Arkansas Best Corporation Announces Second Quarter 2011 Profit of $0.20/Share

Aug 02, 2011, 03:00 ET from Arkansas Best Corporation

FORT SMITH, Ark., Aug. 2, 2011 /PRNewswire/ -- Arkansas Best Corporation (Nasdaq: ABFS) today announced second quarter 2011 net income of $5.3 million, or $0.20 per share, compared to a net loss of $7.4 million, or $0.30 per share, in the second quarter of 2010.

Arkansas Best's second quarter 2011 return to profitability was primarily a result of ABF's healthy tonnage levels combined with an emphasis on increased account pricing.  ABF improved its operating ratio by over five operating points versus the same period last year and nearly seven and a half operating points versus the previous quarter.

"We are pleased with the improvement in our company's performance and the steps we have taken toward restoring Arkansas Best's historical profit margins," said Judy R. McReynolds, Arkansas Best President and Chief Executive Officer.  "However, the progress made so far does not produce sufficient returns for our shareholders nor does it allow us to adequately recapitalize our business.  Further profitability gains should result from improved pricing on ABF's existing account base and from continuing efforts to achieve a more competitive cost structure.  Our focus on growing business with customers who value ABF's high level of service and wide range of logistics offerings should also positively impact our profitability."

Arkansas Best Corporation

Second Quarter 2011

  • Revenue of $498.6 million, a per day increase of 21.2% from the prior year second quarter revenue of $411.3 million
  • Net income of $0.20 per share compared to a net loss of $0.30 per share in the prior year quarter

ABF Freight System, Inc.®

Second Quarter 2011

  • Revenue of $458.5 million compared to $379.4 million in second quarter 2010, a per-day increase of 20.8%
  • Tonnage per day increase of 9.9% versus second quarter 2010
  • Total billed revenue per hundredweight of $25.83 compared to $23.59 in second quarter 2010, an increase of 9.5%, including increases in fuel surcharge
  • Operating income of $8.2 million compared to an operating loss of $12.6 million in second quarter 2010
  • Operating ratio of 98.2% compared to 103.3% in second quarter 2010

"Last quarter I described various initiatives that were under way to address inadequate pricing and improve the profitability on a large number of accounts.  Throughout the second quarter, ABF held firm on requests to better match individual customer revenues with the high level of service and superior value that ABF offers.  Though these pricing actions have caused some business to go to other carriers, the success of our efforts is reflected in ABF's return to profitability," said Ms. McReynolds.  

Legal Update

On July 6, 2011, the U.S. Court of Appeals for the Eighth Circuit reversed a lower court's previous dismissal of a lawsuit ABF filed in November 2010 against the International Brotherhood of Teamsters and various other parties.  The lawsuit was remanded back to the lower court. The lawsuit related to three modifications of the National Master Freight Agreement ("NMFA") that were exclusively granted to the YRC subsidiaries in 2009 and 2010.  Approximately 76% of ABF's employees are covered under the NMFA.  ABF believes it is an equal signatory to the NMFA which, as a national collective bargaining agreement, is designed to establish a single national standard for wages and other employment terms for all employer participants.  The intent of ABF's original lawsuit was to level the playing field relative to the cost structures of all parties to the NMFA.  ABF is very pleased with the Eighth Circuit's ruling and will work through the next steps of the legal process to validate its rights under the NMFA.

Final Remarks

"We are encouraged by the positive results of the second quarter and we are pleased with the progress ABF has made," said Ms. McReynolds.  "However, we know we have a lot of work left to do.  Our employees continue to work efficiently and productively to overcome our higher cost structure and to deliver the superior customer service for which ABF is known.  As we move through the remainder of the year, we expect to make further progress toward consistently achieving the historical returns of our company."

Conference Call

Arkansas Best Corporation will host a conference call with company executives to discuss the second quarter 2011 results.  The call will be today, Tuesday, August 2, at 9:30 a.m. ET (8:30 a.m. CT).  Interested parties are invited to listen by calling (800) 926-9192.  Following the call, a recorded playback will be available through the end of the day on August 31, 2011.  To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers).  The conference call ID for the playback is 21532122.  The conference call and playback can also be accessed, through August 31, on Arkansas Best's website at arkbest.com.

