Arkansas Best loses $13.4 million in the first quarter (Updated)

The tough times continue for Arkansas Best Corp., which reported early Tuesday (April 30) a first quarter 2013 loss of $13.4 million. The loss of 52 cents per share was higher than the consensus analyst estimate of a loss of 41 cent per share.

Revenue during the quarter was $520.7 million, well ahead of the $440.9 million during the same quarter in 2012.

The quarter followed a 2012 that saw the Fort Smith-based transportation holding company post a $7.7 million loss, a wide swing from the $6.159 million gain in 2011. The largest subsidiary of Arkansas Best is ABF Freight System, one of the largest less-than-truckload carriers in the U.S.

“Despite losses in the seasonally weak first quarter, Arkansas Best is well-positioned for growth in new and existing markets. We continue to develop a comprehensive array of services designed to meet the ever-changing needs of our customers and generate financial returns for our company and our shareholders,” Judy McReynolds, president and CEO of Arkansas Best Corp., said in the earnings statement.

LABOR CONTRACT
Coming to terms on a new labor contract with the International Brotherhood of Teamsters also has been tough.

The existing labor contract between ABF and the International Brotherhood of Teamsters was initially set to expire March 31 for the about 7,500 Arkansas Best employees represented by the Teamsters.

Negotiations and the contract have twice been extended, with the recent extension set to expire May 31. The Teamsters issued a statement on April 19 suggesting that new proposals from Arkansas Best have put the negotiations “at risk.” But the company has argued that wage concessions are necessary to ensure future profitability.

“Current negotiations on a new labor agreement provide an opportunity to preserve good-paying jobs and protect the retirement benefits of our union employees through a lower cost structure and improved operational flexibility,” McReynolds said in the earnings statement. “A new labor contract, with lower more competitive costs, is a critical element in allowing ABF to effectively compete in a drastically different LTL marketplace.”

OTHER BUSINESSES
The company continues to tout its “non-asset-based businesses” as part of efforts to diversify revenue and income streams.

Panther, the logistics and freight brokerage company acquired by Arkansas Best in mid-2012, posted first quarter operating revenue of $53.252 million – a source of revenue the company did not have in 2012.

The truck brokerage segment posted operating revenue of $14.604 million, up from $8.039 million in the 2012 quarter. Emergency and preventive maintenance posted operating revenue of $32.522 million, better than the $22.378 million in the 2012 quarter. The household goods moving division had quarterly operating revenue of $13.576 million, down from the $15.052 million in the 2012 quarter.

During the first quarter, ABF Freight represented 78.2% of total operating revenue for Arkansas Best Corp.

"First quarter revenue and operating income at our emerging businesses reflected growth and improvement as we invested heavily in these businesses during 2012. They represent a critical piece of Arkansas Best's strategy to achieve sustained profitability," McReynolds explained.

EARNINGS HISTORY
Arkansas Best has been unable to post two consecutive years of income gains since 2008. The company posted a loss of $7.7 million loss in 2012. Net income for 2011 reached $6.159 million, a huge swing from the $32.693 million loss during 2010. The company posted a net income loss of $127.522 million loss in 2009, with $64 million representing an accounting charge. The company posted net income of $29.168 million in 2008.

A large cash reserve has kept the company stable during the past several years. The company’s cash and cash equivalents totaled $75.071 million at the end of the quarter, down from the $138.516 million during the same quarter of 2012. The company used $80 million in cash to pay toward the $180 million acquisition of Panther in June 2012.

The company’s short-term investments – which could be converted to cash if needed – total $29.891 million, slightly higher than the $29.054 million in the 2012 quarter.

Arkansas Best shares (NASDAQ: ABFS) closed Monday (April 29) at $11.55. During the past 52 weeks the share price has ranged from a $16.18 high to a $6.43 low.