Arkansas Best Corporation Announces First Quarter 2013 Results - Revenue rises to $520.7 million from $440.9 million

- First quarter 2013 net loss of $13.4 million, or $0.52 per share

- Emerging, non-asset-based businesses continue growth trends and cash generation

- ABF labor contract negotiations continue and remain important to lowering ABF's cost structure

FORT SMITH, Ark., April 30, 2013 /PRNewswire/ -- Arkansas Best Corporation (Nasdaq: ABFS) today reported a first quarter 2013 net loss despite continued encouraging trends in its emerging businesses.  Year-over-year revenue and tonnage growth at LTL carrier ABF Freight System, Inc., were offset by higher wage and benefit costs for employees represented by the International Brotherhood of Teamsters.

Arkansas Best's first quarter 2013 revenue was $520.7 million compared to revenue of $440.9 million in the first quarter of 2012. The first quarter net loss was $13.4 million, or $0.52 per share, compared to a first quarter 2012 net loss of $18.2 million, or $0.71 per share.  Last year's first quarter results included the effects of an unusually low corporate tax benefit rate and unusually high workers' compensation claims costs.  Combined, these items increased last year's first quarter net loss by $0.31 per share.    

Arkansas Best's emerging, non-asset-based businesses continue to display strength in their revenue growth and cash flow generation.  Freight brokerage and vehicle roadside and preventive maintenance grew first-quarter revenue 82% and 45%, respectively, and improved operating income. Operating results at Panther Expedited Services, Inc., were impacted by reduced demand for expedited services and investments made in sales and service locations for future growth.  On a combined basis, Panther and all of the other non-asset-based businesses generated first quarter 2013 earnings before interest, taxes, depreciation and amortization ("EBITDA") of $3.4 million, versus slightly negative EBITDA in the first quarter of 2012.  "First quarter revenue and operating income at our emerging businesses reflected growth and improvement as we invested heavily in these businesses during 2012.  They represent a critical piece of Arkansas Best's strategy to achieve sustained profitability," said Arkansas Best President and Chief Executive Officer Judy R. McReynolds.  "The investments made so far have improved the financial performance of these subsidiaries and strengthened their service offerings and their ability, both individually and through significant cross-selling opportunities, to better serve customers with full supply-chain solutions."

ABF Freight's first-quarter operating loss deepened despite revenue growth and improving business levels. McReynolds noted that the company's high-cost structure continues to weigh on results, underscoring the need for a more rational labor agreement that reflects the increasingly competitive LTL industry. "After months of hard work and a second extension of contract talks through May 31, the negotiating teams continue to make progress on developing a contract agreement for our Teamster-represented employees that is expected to provide ABF greater operational flexibility and lower costs in order to effectively compete in the future."

Closing Comments
"Despite losses in the seasonally weak first quarter, Arkansas Best is well-positioned for growth in new and existing markets.  We continue to develop a comprehensive array of services designed to meet the ever-changing needs of our customers and generate financial returns for our company and our shareholders," said McReynolds.  "Current negotiations on a new labor agreement provide an opportunity to preserve good-paying jobs and protect the retirement benefits of our union employees through a lower cost structure and improved operational flexibility.  A new labor contract, with lower more competitive costs, is a critical element in allowing ABF to effectively compete in a drastically different LTL marketplace." 

Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2013 first quarter results.  The call will be today, Tuesday, April 30, at 9:30 a.m. ET (8:30 a.m. CT).  Interested parties are invited to listen by calling (800) 659-2165.  Following the call, a recorded playback will be available through the end of the day on May 31, 2013.  To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers).  The conference call ID for the playback is 21653957.  The conference call and playback can also be accessed, through May 31, on Arkansas Best's website at arkbest.com.

Company Description
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a freight transportation services and solutions provider. Through its various subsidiaries, Arkansas Best offers a wide variety of logistics solutions including: domestic and global transportation of less-than-truckload ("LTL") and full load shipments, expedited ground and time-definite delivery solutions, freight forwarding services, freight brokerage, oversight of roadside assistance and equipment services for commercial vehicles, and household goods moving market services for consumers, corporations, and the military. More information is available at arkbest.com, abf.com and pantherexpedite.com.

