Arkansas Best posts 1Q net loss of $18.2M

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Arkansas Best Corp. today, April 22, announced a first-quarter 2009 net loss of $18.2 million compared to net income of $8.5 million in the first quarter of 2008. The company posted revenue of $339.7 million, a per-day decrease of 22.9 percent from $447.5 million.

“Our first-quarter results continue to be hurt by the poor economy and the resulting decline in profitable business,” said Robert A. Davidson, president and chief executive officer of Arkansas Best, based in Fort Smith, Ark. “ABF’s first-quarter results reflect significantly lower freight levels, a very competitive industry pricing environment and our efforts to maintain a high level of customer service.”

Davidson said the company is taking the steps necessary to improve long-term profitability consistent with providing reliable and safe transportation services. “As a result, we have taken additional actions to further align our network labor and equipment capacity with available business levels,” he said. Since the end of 2008, these actions include:

  • An additional reduction of more than 625 ABF employees, resulting in a 23 percent employee reduction since the fourth quarter of 2006, when ABF first experienced dramatic declines in business; and
  • Additional fleet reductions, including 326 tractors and 448 trailers, resulting in an overall 20 percent decrease in tractors and an 11 percent decrease in trailers since the fourth quarter of 2006.
  • The company said the overall decrease in its total employees and equipment fleet mirrors or exceeds the decline in tonnage levels since the fourth quarter of 2006. However, ABF says its operating ratio continues to be affected adversely by the short-term fixed nature of overhead expenses and by the limited ability to obtain needed base rate increases. Though ABF’s customers have benefited from reduced fuel surcharges related to a consistent decline in diesel fuel prices since July 2008, the company said the competitive freight environment has prevented its from obtaining sufficient base rate increases to cover nonfuel-related cost increases; as a result, despite the significant reduction in labor and other operating costs, ABF’s profitability has suffered.

    “Our solid financial position, with an April 15 cash and short-term investment balance of $209 million and minimal debt, continues to provide security and allows a long-term focus during this difficult time,” Davidson said. “Even in this challenging environment, we remain committed to the organic development of our RPM regional freight initiative that offers significant growth opportunities in an important portion of the LTL market.”

    ABF Freight System reported revenue of $323.1 million compared to $427.7 million, a per-day decrease of 23.3; a tonnage per-day decrease of 15.7 percent; an operating loss of $26.8 million compared to operating income of $12.9 million; and an operating ratio of 108.3 percent compared to 97.0 percent. The company says its RPM initiative impacted the operating ratio by 1.9 percent compared to 1.0 percent, reflecting additional operational changes implemented in the third quarter of 2008.

    “Internally, in anticipation of improving business levels, ABF will focus on sustaining our superior customer service and attention to specific customer requirements while working to maximize the profitability of individual accounts,” Davidson said. “In addition, this month will conclude the formal strategic analysis that began in the fourth quarter and which was designed to validate our corporate strengths and identify future external opportunities for maximizing shareholder value.”