A storm-impacted fourth quarter didn’t help Arkansas Best Corp.’s bottom line.
The Fort Smith-based freight hauler posted a $7.9 million quarterly loss compared to a profit of $1.4 million one year ago. For the full year, Arkansas Best ended with a $7.7 million loss after turning a $6.2 million profit in 2011.
Company officials said Hurricane Sandy’s disruption of commerce along the eastern seaboard was partially to blame. Arkansas Best said it had to return and re-route customer deliveries in the storm’s aftermath. They estimated that the hurricane sliced as much as $2.5 million off the company’s top line.
The company also had a one-time charge of $2.4 million related to an actuarial adjustment to its workers’ compensation expenses.
Revenue did improve for Arkansas Best as the company has sought to diversify its portfolio with its Panther logistics division.
Arkansas Best’s fourth quarter 2012 revenue was $537 million compared to revenue of $463.2 million in the fourth quarter of 2011. Arkansas Best’s full year 2012 revenue was $2.1 billion compared to revenue of $1.9 billion in 2011.
Still, officials warned that current economic conditions and pending labor negotiations could affect future results.
“Panther was affected by a lack of commitment of many of its customers to invest in their businesses due to uncertainty in the economy. A slowdown in industrial production and tighter inventory management also resulted in fewer available manufacturing-related shipments,” the company said in its earnings release.
“We are pleased with revenue growth and improving profitability at our emerging businesses as they added up to more than 20 percent of our total company fourth quarter revenue,” said Arkansas Best President and CEO Judy McReynolds. “Expanding our portfolio of expedited and premium logistics services was a major initiative in 2012 as our customers’ supply chains grow ever more complex.”
McReynolds noted that labor negotiations were critical to stabilizing the company’s profitability. The company is seeking new terms for its National Master Freight Agreement with its nearly 7,500 Teamster union employees.
Arkansas Best officials warned that without significant reductions to the current labor cost structure it would have to consider “extensive network changes,” including closure of terminals and distribution centers.
“We are focused on a return to profitability at ABF by substantially lowering our costs in the next labor contract through negotiations that are now underway,” said McReynolds. “ABF’s management team is hopeful it will reach an agreement with the Teamsters that allows us to preserve good-paying jobs and protect our employees’ retirements through a lower cost structure that truly reflects the competitive nature of today’s LTL [less-than-truckload] marketplace.”
“There continue to be many questions about the economy and its impact on the transport markets in which we compete,” she added. “Most economists are predicting a low level of growth in 2013. Looking ahead, we recognize that ABF and all of our other subsidiaries must generate profits regardless of the economic climate. We are hopeful that our ongoing ABF contract negotiations will result in the right cost structure and greater operational flexibility, but our game plan for success at Arkansas Best takes into account all potential outcomes.”
Arkansas Best shares (NASDAQ: ABFS) closed trading on Tuesday at $10.63. The company’s stock has hovered between $6.43 and $19.50 a share during the past year.
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