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Arkansas Best Corp. Reports Operating Results (10-Q)

November 08, 2011 | About:
10qk

10qk

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Arkansas Best Corp. (ABFS) filed Quarterly Report for the period ended 2011-09-30.

Arkansas Best Corp. has a market cap of $507.4 million; its shares were traded at around $19.96 with a P/E ratio of 399.2 and P/S ratio of 0.3. The dividend yield of Arkansas Best Corp. stocks is 0.6%.
This is the annual revenues and earnings per share of ABFS over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of ABFS.


Highlight of Business Operations:

ABF’s revenue for the three and nine months ended September 30, 2011 was $466.3 million and $1,327.2 million, respectively, compared to $409.9 million and $1,122.4 million for the same periods in 2010. The 13.8% increase in ABF’s revenue per day for the three months ended September 30, 2011 compared to the same prior year period was primarily due to a 15.9% increase in billed revenue per hundredweight, including fuel surcharges, partially offset by a 2.0% decrease in tonnage per day. The 17.6% increase in ABF’s revenue per day for the nine months ended September 30, 2011 compared to the same prior year period was due to a 9.3% increase in billed revenue per hundredweight, including fuel surcharges, and a 7.8% increase in tonnage per day.

Labor costs, which are reported in ABF operating expenses and costs as salaries, wages and benefits, amounted to 58.3% and 60.9% of ABF’s revenue for the three and nine months ended September 30, 2011, compared to 63.3% and 66.4% for the same three and nine month periods in 2010, respectively. Salaries, wages and benefits expense as a percentage of revenue decreased 5.0% and 5.5% for the three and nine months ended September 30, 2011, respectively, compared to the same periods in 2010. Portions of salaries, wages and benefits are fixed in nature and decrease, as a percent of revenue, with increases in revenue levels including fuel surcharges. Despite the decrease in salaries, wages and benefits expense as a percentage of revenue, these costs increased $12.4 million and $62.8 million for the three and nine months ended September 30, 2011, respectively, compared to the same periods in 2010. The expense increase reflects higher contractual wage and benefit costs related to ABF’s union workforce under the NMFA. The annual contractual wage increases effective on April 1, 2011 and 2010 were 1.7% and 1.9%, respectively. The health, welfare and pension benefit rate for contractual employees increased an average of 3.8% and 6.9% on August 1, 2011 and 2010, respectively. The lower percentage increase on August 1, 2011 compared to the prior year reflects adherence to the contribution rate requested by the Central States Southeast and Southwest Area Pension Fund (the “Central States Pension Fund”), which is consistent with the rate in effect prior to August 1, 2011 (see Note E to the Company’s consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q). Approximately one half of ABF’s total contributions to multiemployer pension plans are made to the Central States Pension Fund. Salaries, wages and benefits costs were further influenced by workers’ compensation expense, which were 0.2% higher as a percentage of revenue in the third quarter of 2011 compared to the third quarter of 2010, primarily due to the higher severity of claims in the 2011 period. For the nine months ended September 30, 2011, workers’ compensation expense as a percent of revenue was slightly lower than the same period of 2010 and ABF’s ten-year historical average.

Rents and purchased transportation as a percentage of revenue decreased by 0.8% and 0.1% for the three and nine months ended September 30, 2011, respectively, compared to the same periods of 2010, reflecting lower rail utilization, partially offset by increased utilization of other outside services and higher fuel surcharges associated with these services. Rail miles decreased from 16.3% and 13.8% of total linehaul miles for the three and nine months ended September 30, 2010, respectively, to 13.8% and 13.7% for the same periods in 2011.

Unrestricted cash, cash equivalents and short-term investments increased $26.2 million from December 31, 2010 to September 30, 2011. During the nine months ended September 30, 2011, cash provided by operations of $72.3 million was used to repay $10.9 million of long-term debt related to capital leases, fund $26.4 million of capital expenditures net of proceeds from asset sales, acquire the outstanding 25% equity interest of a consolidated logistics subsidiary for $4.1 million and pay dividends of $2.4 million on Common Stock. Cash provided by operating activities during the nine months ended September 30, 2011 was $50.4 million above the same prior year period primarily due to improved ABF operating results. Cash provided by operating activities included federal and state income taxes payments net of refunds of $0.8 million for the nine months ended September 30, 2011, compared to net refunds of income taxes of $29.3 million for the nine months ended September 30, 2010. During the nine months ended September 30, 2011, ABF financed the acquisition of $21.3 million in revenue equipment (tractors and trailers) through capital lease and note payable arrangements.

Unrestricted cash, cash equivalents and short-term investments increased $12.1 million from December 31, 2009 to September 30, 2010. During the nine months ended September 30, 2010, cash provided by operations of $21.9 million included federal and state income tax refunds of $29.3 million net of payments. Operating cash flows were also impacted by changes in working capital, primarily growth in accounts receivable associated with the improved business volumes, distributions to retired officers of $7.8 million under the unfunded supplemental benefit plan and a $5.0 million contribution to the nonunion pension plan. Cash provided by operations along with $11.4 million in proceeds from issuance of long-term debt related to capital leases were used to fund $0.9 million of capital expenditures net of proceeds from asset sales, repay $10.1 million of bank overdrafts (which represent checks issued that are later funded when cleared through banks), repay $5.2 million of long-term debt related to capital leases and pay dividends of $2.3 million on Common Stock. During the nine months ended September 30, 2010, ABF financed the acquisition of $21.4 million in revenue equipment (tractors and trailers) through capital lease arrangements.

Read the The complete Report

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