Frozen Food Express Industries Inc. on Wednesday, Nov. 2, announced cost savings initiatives that involve a reduction in non-driver staff levels by about 12 percent to better align the Dallas-based company’s back-office cost structure with its reduction of dry-freight revenue equipment. Frozen Food Express says it expects to incur a cash compensation charge of about $0.4 million during the fourth quarter of 2011 and realize annualized cost savings of about $5.0 million.
The company also announced that the progress on the sale of certain assets related to its dry-freight operations to Celadon Trucking Services Inc. were ahead of plan. Along with sales to various vendors and replacement of 240 of its oldest tractors for new equipment, the company expects to receive about $21.9 million in free cash flow, net of related expenditures, during the fourth quarter of 2011 and January 2012.
The proceeds will be utilized as received to reduce bank debt. Frozen Food Express says it also will incur future lease obligations for the 240 replacement tractors of about $20.2 million during the fourth quarter.
“We would like to thank those affected for their past efforts,” says Russell Stubbs, president and chief executive officer. “The reduction, although regrettable, had to be made at this time, as the sale of equipment was conducted much quicker than we expected. These actions will create a leaner company with improved liquidity and a greater ability to achieve profitability in the future.”
