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