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 PR Newswire FORT SMITH, Ark., April 30, 2013 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 9:30a.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 544,037 463,854 COSTS OPERATING LOSS (23,350) (22,987) OTHER INCOME (EXPENSE) Interest and dividend 171 253 income Interest expense and other (1,207) (1,142) related financing costs 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 $ 0.03 $ 0.03 PER COMMON SHARE (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 (38) (34) AWARDS^(1) ADJUSTED NET LOSS FOR CALCULATING $ (13,433) $ (18,196) EARNINGS PER COMMON SHARE ARKANSAS BEST CORPORATION CONSOLIDATED BALANCE SHEETS March 31 December 31 2013 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 5,904 9,658 short-term investments Accounts receivable, less allowances (2013 – 190,036 180,631 $5,360; 2012 – $5,249) Other accounts receivable, less allowances 6,011 6,539 (2013 – $1,376; 2012 – $1,334) 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 653,862 635,292 amortization 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: 27,307,505 273 273 shares; 2012: 27,296,285 shares 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 11,124 7,371 liabilities 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 (2,090) (1,618) other 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 3,754 23,149 short-term investments 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 Three Months Ended March 31 March 31 2013 2012 Operating Depreciation Operating Depreciation Income and EBITDA Income and EBITDA Amortization (Loss) Amortization (Loss) Non-Asset Based Segments Premium Logistics & Expedited $ (864) $ 2,550 $ 1,686 $ – $ – $ – Freight Services^(1) Truck Brokerage 767 92 859 394 65 459 and Management Emergency and Preventative 711 132 843 (137) 118 (19) Maintenance Household Goods (231) 241 10 (792) 179 (613) Moving Services Total non-asset $ 383 $ 3,015 $ 3,398 $ (535) $ 362 $ (173) based segments Depreciation and amortization consists primarily of amortization of (1) 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 53,252 – Services 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 $ 544,037 $ 463,854 costs Depreciation and amortization consists primarily of amortization of (1) 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: oFreight Transportation includes the results of operations of Arkansas Best's largest subsidiary, ABF Freight System, Inc.^®. oPanther Expedited Services, Inc., which was acquired on June 15, 2012, is reported as Premium Logistics & Expedited Freight Services. oTruck Brokerage and Management includes the transportation brokerage services operating as FreightValue^®. oEmergency and Preventative Maintenance includes the roadside vehicle assistance and commercial equipment services subsidiary FleetNet America, Inc. oHousehold 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% Based on the previously described reclassifications that have been made to the prior year's operating segment data and statistics to conform to the (1) 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 Website: http://www.arkbest.com
Arkansas Best Corporation Announces First Quarter 2013 Results
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