME FOR COMMON
SHAREHOLDERS $ 22,326 $ 15,001 $ 51,123 $ 30,763
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) -- Continued
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
($ thousands, except per share data)
NET INCOME (LOSS) PER
COMMON SHARE
Basic:
Continuing
operations (A) $ 1.12 $ 0.76 $ 2.58 $ 1.60
Discontinued operations --- --- --- (0.03)
NET INCOME (A) $ 1.12 $ 0.76 $ 2.58 $ 1.57
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 19,882,056 19,691,666 19,810,063 19,645,951
Diluted:
Continuing
operations (B) $ 0.97 $ 0.67 $ 2.27 $ 1.46
Discontinued
operations --- --- --- (0.03)
NET INCOME (B) $ 0.97 $ 0.67 $ 2.27 $ 1.43
AVERAGE COMMON
SHARES OUTSTANDING
(DILUTED) 24,081,674 24,102,750 23,901,158 23,821,934
CASH DIVIDENDS PAID
PER COMMON SHARE $ --- $ --- $ --- $ ---
(A) Gives consideration to preferred stock dividends of approximately
$1.0 million and $1.1 million for the three months ended
September 30, 2000 and 1999, respectively, and $3.1 million and
$3.2 million for the nine months ended September 30, 2000 and 1999,
respectively.
(B) For the three and nine months ended September 30, 2000 and 1999,
conversion of preferred shares into common is assumed.
ARKANSAS BEST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30 December 31
2000 1999
($ thousands)
ASSETS
Current assets $ 267,179 $ 243,099
Property, plant and
equipment (net) 382,635 337,094
Other assets 49,293 42,351
Goodwill (less amortization) 106,431 109,385
$ 805,538 $ 731,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 309,252 $ 282,139
Long-term debt, less
current portion 157,041 173,702
Other liabilities 39,803 29,845
Deferred income taxes 29,728 25,191
Shareholders' equity 269,714 221,052
$ 805,538 $ 731,929
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30
2000 1999
($ thousands)
OPERATING ACTIVITIES
Net cash provided by operating
activities $ 94,792 $ 73,944
INVESTING ACTIVITIES
Purchases of property, plant
and equipment less capitalized
leases (86,938) (41,756)
Purchase of Treadco, Inc. stock --- (23,673)
Proceeds from asset sales and other 6,888 13,130
NET CASH USED BY INVESTING ACTIVITIES (80,050) (52,299)
FINANCING ACTIVITIES
Deferred financing costs and expenses --- (125)
Borrowings under revolving credit
facility 106,600 370,750
Payments under revolving credit
facility (97,900) (369,000)
Payments on long-term debt (13,197) (15,531)
Dividends paid (3,123) (3,224)
Net increase (decrease) in bank
overdraft 2,639 (666)
Retirement of bonds (4,781) (4,768)
Purchase of preferred stock (3,924) ---
Other, net 1,464 750
NET CASH USED BY FINANCING ACTIVITIES (12,222) (21,814)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,520 (169)
Cash and cash equivalents at
beginning of period 4,319 4,543
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 6,839 $ 4,374
ARKANSAS BEST CORPORATION
REVENUES AND OPERATING RATIOS (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
($ thousands)
REVENUES (A)
ABF Freight System,
Inc. (B) $ 357,786 $ 332,302 $1,034,294 $ 936,421
G.I. Trucking Company 41,198 34,904 121,694 101,351
Clipper 34,521 29,593 98,279 80,868
Treadco, Inc. 52,415 53,933 141,971 141,561
OPERATING RATIOS
ABF Freight System,
Inc. (B) 88.5% 90.8% 90.2% 92.3%
G.I. Trucking Company 96.7% 99.1% 97.4% 97.7%
Clipper 97.4% 97.4% 98.2% 98.8%
Treadco, Inc. 94.8% 94.8% 97.1% 97.9%
OPERATING INCOME
ABF Freight System,
Inc. (B) $ 41,158 $ 30,554 $ 101,021 $ 72,528
G.I. Trucking Company 1,354 321 3,207 2,301
Clipper 888 778 1,726 948
Treadco, Inc. 2,737 2,790 4,133 3,027
(A) Does not include intercompany eliminations.
(B) Includes U.S., Canadian and Puerto Rican operations of ABF
affiliates.
ABF FREIGHT SYSTEM, INC.
COMBINED FINANCIAL INFORMATION
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 %Change 2000 1999 %Change
Operating Revenue* $357,786 $332,302 7.7% $1,034,294 $936,421 10.5%
Operating Income* $41,158 $30,554 $101,021 $72,528
Operating Ratio 88.5% 90.8% 90.2% 92.3%
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 %Change 2000 1999 %Change
Revenue* LTL $327,912 $301,067 8.9% $945,791 $851,420 11.1%
TL 29,874 31,235 (4.4)% 88,503 85,002 4.1%
Total 357,786 332,302 7.7% 1,034,294 936,422 10.5%
Tonnage* LTL 755,762 773,950 (2.4)% 2,266,558 2,204,904 2.8%
(tons) TL 175,995 203,462 (13.5)% 540,828 561,630 (3.7)%
Total 931,757 977,412 (4.7)% 2,807,386 2,766,534 1.5%
Shipments LTL 1,515,214 1,544,986 (1.9)% 4,520,159 4,428,190 2.1%
TL 22,084 25,151 (12.2)% 68,068 69,925 (2.7)%
Total 1,537,298 1,570,137 (2.1)% 4,588,227 4,498,115 2.0%
Revenue/CWT LTL $21.69 $19.45 11.5% $20.86 $19.31 8.0%
TL 8.49 7.68 10.6% 8.18 7.57 8.1%
Total $19.20 $17.00 12.9% $18.42 $16.92 8.9%
Revenue/
Shipment Total $232.74 $211.64 10.0% $225.42 $208.18 8.3%
Cost/
Shipment Total $205.96 $192.18 7.2% $203.41 $192.06 5.9%
*Note: Values rounded to thousands ($000)
There were 63 workdays in the third quarter of 2000 and 64 workdays in the
third 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