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Arkansas Best Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 5, 2011 10:20PM
Arkansas Best Corp. (ABFS) filed Quarterly Report for the period ended 2011-03-31. Arkansas Best Corp. has a market cap of $569.6 million; its shares were traded at around $22.42 with and P/S ratio of 0.3. The dividend yield of Arkansas Best Corp. stocks is 0.5%.
Highlight of Business Operations:
and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Fuel prices have fluctuated significantly in recent years. The weekly retail on-highway diesel price per gallon, including taxes, published by the U.S. Department of Energy decreased from a high of $4.76 in July 2008 to a low of $2.02 in March 2009 and subsequently increased to $3.93 in March 2011. Fuel prices and related fuel surcharge rates have continued to increase through April 2011. Whether fuel prices fluctuate or remain constant, ABFs operating income may be adversely affected if competitive pressures limit its ability to recover fuel surcharges. While the fuel surcharge is one of several components in ABFs overall rate structure, the actual rate paid by customers is governed by market forces based on value provided to the customer. Throughout the first three months of 2011, the fuel surcharge mechanism generally continued to have market acceptance among ABF customers; however, as previously mentioned in the Pricing section of the ABF Overview, certain nonstandard arrangements with some of ABFs customers have limited the amount of fuel surcharge recovered. The negative impact on operating margins of capped fuel surcharge revenue during periods of increasing fuel costs is more evident as fuel prices remain above the maximum levels recovered through the fuel surcharge mechanism on certain accounts. As a result, fuel surcharge caps and nonstandard fuel surcharge arrangements that became effective during the recent competitive recessionary period had a more significant impact on ABFs operating results for the first quarter of 2011 than in past periods of considerable fuel price increases. Management estimated that the effect of nonstandard arrangements negatively impacted the first quarter 2011 operating ratio by approximately 0.6% of revenue compared to the prior year first quarter.
ABFs revenue for the three months ended March 31, 2011 was $402.4 million, compared to $333.0 million for the same period in 2010. ABFs revenue per day increased 18.9% for the three months ended March 31, 2011 compared to the same period in 2010. The increase in ABFs revenue per day for the three months ended March 31, 2011 was primarily due to increases in tonnage per day of 17.4%, and higher fuel surcharge revenue, which resulted from an increase in the fuel surcharge rate based on changes in diesel fuel prices compared to a national index.
Stocks Discussed: ABFS,