Forward-Looking Statements
The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995:  Statements contained in this report that are not based on historical facts are "forward-looking statements." Terms such as "anticipate," "believe," "could," "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, a workforce stoppage by our employees covered under our collective bargaining agreement or unfavorable terms of future collective bargaining agreements; relationships with employees, including unions; general economic conditions and related shifts in market demand that impact the performance and needs of industries served by Arkansas Best Corporation's subsidiaries and/or limit our customers' access to adequate financial resources; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer pension plans; 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 the inability to collect fuel surcharges; availability of fuel; default on covenants of financing arrangements and the availability and terms of future financing arrangements; availability and cost of reliable third-party services; disruptions or failures of services essential to the use of information technology platforms in our business; availability, timing, and amount of capital expenditures; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; governmental regulations and policies; future climate change legislation; potential impairment of goodwill and intangible assets; the impact of our brand and corporate reputation; the cost, timing, and performance of growth initiatives; the cost, integration, and performance of any future acquisitions; the costs of continuing investments in technology, a failure of our information systems, and the impact of cyber incidents; weather conditions; and other financial, operational, and legal risks and uncertainties detailed from time to time in Arkansas Best Corporation's Securities and Exchange Commission 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

March 31



2013


2012


(Unaudited)


($ thousands, except share and per share data)


OPERATING REVENUES

$

520,687


$

440,867







OPERATING EXPENSES AND COSTS


544,037



463,854







OPERATING LOSS


(23,350)



(22,987)







OTHER INCOME (EXPENSE)






Interest and dividend income


171



253

Interest expense and other related financing costs


(1,207)



(1,142)

Other, net


1,083



1,340



47



451







LOSS BEFORE INCOME TAXES


(23,303)



(22,536)







INCOME TAX BENEFITS


(9,908)



(4,374)







NET LOSS

$

(13,395)


$

(18,162)







LOSS PER COMMON SHARE(1)






Basic

$

(0.52)


$

(0.71)

Diluted

$

(0.52)


$

(0.71)







AVERAGE COMMON SHARES OUTSTANDING






Basic


25,638,333



25,455,607

Diluted


25,638,333



25,455,607







CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.03


$

0.03







(1) The Company uses the two-class method for calculating earnings per share. This method, as calculated below, requires an allocation of dividends paid and a portion of undistributed net income (but not losses) to unvested restricted stock for calculating per share amounts.







NET LOSS

$

(13,395)


$

(18,162)







EFFECT OF UNVESTED RESTRICTED STOCK AWARDS(1)


(38)



(34)







ADJUSTED NET LOSS FOR  CALCULATING

    EARNINGS PER COMMON SHARE

$

(13,433)


$

(18,196)







ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS


March 31

2013



 

December 31

2012


(Unaudited)



Note


($ thousands, except share data)

ASSETS












CURRENT ASSETS






Cash and cash equivalents

$

75,071


$

90,702

Short-term investments


29,891



29,054

Restricted cash, cash equivalents, and short-term investments


5,904



9,658

Accounts receivable, less allowances (2013 – $5,360; 2012 – $5,249)


190,036



180,631

Other accounts receivable, less allowances (2013 – $1,376; 2012 – $1,334)


6,011



6,539

Prepaid expenses


19,397



17,355

Deferred income taxes


37,302



39,245

Prepaid and refundable income taxes


7,851



5,681

Other


7,288



7,185

     TOTAL CURRENT ASSETS


378,751



386,050







PROPERTY, PLANT AND EQUIPMENT






Land and structures


243,990



243,699

Revenue equipment


588,809



589,729

Service, office, and other equipment


119,642



119,456

Software


105,164



103,164

Leasehold improvements


23,357



23,272



1,080,962



1,079,320

Less allowances for depreciation and amortization


653,862



635,292



427,100



444,028

GOODWILL


75,032



73,189

INTANGIBLE ASSETS, NET


78,518



79,561

OTHER ASSETS


51,994



51,634








$

1,011,395


$

1,034,462







LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES






Bank overdraft and drafts payable

$

11,737


$

13,645

Accounts payable


84,966



84,292

Income taxes payable


75



59

Accrued expenses


167,848



158,668

Current portion of long-term debt


39,861



43,044

TOTAL CURRENT LIABILITIES


304,487



299,708







LONG-TERM DEBT, less current portion


105,169



112,941

PENSION AND POSTRETIREMENT LIABILITIES


105,922



104,673

OTHER LIABILITIES


12,366



12,832

DEFERRED INCOME TAXES


35,858



45,309







STOCKHOLDERS' EQUITY






Common stock, $0.01 par value, authorized 70,000,000 shares; issued 2013: 27,307,505 shares; 2012: 27,296,285 shares


273



273

Additional paid-in-capital


290,776



289,711

Retained earnings


269,955



284,157

Treasury stock, at cost, 1,677,932 shares


(57,770)



