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"Our third quarter results reflect the on-going impact of lower freight levels and competitive industry pricing that deteriorated further compared to the first half of the year," said Robert A. Davidson, Arkansas Best President and Chief Executive Officer. "We are now entering the fourth year of a severe freight decline that is unprecedented in our company's history. It is unclear when business levels will benefit from a significant improvement in our nation's economy. In the meantime, our company's emphasis will remain on providing a high level of value-added service to our customers while managing our business, for the long-term, through diligent cost control and disciplined pricing."
Arkansas Best Corporation
Third Quarter 2009
-- Revenue of $399.0 million, a per day decrease of 19.5% from prior year
quarter of $495.8 million
-- Net loss of $0.23 per diluted share compared to net income of $0.60 per
diluted share in the prior year period
ABF Freight System, Inc.(R)
Third Quarter 2009
-- Revenue of $369.8 million compared to $476.3 million in third quarter of
2008, a per-day decrease of 22.4%
-- Tonnage per day decrease of 10.1% versus third quarter of 2008
-- Total billed revenue per hundredweight of $23.98 compared to $27.75, a
decrease of 13.6%, that is mainly attributable to the steep decline in
fuel surcharge compared to the third quarter of 2008
-- Operating loss of $14.0 million compared to operating income of $25.2
million in third quarter of 2008
-- Operating ratio of 103.8% compared to 94.7% in third quarter of 2008
"The smaller decline in ABF's third quarter tonnage implies an improving freight environment compared to the first half of the year. However, this year-over-year trend is primarily related to comparisons back to last year's third quarter when business levels fell sharply. Nevertheless, this quarter's tonnage also benefitted from modest market share gains from our LTL competitors," said Mr. Davidson. "On a sequential basis, ABF's third quarter tonnage trends were slightly better than normal, seasonal expectations. Though that trend has weakened somewhat since the last full week of September, we continue to add freight previously handled by other carriers. Regardless of business levels, we continue to manage the costs of the ABF network each day in line with the amount of available freight, while striving to maintain the high level of customized service that is important to ABF's customers."
"Industry LTL pricing further weakened during the third quarter. Declining yields, worsened by the recessionary economy, have made it more difficult to cover normal cost increases," said Mr. Davidson. "Despite a more price-sensitive environment, ABF has maintained its traditional emphasis on offering each customer a fair, competitive rate. ABF's history of pricing discipline has contributed to our current financial strength, and Arkansas Best's financial stability allows us to maintain high service levels and manage the company for the long-term benefit of our shareholders, employees and customers."
Conference Call
Arkansas Best Corporation will host a conference call with company executives to discuss the 2009 third quarter results. The call will be today, Wednesday, October 21, at 11:00 a.m. ET (10:00 a.m. CT). Interested parties are invited to listen by calling (877) 275-1257 or (706) 634-6529 (for international callers). Following the call, a recorded playback will be available through the end of the day on Saturday, November 14, 2009. To listen to the playback, dial (800) 642-1687 or (706) 645-9291 (for international callers). The conference call ID for the playback is 33767405. The conference call and playback can also be accessed, through Saturday, November 14, 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 provides transportation of less-than-truckload ("LTL") general commodities throughout North America. 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, current adverse economic conditions; 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; costs of continuing investments in technology; the timing and amount of capital expenditures; the cost, integration and performance of any future acquisitions; 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 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 Nine Months Ended
September 30 September 30
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited)
($ thousands, except share and per share data)
OPERATING REVENUES $398,957 $495,815 $1,101,269 $1,441,840
OPERATING EXPENSES
AND COSTS 411,194 470,323 1,169,405 1,377,514
--------- -------- --------- ---------
OPERATING INCOME (LOSS) (12,237) 25,492 (68,136) 64,326
OTHER INCOME (EXPENSE)
Interest and
dividend income 666 1,492 2,399 4,759
Interest expense
and other related
financing costs (357) (206) (1,041) (881)
Other, net 2,035 (681) 2,345 (1,174)
--------- -------- --------- ---------
2,344 605 3,703 2,704
--------- -------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES (9,893) 26,097 (64,433) 67,030
FEDERAL AND STATE
INCOME TAXES
Current (benefit)
provision (3,302) 8,469 (25,515) 28,709
Deferred (benefit)
provision (1,263) 2,186 (69) (1,821)
--------- -------- --------- ---------
(4,565) 10,655 (25,584) 26,888
--------- -------- --------- ---------
