Arkansas Best Corp. Reports Operating Results (10-Q)
Arkansas Best Corporation has a market cap of $252.7 million; its shares were traded at around $10.47 with a P/E ratio of 330.8 and P/S ratio of 0.1. The dividend yield of Arkansas Best Corporation stocks is 1.2%.
Highlight of Business Operations:ABF is generally effective in managing its costs to business levels. ABFs ability to effectively manage labor costs has a direct impact on its operating performance. These costs, which are reported in ABF operating expenses and costs as salaries, wages and benefits, amounted to 60.5% and 63.2% of ABFs revenue for the three and six months ended June 30, 2012, compared to 60.4% and 63.0% for the same periods in 2011, respectively. Labor costs, including retirement and health care benefits for ABFs contractual employees that are provided by a number of multiemployer plans (see Note G to the Companys consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q), are impacted by ABFs contractual obligations under its labor agreement primarily with the International Brotherhood of Teamsters (the IBT). This five-year collective bargaining agreement, the National Master Freight Agreement (the NMFA), became effective April 1, 2008 and provides for compounded annual contractual wage and benefit increases of approximately 3% to 4%, subject to additional increases for cost-of-living adjustments. The contractual wage rate increase effective primarily on April 1, 2012 under the NMFA averaged 1.9%. Contractual health, welfare and pension benefit rates under the NMFA are expected to increase by an average of 4.3% effective primarily on August 1, 2012, assuming that the request by the Central States, Southeast and Southwest Area Pension Fund (the Central States Pension Fund) for no increase in the pension contribution rate is approved, which would be consistent with the pension benefit rate effective August 1, 2011.
ABFs revenues for the three and six months ended June 30, 2012 were $445.7 million and $846.3 million, respectively, compared to $452.1 million and $849.4 million for the same periods in 2011. ABFs revenues per day for the three and six months ended June 30, 2012 were slightly lower than the same periods of 2011, primarily reflecting decreases in tonnage per day of 6.3% and 8.4% for the three and six-month periods ended June 30, 2012, respectively. ABFs tonnage declines were partially offset by 4.7% and 7.9% increases in billed revenue per hundredweight, including fuel surcharges, for the three and six-month periods ended June 30, 2012, respectively.
Emergency and Preventative Maintenance revenues increased 29.0% and 15.0% for the three and six months ended June 30, 2012, respectively, compared to the same periods in 2011. The revenue growth was impacted by increases in customer emergency and maintenance service events of 13.1% and 1.8% during the three and six months ended June 30, 2012, respectively, due to the addition of new customers coupled with warmer than normal weather during the second quarter. Emergency and Preventative Maintenance reported operating income of $0.7 million and $0.6 million for the three and six months ended June 30, 2012, respectively, versus operating income of $0.9 million and $1.8 million for the same periods in 2011. The decline in operating income was primarily due to the effect of incremental operating costs, including investment in sales and information technology, to continue expansion of this segment.
Revenues of Household Goods Moving Services (which was previously reported as Special Services Logistics) decreased 18.9% and 13.6% for the three and six months ended June 30, 2012, respectively, compared to the same periods in 2011, primarily due to reduced business volumes for the respective periods, partially offset by higher pricing in the 2012 periods. Total shipments decreased 22.3% and 17.1% for the three and six months ended June 30, 2012 compared to the same prior year periods, primarily reflecting the influence of pricing initiatives, the effect of reduced military moves and comparison to significant shipment growth experienced in the prior year periods. Household Goods Moving Services had operating income of $0.2 million and an operating loss of $0.6 million for the three and six months ended June 30, 2012, respectively, compared to operating income of $0.9 million and $1.1 million for the same periods in 2011. The operating results are primarily attributable to the shipment-driven decline in revenue and incremental investment in operations, primarily additional information technology development and supply chain personnel costs. Although there can be no assurances, management believes that these incremental investments combined with the pricing initiatives, previously mentioned, will result in improved profitability.
During the six months ended June 30, 2012, cash provided by operations of $14.2 million and cash equivalents and short-term investments on hand, were used to fund $80.8 million of the Panther acquisition ($100.0 million of the purchase price was funded through the new Term Loan further described in Financing Arrangements within this section of MD&A), fund $15.7 million of capital expenditures net of proceeds from asset sales, repay $12.3 million of long-term debt related to capital leases and notes payable, pay $5.5 million of bank overdrafts (representing checks issued that are later funded when cleared through banks), pay $1.6 million of financing fees and pay dividends of $1.6 million on Common Stock. Cash provided by operating activities during the six months ended June 30, 2012 was $19.0 million below the same prior-year
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