(57,770)

Accumulated other comprehensive loss


(55,641)



(57,372)

TOTAL STOCKHOLDERS' EQUITY


447,593



458,999








$

1,011,395


$

1,034,462

Note: The balance sheet at December 31, 2012 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



Three Months Ended

March 31


2013


2012


(Unaudited)


($ thousands)

OPERATING ACTIVITIES






Net loss

$

(13,395)


$

(18,162)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:






Depreciation and amortization


22,150



19,320

Amortization of intangibles


1,043



Share-based compensation expense


1,303



1,442

Provision for losses on accounts receivable


969



275

Deferred income tax benefit


(8,756)



(4,301)

Gain on sale of property and equipment


(212)



(285)

Changes in operating assets and liabilities:






Receivables


(9,886)



(859)

Prepaid expenses


(2,042)



(1,621)

Other assets


(964)



(96)

Income taxes


(1,548)



1,793

Accounts payable, accrued expenses, and other liabilities


11,124



7,371

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


(214)



4,877







INVESTING ACTIVITIES






Purchases of property, plant and equipment


(3,440)



(2,388)

Proceeds from sales of property and equipment


842



1,315

Purchases of short-term investments


(3,752)



(14,335)

Proceeds from sales of short-term investments


2,940



3,185

Capitalization of internally developed software and other


(2,090)



(1,618)

NET CASH USED IN INVESTING ACTIVITIES


(5,500)



(13,841)







FINANCING ACTIVITIES






Repayments on long-term debt


(10,955)



(6,075)

Net change in bank overdraft and other


(1,909)



(10,056)

Change in restricted cash, cash equivalents, and short-term investments


3,754



23,149

Deferred financing costs




(36)

Payment of common stock dividends


(807)



(797)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES


(9,917)



6,185







NET DECREASE IN CASH AND CASH EQUIVALENTS


(15,631)



(2,779)

Cash and cash equivalents at beginning of period


90,702



141,295

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

75,071


$

138,516







NONCASH INVESTING ACTIVITIES






Accruals for equipment received

$

173


$

2,060
















ARKANSAS BEST CORPORATION

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES


Three Months Ended

March 31


2013


2012


(Unaudited)


($ thousands)

Arkansas Best Corporation – Consolidated












Earnings Before Interest, Taxes, Depreciation, and Amortization






Net loss

$

(13,395)


$

(18,162)

Interest expense


1,207



1,142

Income tax benefits


(9,908)



(4,374)

Depreciation and amortization


23,193



19,320

Amortization of share-based compensation


1,303



1,442

Amortization of actuarial losses


2,912



2,847

EBITDA

$

5,312


$

2,215

















Three Months Ended

March 31

2013


Three Months Ended

March 31

2012


Operating

Income

(Loss)

Depreciation and Amortization

EBITDA


Operating Income (Loss)

Depreciation and Amortization

EBITDA

Non-Asset Based Segments




























Premium Logistics & Expedited Freight Services(1)

$

(864)

$

2,550

$

1,686


$

$

$

Truck Brokerage and Management


767


92


859



394


65


459

Emergency and Preventative Maintenance


711


132


843



(137)


118


(19)

Household Goods Moving Services


(231)


241


10



(792)


179


(613)

Total non-asset based segments

$

383

$

3,015

$

3,398


$

(535)

$

362

$

(173)



















 

(1)

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software, which were acquired in conjunction with the purchase of Panther Expedited Services, Inc. on June 15, 2012.

Non-GAAP Financial Measures. The company reports its financial results in accordance with generally accepted accounting principles ("GAAP").  However, management believes that certain non-GAAP performance measures and ratios utilized for internal analysis provide financial statement users meaningful comparisons between current and prior period results, as well as important information regarding performance trends.  Certain information discussed in the scheduled conference call could be considered non-GAAP measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results. Management believes EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure financial performance and ability to service debt obligations. However, these financial measures should not be construed as better measurements than operating income, operating cash flow, net income or earnings per share, as defined by generally accepted accounting principles. Other companies may calculate EBITDA differently, and therefore the Company's EBITDA may not be comparable to similarly titled measures of other companies.