Company Description

Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a transportation holding company.  ABF Freight System, Inc., Arkansas Best's largest subsidiary, has been in continuous service since 1923.  ABF has evolved from a local less-than-truckload (LTL) motor carrier into a global provider of customizable supply chain solutions.  More information is available at arkbest.com and abf.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 "anticipate," "believe," "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, recessionary economic conditions; competitive initiatives, pricing pressures and effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates; the impact of any limitations on our customers' access to adequate financial resources; availability and cost of capital; shifts in market demand; weather conditions; the performance and needs of industries served by Arkansas Best Corporation's subsidiaries; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; relationships with employees, including unions; union and non-union employee wages and benefits, including changes in required contributions to multiemployer pension plans; governmental regulations and policies; future climate change legislation; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; and other financial, operational and legal risks and uncertainties detailed from time to time in Arkansas Best Corporation's Securities and Exchange Commission ("SEC") 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

June 30

Six Months Ended

June 30

2011

2010

2011

2010

(Unaudited)

($ thousands, except share and per share data)

OPERATING REVENUES

$

498,550

$

411,347

$

933,481

$

771,237

OPERATING EXPENSES AND COSTS

489,552

422,157

946,475

817,313

OPERATING INCOME (LOSS)

8,998

(10,810)

(12,994)

(46,076)

OTHER INCOME (EXPENSE)

Interest and dividend income

273

274

516

608

Interest expense and other related financing costs

(932)

(434)

(1,927)

(999)

Other, net

281

(457)

2,892

211

(378)

(617)

1,481

(180)

INCOME (LOSS) BEFORE INCOME TAXES

8,620

(11,427)

(11,513)

(46,256)

INCOME TAXES

Current provision (benefit)

3,132

(847)

2,392

(9,336)

Deferred provision (benefit)

37

(3,232)

(6,569)

(8,200)

3,169

(4,079)

(4,177)

(17,536)

NET INCOME (LOSS)

5,451

(7,348)

(7,336)

(28,720)

LESS: NONCONTROLLING INTEREST IN

     NET INCOME OF SUBSIDIARY

153

96

174

116

NET INCOME (LOSS) ATTRIBUTABLE TO

  ARKANSAS BEST CORPORATION

$

5,298

$

(7,444)

$

(7,510)

$

(28,836)

EARNINGS PER COMMON SHARE(1)

Basic

$

0.20

$

(0.30)

$

(0.30)

$

(1.15)

Diluted

0.20

(0.30)

(0.30)

(1.15)

AVERAGE COMMON SHARES OUTSTANDING

Basic

25,411,339

25,182,579

25,358,130

25,137,886

Diluted

25,411,942

25,182,579

25,358,130

25,137,886

CASH DIVIDENDS DECLARED   PER COMMON SHARE

$

0.03

$

0.03

$

0.06

$

0.06

(1)

The Company uses the two-class method for calculating earnings per share. This method 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.

ARKANSAS BEST CORPORATION

CONSOLIDATED BALANCE SHEETS

June 30

2011

December 31

2010

(Unaudited)

Note

($ thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

114,834

$

102,578

Short-term investments

37,579

39,288

Restricted cash equivalents and short-term investments

51,681

51,661

Accounts receivable, less allowances (2011 – $5,737; 2010 – $3,944)

170,660

145,426

Other accounts receivable, less allowances (2011 – $1,214; 2010 – $1,254)

7,415

8,157

Prepaid expenses

9,422

10,258

Deferred income taxes

35,596

32,681

Prepaid and refundable income taxes

2,209

3,958

Other

5,221

5,677

TOTAL CURRENT ASSETS

434,617

399,684

PROPERTY, PLANT AND EQUIPMENT

Land and structures

241,082

243,981

Revenue equipment

551,411

530,424

Service, office and other equipment

167,329

163,732

Leasehold improvements

21,198

21,890

981,020

960,027

Less allowances for depreciation and amortization

582,686

552,781

398,334

407,246

OTHER ASSETS

54,564

54,021

$

887,515

$

860,951

Note: The balance sheet at December 31, 2010 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 BALANCE SHEETS – continued

June 30

2011

December 31

2010

(Unaudited)

Note

($ thousands, except share data)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank overdraft and drafts payable

$

15,820

$

13,023

Accounts payable

82,950

62,134

Income taxes payable

348

196

Accrued expenses

157,589

144,543

Current portion of long-term debt

15,386

14,001

TOTAL CURRENT LIABILITIES

272,093

233,897

LONG-TERM DEBT, less current portion

38,160

42,657

PENSION AND POSTRETIREMENT LIABILITIES

65,204

65,421

OTHER LIABILITIES

17,713

19,827

DEFERRED INCOME TAXES

17,878

19,405

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, authorized 70,000,000 shares;

   issued 2011: 27,099,819 shares; 2010: 26,934,847 shares

271

269

Additional paid-in capital

284,771

281,169

Retained earnings

283,034

292,129

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

(57,770)

(57,770)

Accumulated other comprehensive loss

(33,839)

(36,053)

TOTAL STOCKHOLDERS' EQUITY

476,467

479,744

$

887,515

$

860,951

Note: The balance sheet at December 31, 2010 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

Six Months Ended

June 30

2011

2010

(Unaudited)

($ thousands)

OPERATING ACTIVITIES

Net loss

$

(7,336)

$

(28,720)

Adjustments to reconcile net loss to net cash

   provided by operating activities:

Depreciation and amortization

35,971

36,096

Other amortization

123

133

Pension settlement expense

178

Share-based compensation expense

3,699

2,158

Provision for losses on accounts receivable

1,122

303

Deferred income tax benefit

(6,569)

