Arkansas Best says 4Q, full-year net earnings both down

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Arkansas Best Corp. today, Jan. 25, announced fourth quarter 2007 net income of $13.5 million compared to $14.2 million in the fourth quarter of 2006. Arkansas Best’s revenue during the fourth quarter of 2007 was $459.3 million compared to $454.3 million in the fourth quarter of 2006.

For the full year of 2007, Arkansas Best reported income of $56.8 million compared to $84.1 million for the full year of 2006. Arkansas Best’s 2007 full-year revenue was $1.84 billion compared to 2006 full-year revenue of $1.88 billion.

ABF Freight System, the company’s largest subsidiary, had fourth-quarter 2007 revenue of $441.3 million, consistent with fourth-quarter 2006 revenue of $441.4 million. ABF’s operating income during the 2007 fourth quarter was $19.8 million compared to $20.8 million in the same period last year. ABF’s fourth quarter 2007 operating ratio was 95.5 percent compared to its fourth quarter 2006 operating ratio of 95.3 percent.

“During the fourth quarter of 2006, we first experienced significant declines in year-over-year tonnage,” said Robert A. Davidson, president and chief executive officer of Fort Smith, Ark.-based Arkansas Best. “In the fourth quarter of 2007, ABF’s total weight per day decreased by another 1.5 percent compared to that period. However, since October, our year-over-year tonnage trends have improved each month, with slight increases in December and January.”

Although industry pricing remained competitive, ABF achieved reasonable price increases, Davidson said. “Fuel prices in this year’s fourth quarter were significantly higher than the same period last year, and the higher fuel surcharge increased revenue yields,” he said. “This nominal yield increase was partially offset by continuing shipment profile and freight mix changes. ABF handled a higher-than-normal percentage of spot-priced truckload shipments in order to improve utilization of system capacity. In addition, success in ABF’s regional freight initiative continued to reduce the average length of haul and the nominal yield.”

For the full year of 2007, ABF’s revenue was $1.77 billion, a per-day decrease of 3.3 percent compared to 2006 revenue. After adjusting for pension settlement expense, ABF’s 2007 operating ratio was 95.1 percent versus an operating ratio of 92.6 percent in 2006, and ABF’s 2007 operating income was $86.2 million versus $135.3 million during 2006.

“The reduction in operating income was primarily associated with the effects of lower tonnage levels throughout the year and the additional costs related to the implementation of ABF’s regional model,” Davidson said. Total tonnage per day in 2007 decreased by 5.1 percent compared to 2006. Total billed revenue per hundredweight in 2007 was $25.81, an increase of 1.9 percent over last year’s figure of $25.32.

“Though the overall freight environment was weak, ABF continued to gain market traction with its Regional Performance Model,” Davidson said. “In the fourth quarter, ABF’s investment in RPM stabilized, and the impact on year-over-year operating results was minimal. The rate of revenue growth in regional lanes is substantially outpacing that of ABF’s traditional business. We are encouraged by the success we are having, especially in our next-day markets. ABF’s initial success confirms the validity of our low-risk strategy of organic expansion in the growing regional market.”