 


ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS


Three Months Ended

March 31



2013


2012


(Unaudited)


($ thousands)

OPERATING REVENUES








Freight Transportation

$

407,281



$

396,513










Premium Logistics & Expedited Freight Services


53,252





Truck Brokerage and Management


14,604




8,039


Emergency and Preventative Maintenance


32,522




22,378


Household Goods Moving Services


13,576




15,052


Total non-asset based segments


113,954




45,469










Other revenues and eliminations


(548)




(1,115)


Total consolidated operating revenues

$

520,687



$

440,867










OPERATING EXPENSES AND COSTS

Freight Transportation








Salaries, wages, and benefits

$

267,178

65.6%


$

265,061

66.8%

Fuel, supplies, and expenses


83,332

20.5



80,640

20.3

Operating taxes and licenses


10,990

2.7



10,801

2.7

Insurance


4,484

1.1



4,881

1.2

Communications and utilities


3,933

1.0



3,799

1.0

Depreciation and amortization


19,574

4.8



18,573

4.7

Rents and purchased transportation


38,469

9.4



33,216

8.4

Gain on sale of property and equipment


(212)

(0.1)



(282)

(0.1)

Other


2,082

0.5



1,682

0.5



429,830

105.5%



418,371

105.5%









Premium Logistics & Expedited Freight Services








Purchased transportation

$

41,036

77.1%


$

Depreciation and amortization(1)


2,550

4.8



Salaries, benefits, insurance, and other


10,530

19.7





54,116

101.6%











Truck Brokerage and Management


13,837




7,645


Emergency and Preventative Maintenance


31,811




22,515


Household Goods Moving Services


13,807




15,844


Total non-asset based segments


113,571




46,004










Other expenses and eliminations


636




(521)


Total consolidated operating expenses and costs

$

544,037



$

463,854


(1)

Depreciation and amortization consists primarily of amortization of intangibles, including customer relationships and software, which were acquired in conjunction with the purchase of Panther Expedited Services, Inc. on June 15, 2012.



Note: See the following page for description of segments.








ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA AND OPERATING RATIOS – Continued


Three Months Ended

March 31



2013


2012


(Unaudited)


($ thousands)

OPERATING INCOME (LOSS)






Freight Transportation

$

(22,549)


$

(21,858)







Premium Logistics & Expedited Freight Services


(864)



Truck Brokerage and Management


767



394

Emergency and Preventative Maintenance


711



(137)

Household Goods Moving Services


(231)



(792)

Total non-asset based segments


383



(535)







Other loss and eliminations


(1,184)



(594)

Total consolidated operating loss

$

(23,350)


$

(22,987)







Description of Segments:

  • Freight Transportation includes the results of operations of Arkansas Best's largest subsidiary, ABF Freight System, Inc.®.
  • Panther Expedited Services, Inc., which was acquired on June 15, 2012, is reported as Premium Logistics & Expedited Freight Services.
  • Truck Brokerage and Management includes the transportation brokerage services operating as FreightValue®.
  • Emergency and Preventative Maintenance includes the roadside vehicle assistance and commercial equipment services subsidiary FleetNet America, Inc.
  • Household Goods Moving Services includes Albert Companies, Inc. and Moving Solutions, Inc. which provide services to the consumer, corporate, and military household goods moving market.

Certain reclassifications have been made to the prior year's operating segment data to conform to the current year presentation. The operating results of Global Supply Chain Services and Supply Chain Services, businesses which provide ocean container transport and warehousing services, have been reclassified from the Freight Transportation segment to "Other and Eliminations." There was no impact on consolidated amounts as a result of these reclassifications.

 

ARKANSAS BEST CORPORATION

OPERATING STATISTICS




Three Months Ended


March 31


2013


2012

% Change


(Unaudited)





Freight Transportation(1)




Workdays


62.5



64.0









Billed Revenue(2) / CWT       

$

26.88


$

27.52

(2.3)%








Billed Revenue(2) / Shipment

$

372.36


$

366.15

1.7%








Shipments                                


1,095,678



1,095,019

0.1%








Shipments / Day


17,531



17,110

2.5%








Tonnage (tons)                        


758,889



728,465

4.2%








Tons / Day


12,142



11,382

6.7%

 

(1)

Based on the previously described reclassifications that have been made to the prior year's operating segment data and statistics to conform to the current year presentation, operations of Global Supply Chain Services and Supply Chain Services are excluded from key operating statistics for the Freight Transportation Segment.

(2)

Billed Revenue does not include revenue deferral required for financial statement purposes under the company's revenue recognition policy.

 

Contact:

Mr. David Humphrey, Vice President, Investor Relations


Telephone: (479) 785-6200




Media:  Ms. Kathy Fieweger, Vice President, Marketing and Corporate Communications


Telephone:  (847) 903-8806

SOURCE Arkansas Best Corporation



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