NET INCOME (LOSS) (5,328) 15,442 (38,849) 40,142
LESS: NONCONTROLLING
INTEREST IN NET INCOME
OF SUBSIDIARY 245 - 324 -
--------- -------- --------- ---------
NET INCOME (LOSS)
ATTRIBUTABLE TO
ARKANSAS BEST CORPORATION $(5,573) $15,442 $(39,173) $40,142
========= ======== ========= =========
EARNINGS (LOSS) PER
SHARE(1)
Basic $(0.23) $0.60 $(1.58) $1.57
Diluted (0.23) 0.60 (1.58) 1.56
========= ======== ========= =========
AVERAGE COMMON SHARES
OUTSTANDING
Basic 25,047,975 25,013,314 25,047,270 24,956,205
Diluted 25,047,975 25,174,345 25,047,270 25,109,963
========== ========== ========== ==========
CASH DIVIDENDS DECLARED
AND PAID PER COMMON SHARE $0.15 $0.15 $0.45 $0.45
========= ======== ========= =========
(1) Effective January 1, 2009, the Company adopted new accounting guidance
that requires an allocation of dividends paid and a portion of
undistributed net income to unvested restricted stock. As a result,
earnings per share for periods prior to 2009 have been retrospectively
adjusted to be consistent with the 2009 presentation.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
September 30 December 31
2009 2008
---- ----
(Unaudited) Note
($ thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $58,887 $100,880
Short-term investment securities 131,365 117,855
Accounts receivable, less allowances
(2009 - $3,910; 2008 - $3,513) 124,773 111,452
Other accounts receivable, less
allowances (2009 - $1,033; 2008 -
$1,001) 7,426 6,611
Prepaid expenses 8,512 10,670
Deferred income taxes 35,799 36,079
Prepaid and refundable income taxes 16,408 17,661
Other 6,688 6,982
------- -------
TOTAL CURRENT ASSETS 389,858 408,190
PROPERTY, PLANT AND EQUIPMENT
Land and structures 239,799 235,861
Revenue equipment 512,114 514,503
Service, office and other equipment 155,934 150,524
Leasehold improvements 21,647 21,697
------- -------
929,494 922,585
Less allowances for depreciation and
amortization 497,434 473,010
------- -------
432,060 449,575
OTHER ASSETS 53,185 50,636
GOODWILL 66,655 63,897
------- -------
$941,758 $972,298
======== ========
Note: The balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED BALANCE SHEETS - continued
---------------------------------------
September 30 December 31
2009 2008
---- ----
(Unaudited) Note
($ thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and drafts payable $13,969 $15,189
Accounts payable 60,666 51,646
Income taxes payable 340 758
Accrued expenses 152,619 147,540
Current portion of long-term debt 138 159
------- -------
TOTAL CURRENT LIABILITIES 227,732 215,292
LONG-TERM DEBT, less current portion 1,618 1,457
PENSION AND POSTRETIREMENT LIABILITIES 81,432 89,472
OTHER LIABILITIES 19,822 17,314
DEFERRED INCOME TAXES 26,847 24,017
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized
70,000,000 shares; issued 2009:
26,726,216 shares; 2008: 26,702,222
shares 267 267
Additional paid-in capital 273,097 268,396
Retained earnings 420,555 471,360
Treasury stock, at cost, 1,677,932
shares (57,770) (57,770)
Accumulated other comprehensive loss (51,842) (57,507)
------- -------
TOTAL STOCKHOLDERS' EQUITY 584,307 624,746
------- -------
$941,758 $972,298
======== ========
Note: The balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
ARKANSAS BEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Nine Months Ended
September 30
2009 2008
---- ----
(Unaudited)
($ thousands)
OPERATING ACTIVITIES
Net income (loss) $(38,849) $40,142
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 56,348 57,469
Other amortization 220 220
Pension settlement expense 158 1,540
Share-based compensation expense 4,777 4,523
Provision for losses on accounts
receivable 2,432 1,210
Deferred income tax benefit (69) (1,821)
Gain on sales of assets (1,214) (2,994)
Excess tax benefits from share-based
compensation - (657)
Changes in operating assets and
liabilities:
Receivables (13,587) (6,842)
Prepaid expenses 2,321 2,287
Other assets 316 5,914
Accounts payable, taxes payable,
accrued expenses and other
liabilities (1) 11,011 2,764
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,864 103,755
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and
equipment, net of capital leases (1) (32,914) (45,425)
Proceeds from asset sales 3,714 14,984
Purchases of short-term investment
securities (110,198) (80,386)
Proceeds from sales of short-term
investment securities 96,689 85,004
Business acquisition, net of cash
acquired (4,873) -
Capitalization of internally developed
software and other (3,962) (4,040)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (51,544) (29,863)
------- -------
FINANCING ACTIVITIES
Payments on long-term debt (1,401) (175)
Net change in bank overdraft (1,220) (2,135)
Deferred financing costs (300) -
Payment of common stock dividends (11,632) (11,497)
Excess tax benefits from share-based
compensation - 657
Proceeds from the exercise of stock
options and other 240 2,906
------- -------
NET CASH USED BY FINANCING ACTIVITIES (14,313) (10,244)
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (41,993) 63,648
Cash and cash equivalents at beginning
of period 100,880 93,805
------- -------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $58,887 $157,453
======= ========
(1) Does not include $1.0 million and $3.1 million of equipment which was
received but not yet paid for at September 30, 2009 and 2008,
respectively.
