Fuel, weather keep Arkansas Best in the red (Updated)

High fuel prices, bad weather and price pressures countered gains in the trucking sector  to push Fort Smith-based Arkansas Best Corp. to a first-quarter 2011 net loss of $12.8 million — extending to 10 the number of consecutive quarters the trucking company has posted a loss.

The loss is an improvement over the $21.4 million loss in the first quarter of 2010.

Also, the per share loss of 51 cents was well below the 21 cents per share loss from an average of analyst estimates.

Despite the tough headline numbers, the company continues to show systemic improvements in its effort to emerge from the string of quarterly losses that began in the fourth quarter of 2008. The improvements include:
• First-quarter revenue of $402.4 million, up 18.9% compared to the $333 million in the 2010 period;
• Per day tonnage increase of 17.4% compared to the 2010 period; and,
• Increase in billed revenue per hundredweight of $24.16 compared to $23.61 in the 2010 period.

“As the economic environment has improved, ABF’s tonnage levels have continued to grow.  During each month of the first quarter our rate of positive year-over-year tonnage increased,” Judy McReynolds, Arkansas Best president and CEO, said in the earnings report.  “As in the past, there is an opportunity for ABF to benefit from operating leverage in its business.”

ABF Freight System is the largest subsidiary of Arkansas Best, and is one of the largest less-than-truckload carriers in the U.S.

The company reported that first quarter results were dragged down “by the lingering effects of a weaker, recessionary pricing environment,” and severe winter weather in January and February. Also, the last six weeks of the quarter brought a “significant increase” in fuel costs. The company is moving to revise fuel surcharge policies and increase rates on “underperforming accounts” to counter the higher fuel costs.

“There are currently several internal initiatives directed at highlighting underperforming segments of business, including revisiting substandard and capped fuel surcharge programs,” McReynolds noted in the statement. “I am pleased to report that the positive effects of these efforts can be seen in April yield improvements.”

First quarter “Fuel, supplies and expenses” for the company was $79.395 million, up 30.3% over $60.911 million in the 2010 period. The increase is primarily attributable to a 15.8% increase in shipments and the higher fuel costs.

The company, which has survived the lengthy economic downturn thanks in large part to entering the recession with healthy cash reserves, saw its cash position drop slightly from the $141.86 million as of Dec. 31 to $129.09 million at the end of the quarter.

Updated info: Jack Waldo, a transportation sector analyst with Little Rock-based Stephens Inc., continues to support his assessment the company will return to profitability in this year. He sees them turning the corner into the black no later than the third quarter.

“We’re optimistic it could be in the second quarter,” Waldo said Monday, adding that he does not have a fuel price-related caveat on the optimism.

The transportation holding company, which employs about 9,500 nationwide, posted a 2010 net loss of $32.421 million, an improvement compared to a $127.522 million net loss in 2009. The 2009 income loss included a non-cash accounting charge of $64 million for the impairment of goodwill.

Total revenue in 2010 was $1.657 billion, a 12.55% gain over 2009 revenue of $1.472 billion, but still less than the $1.833 billion total revenue in 2008. In 2008, the company posted net income of $29.168 gain in 2008.

Arkansas Best shares (NASDAQ: ABFS) were set to open Monday at $25.36. During the past 52 weeks, the share price has ranged from a $33.52 high to an$18.84 low.