Arkansas Best Corp. suffered another quarter of disappointing results and troubling losses.
The Fort Smith-based trucking giant announced a first quarter 2010 net loss of $21.4 million, or $0.85 per share, compared to a net loss of $18.2 million, or $0.73 per share in the first quarter of 2009.
Revenue actually rose during the quarter to $359.9 million versus $339.7 million one year ago.
"Despite some signs of improvement in our nation’s economy resulting in the stabilization of our business, Arkansas Best’s first quarter results illustrate the ongoing effects of low freight levels combined with a weak pricing environment," said CEO Judy McReynolds.
"We are encouraged by the first quarter increases in ABF’s tonnage versus very low totals last year. However, in order for ABF’s operating results to improve in a meaningful way, we need further increases in freight demand, strong improvements in pricing and the positive financial impact of wage concessions."
Arkansas Best and the Teamsters union, which represents many of the trucking company’s employees, announced an agreement earlier this week that will result in a 15% wage and mileage rate reduction through 2013, but no changes to health and retirement benefits.
Our content partner, The City Wire, reports that Arkansas Best burned through $10 million of its cash reserves during the first quarter of 2010. Unrestricted cash and short term investments were at $123.1 million as of March 31, down from the $133.2 million at the end of 2009.
Also, the company known for operating with little to no debt has seen its debt increase in the past six months. During the fourth quarter of 2009 and the first quarter of 2010, ABF purchased new tractors (trucks), which pushed debt from $1.8 million as of Sept. 30, 2009, to $27 million as of March 31.
The City Wire also reports on a memo sent from ABF President and CEO Wesley Kemp to the more than 9,000 ABF employees about the company’s dilemma.
“As you know, ABF lost almost $100 million in 2009, the greatest loss in our history, due largely to the worst economic conditions since the Great Depression of the 1930s and our inability to adjust spending to the levels of our competitors. In addition, our parent company’s unrestricted cash reserves have dropped 44% and we’re starting to take on debt again. While some segments of the economy are showing signs of recovery, the LTL sector of our industry is still lagging. There continues to be excess capacity, and companies with significant cost and operating advantages are taking a toll on our margins. Very simply, we need more business and better yields which doesn’t appear likely in the foreseeable future. There are just too many LTL carriers for the volume of business currently available in the market.”
You can read more at this link.