ARKANSAS BEST CORPORATION
FINANCIAL STATEMENT OPERATING SEGMENT DATA,
OPERATING RATIOS AND FINANCIAL STATISTICS
-------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited)
($ thousands)
OPERATING
REVENUES
ABF
Freight
System,
Inc.(1) $369,763 $476,323 $1,036,681 $1,383,592
Other
revenues
and
elimina-
tions 29,194 19,492 64,588 58,248
-------- ------- ---------- ----------
Total
consol-
idated
operating
reve-
nues $398,957 $495,815 $1,101,269 $1,441,840
======== ======== ========== ==========
OPERATING
EXPENSES
AND COSTS
ABF Freight
System,
Inc.(1)
Salaries,
Wages
and
bene-
fits $248,093 67.1% $271,138 56.9% $726,817 70.1% $802,652 58.0%
Fuel,
supplies
and
expen-
ses 58,758 15.9 94,023 19.7 162,019 15.6 272,911 19.7
Operating
Taxes
and
licen-
ses 10,590 2.9 11,880 2.5 31,657 3.1 35,779 2.6
Insurance 6,129 1.7 5,652 1.2 16,049 1.5 15,899 1.1
Communi-
cations
and
utili-
ties 3,455 0.9 3,689 0.8 10,989 1.1 11,381 0.8
Deprec-
iation
and
amort-
ization 17,638 4.8 18,302 3.8 54,109 5.2 55,319 4.0
Rents
and
purchased
trans-
porta-
tion 37,576 10.2 45,759 9.6 97,819 9.4 124,227 9.0
Gain
on sale
of
property
and
equip-
ment (254) (0.1) (671) (0.1) (1,215) (0.1) (2,997) (0.2)
Other 1,768 0.4 1,375 0.3 6,092 0.6 4,835 0.4
------- ----- ------- ---- --------- ----- --------- ----
383,753 103.8% 451,147 94.7% 1,104,336 106.5% 1,320,006 95.4%
Other
Expenses
and
elimina-
tions 27,441 19,176 65,069 57,508
------ ------ ------ ------
Total
Consol-
idated
oper-
ating
expenses
and
costs $411,194 $470,323 $1,169,405 $1,377,514
======== ======== ========== ==========
OPERATING
INCOME
(LOSS)
ABF
Freight
System,
Inc.(1) $(13,990) $25,176 $(67,655) $63,586
Other
income
(loss)
and
elimina-
tions 1,753 316 (481) 740
----- ------- -------- -------
Total
consol-
idated
opera-
ting
income
(loss) $(12,237) $25,492 $(68,136) $64,326
======== ======= ======== =======
(1) Includes U.S., Canadian, and Puerto Rican operations of ABF
affiliates.
ABF FREIGHT SYSTEM, INC.
OPERATING STATISTICS
------------------------
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
Workdays 64.0 64.0 190.0 191.5
Billed
Revenue(1)
/ CWT $23.98 $27.75 (13.6)% $23.88 $27.17 (12.1)%
Billed
Revenue(1)
/ Shipment $322.00 $368.49 (12.6)% $312.32 $356.99 (12.5)%
Shipments 1,144,026 1,286,414 (11.1)% 3,322,499 3,886,612 (14.5)%
Tonnage
(tons) 768,022 854,037 (10.1)% 2,172,555 2,553,033 (14.9)%
Tons/Day 12,000 13,344 (10.1)% 11,434 13,332 (14.2)%
(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: Ms. Judy R. McReynolds, Senior Vice President, Chief Financial
Officer and Treasurer
Telephone: (479) 785-6281
Mr. David Humphrey, Director of Investor Relations
Telephone: (479) 785-6200
SOURCE Arkansas Best Corporation
http://www.arkbest.com
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