Two surprising bank acquisitions and two attempted corporate takeovers have been part of an Arkansas business year in which the share price has increased for 10 the 15 publicly-held companies based in the state during the first three quarters.
Ironically, or maybe because of, the share price of the takeover targets sported the largest increases between January and September of 2013. Fort Smith-based Arkansas Best Corp. and Van Buren-based USA Truck have seen a share price increase of 164.09% and 156.73%, respectively.
Arkansas Best, the parent company of ABF Freight System, was pursued earlier this year by YRC Worldwide, one of the largest less-than-truckload (LTL) carriers in the country. Neither company had much to say about a March 22 Fort Smith meeting between YRC CEO James Welch and Arkansas Best CEO Judy McReynolds. A 10-Q filed May 8 with the SEC by Arkansas Best did not include mention of the meeting between McReynolds and Welch.
ABF and the International Brotherhood of Teamsters did come to agreement on a new five-year labor agreement, but failure to approve minor stipulations of the contract have prevented implementation of a contract that would reduce costs for ABF.
Arkansas Best shares (NASDAQ: ABFS) began 2013 with a closing price of $9.72, with the Sept. 30 close reaching $25.67.
USA Truck is in the midst of a hostile takeover attempt by Phoenix-based Knight Transportation. Knight made public its bid for USA Truck on Sept. 26. The per share bid is a 39% premium from USA Truck’s share price (NASDAQ: USAK) on Sept. 25, and a 58% premium compared to the Aug. 27 closing price – the day before Knight sent its first proposal letter to the USA Truck Board of Directors. The share purchase and assumption of liabilities creates a $242 million deal.
The USA Truck Board has rejected the offer, saying that $9 per share “substantially undervalues” the long-haul trucking company.
USA Truck shares (NASDAQ: USAK) began 2013 with a closing price of $3.49, with the Sept. 30 close reaching $8.96. Most of the share price gain has happened in recent weeks.
UPS AND DOWNS
In addition to ABF and USA Truck, the companies with share price gains for the first three quarters of the year are:
• Acxiom Corp. (up 54.5%)
• America’s Car-Mart (up 10.07%)
• Bank of the Ozarks (up 39.48%)
• J.B. Hunt Transport (up 19.47%)
• P.A.M. Transport (up 76.8%)
• Simmons First (up 19.11%)
• Tyson Foods (up 41.54%)
• Wal-Mart Stores (up 6.81%)
Companies with share prices declines in the period are:
• Deltic Timber (down 8.72%)
• Dillard’s (down 3.96%)
• Home Bancshares (down 10.09%)
• Murphy Oil (down 0.04%)
• Windstream (down 9.2%)
Overall, the U.S. equity markets did well during the first nine months of the 2013. The Dow Jones Industrial Average – of which Wal-Mart is a component – began the year at 13,142.55, and closed Sept. 30 at 15,129.67, up 15.1%.
The broader S&P 500 also saw a healthy gain, rising almost 15% from 1,462.42 to begin the year to a 1,681.55 close on Sept. 30.
Consolidation was the theme in Arkansas’ banking industry in 2013, with Conway-based Home Bancshares (NASDAQ: HOMB) announcing on June 25 a $280 million deal to acquire Jonesboro-based and privately-held Liberty Bank.
The transaction between Home Bancshares, parent company of Centennial Bank, and Liberty Bank is the largest in-state banking transaction in the history of Arkansas. It boosts Home Bancshares to a financial institution with $7.1 billion in assets; $5.6 billion deposits; $4.5 billion in loans; 151 banking locations in Arkansas, Alabama and Florida; 92 banking location just in Arkansas; and roughly 1,500 employees.
Following that second quarter announcement, Pine Bluff-based Simmons First National (NASDAQ: SFNC) was the last bidder standing during a Sept. 9 court-sanctioned auction of Little Rock-based Metropolitan National Bank. The deal was a few days later approved by the U.S. Bankruptcy Court.
Metropolitan had assets of $1.006 billion and equity capital of $65.7 million as of June 30. Simmons First National is a $3.6 billion financial holding company with 91 offices in 54 communities, in Arkansas, Kansas and Missouri.
“It’s a great acquisition for Simmons, a feather in their cap and one that surely add to the franchise value,” Garland Binns, attorney with Dover Dixon Horne, specializing in mergers and capital fund raising, said at the time.
Metropolitan is well-known brand in the Little Rock and Northwest Arkansas markets touting itself as “Nearby and Neighborly," but Simmons will undoubtedly merge those assets into its own growing footprint.
RETAIL AND PROTEIN
Shareholders of Bentonville-based Wal-Mart Stores Inc. have enjoyed an almost 7% gain in the share price (NYSE: WMT) for the first nine months of 2013, but the company has cautioned that sales in the back half of its fiscal year could be flat.
During the Aug. 15 second-quarter earnings report, Wal-Mart executives slashed the company’s growth projections for this fiscal year by 50%, on the heels of two softer-than-expected quarters.
The retail giant reported fiscal second quarter net income of $4.069 billion, up 1.3% compared to the 2012 quarter, with earnings per share of $1.24 just a penny below the consensus analyst estimate of $1.25. Absent a 1-cent charge relating to a non-income tax matter, earnings would have met Wall Street expectations, the company said. Total revenue of $116.945 billion for the quarter also missed the consensus estimate of $118.47 billion. However, the revenue in the quarter was up 2.3% compared to the 2012 quarter.
Wal-Mart shares closed Tuesday (Oct. 1) at $73.59, down 37 cents. The price is down more than $6 from its 52-week high of $79.96.
Springdale-based Tyson Foods has had a great year, so far. The meat giant’s third quarter profits – reported Aug. 5 – soared past expectations on with net income of $249 million, three times better than the $76 million earned in the same period of last year.
Through nine months in fiscal 2013 Tyson’s sales total $25.48 billion, compared to the $24.74 billion in the same period of the previous fiscal year. Net income in the first nine months is $517 million, up almost 30% compared to the $398 million in the same period of last year.
OIL AND TRANSPORTATION
The share price of El Dorado-based Murphy Oil was almost unchanged for the first nine months. The closing price between Jan. 3 and Sept. 30 fell by only 26 cents.
Second quarter earnings for the company reached $402.6 million, well ahead of the $295.4 million in the same quarter of 2012. Revenues climbed to $7.21 billion for the quarter, up from $7.15 billion in the previous year’s second quarter.
During the third quarter, Murphy Oil split into two publicly traded companies. Murphy Oil will remain a pure-play oil and gas exploration and production company, and Murphy USA (NASDAQ: MUSA) will become a standalone company holding retail assets across the south and midwest. Murphy USA began trading on Sept. 1 at $37.30, and the share price closed Oct. 1 at $40.53.
J.B. Hunt Transport Services continued to post higher earnings and revenue during 2013. The Lowell-based transport company earned $87.69 million in the second quarter, up 6.3% from the same period a year ago. Total operating income in the quarter was $147.4 million, up from $137.2 million a year ago.
The intermodal – truck via rail – division of J.B. Hunt continues to be the catalyst for strong earnings again this quarter. Hunt’s intermodal segment posted revenue of $854.74 million in the second quarter, up 12% from a year ago. This segment was responsible for 75% of the company's total sales in the quarter.
Despite concerns with consumer spending and GDP growth in the remainder of 2013, investors still like the company. Shares (NASDAQ: JBHT) closed Monday at $73.49, up 56 cents and trending toward a 52-week high of $78.39.