(8,200)

Gain on sale of property and equipment

(873)

(72)

Changes in operating assets and liabilities:

Receivables

(25,756)

(20,857)

Prepaid expenses

836

1,399

Other assets

146

706

Income taxes

2,417

21,605

Accounts payable, accrued expenses and other liabilities

29,352

14,499

NET CASH PROVIDED BY OPERATING ACTIVITIES

33,132

19,228

INVESTING ACTIVITIES

Purchases of property, plant and equipment, net of capital leases and notes payable

(18,766)

(3,399)

Proceeds from sales of property and equipment

3,370

2,676

Purchases of short-term investments

(12,250)

(27,542)

Proceeds from sales of short-term investments

14,125

57,916

Capitalization of internally developed software and other

(2,183)

(2,293)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(15,704)

27,358

FINANCING ACTIVITIES

Payments on long-term debt

(6,994)

(3,011)

Proceeds from issuance of long-term debt

11,416

Net change in bank overdraft

2,797

(11,844)

Change in restricted cash equivalents and short-term investments

(20)

(983)

Deferred financing costs

(133)

Payment of common stock dividends

(1,585)

(1,554)

Proceeds from the exercise of stock options and other

763

515

NET CASH USED IN FINANCING ACTIVITIES

(5,172)

(5,461)

NET INCREASE IN CASH AND CASH EQUIVALENTS

12,256

41,125

Cash and cash equivalents at beginning of period

102,578

39,332

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

114,834

$

80,457

ARKANSAS BEST CORPORATION

FINANCIAL STATEMENT OPERATING SEGMENT DATA

AND OPERATING RATIOS

Three Months Ended

June 30

Six Months Ended

June 30

2011

2010

2011

2010

(Unaudited)

($ thousands)

ABF Freight System, Inc.(1)

$

458,521

$

379,443

$

860,880

$

712,468

Other revenues and eliminations

40,029

31,904

72,601

58,769

Total consolidated   operating revenues

$

498,550

$

411,347

$

933,481

$

771,237

OPERATING EXPENSES AND COSTS

ABF Freight System, Inc.(1)

Salaries, wages and benefits

$

273,262

59.6%

$

248,985

65.6%

$

535,755

62.2%

$

485,424

68.1%

Fuel, supplies and expenses

88,327

19.3

64,729

17.1

167,722

19.5

125,641

17.6

Operating taxes and licenses

11,572

2.5

10,718

2.8

22,993

2.7

21,209

3.0

Insurance

6,513

1.4

5,929

1.6

12,993

1.5

10,111

1.4

Communications and utilities

3,731

0.8

3,313

0.9

7,711

0.9

7,179

1.0

Depreciation and amortization

17,376

3.8

16,908

4.5

34,620

4.0

34,706

4.9

Rents and purchased transportation

48,384

10.6

39,849

10.5

90,857

10.6

73,941

10.4

Gain on sale of property

  and equipment

(784)

(0.2)

(126)

(884)

(0.1)

(424)

(0.1)

Other

1,951

0.4

1,734

0.3

3,548

0.4

2,958

0.5

450,332

98.2%

392,039

103.3%

875,315

101.7%

760,745

106.8%

Other expenses and eliminations

39,220

30,118

71,160

56,568

Total consolidated operating

  expenses and costs

$

489,552

$

422,157

$

946,475

$

817,313

OPERATING INCOME (LOSS)

ABF Freight System, Inc.(1)

$

8,189

$

(12,596)

$

(14,435)

$

(48,277)

Other income (loss) and   eliminations

809

1,786

1,441

2,201

Total consolidated operating

  income (loss)

$

8,998

$

(10,810)

$

(12,994)

$

(46,076)

(1)

Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.

ABF FREIGHT SYSTEM, INC.

OPERATING STATISTICS

Three Months Ended June 30

Six Months Ended June 30

2011

2010

% Change

2011

2010

% Change

(Unaudited)

Workdays

63.5

63.5

127.5

126.5

Billed Revenue (1) / CWT     

$

25.83

$

23.59

9.5%

$

25.02

$

23.60

6.0%

Billed Revenue (1) / Shipment  

$

368.76

$

339.17

8.7%

$

354.68

$

331.23

7.1%

Shipments                 

1,250,896

1,130,062

10.7%

2,448,806

2,164,916

13.1%

Shipments / Day

19,699

17,796

10.7%

19,206

17,114

12.2%

Tonnage (tons)             

893,010

812,355

9.9%

1,736,005

1,519,354

14.3%

Tons / Day

14,063

12,793

9.9%

13,616

12,011

13.4%

(1)

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

Includes U.S., Canadian and Puerto Rican operations of ABF affiliates.

Contact:

Mr. David Humphrey, Vice President, Investor Relations and Corporate Communications

Telephone: (479) 785-6200

SOURCE Arkansas Best Corporation



RELATED LINKS

http://www.arkbest.com