Arkansas Best pares net loss

ABF’s increased daily tonnage cited in improvement

ANB Financial was shut down in May 2009 by two federal banking regulators.
ANB Financial was shut down in May 2009 by two federal banking regulators.

— Arkansas Best Corp. reported improved results for the second quarter, with a net loss of $7.35 million, or 30 cents per share. That’s roughly half its net loss of $15.46 million, or 62 cents per share, in the same quarter of 2009.

In a news release issued before the stock markets opened Wednesday, company President and Chief Executive Officer Judy R. McReynolds attributed the improvement to increased daily tonnage at its less-than-truckload subsidiary, ABF Freight Systems Inc.

ABF’s total tonnage per day grew 11.9 percent compared with last year’s second quarter, and rose 14 percent from the first quarter this year.

McReynolds said in the release that “modest” improvement in pricing is encouraging, but, “Overall freight levels and yields need to continue to improve in order for [Arkansas Best] to return to consistent profitability.”

The third quarter of 2008 was the last earnings period in which the company posted a profit.

In a conference call with analysts, McReynolds said, “We are not pleased with our results, and realize we still have much work to do.”

The Fort Smith holding company beat the average loss estimate from 17 analysts surveyed by Thomson Reuters of 39 cents per share.

Revenue rose 13.43 percent, to $411.35 million, from $362.64 million.

The trucking industry has grappled with low freight volumes throughout the recession. The American Trucking Associations, a trade group based in Arlington, Va., wrote in a Mayreport that the nation’s freight pool contracted by almost 12.5 percent in 2009.

But the group’s monthly freight-tonnage index shows freight volumes have risen for six of the past eight months. Despite a dip in May, tonnage for the first five months of the year was still 6.2 percent higher than for the same period in 2009, according to the associations’ website.

Jon Langenfeld, a transportation analyst with Robert W. Baird & Co. in Milwaukee, wrote in a research note last week that domestic freight capacity is tight but moderating toward more normal growth.

“A tight capacity environment will support higher domestic freight spot pricing and better second-half 2010 contractual prices,” he wrote.

In Wednesday’s news release, McReynolds said, “We have been encouraged by the improved economy so far this year and its resulting positive impact on our business. However, the economy remains fragile and we are therefore prepared for a modest rate of recovery. Our corporate strategy is designed to effectively manage through all market conditions.”

One of those strategies is cutting costs, and Arkansas Best remains on track to save $15 million to $18 million this year from lower nonunion fringe-benefit costs, McReynolds said in the release.

But the rejection May 24 by Teamsters union-member employees of a proposed 15-percent wage concession and incentive plan remains an obstacle to the company’s cost cutting efforts. ABF Freight has 7,360 workers, or 75 percent of its work force of 9,814, covered by a labor agreement, according to a 2009 year-end document.

In Wednesday’s conference call, McReynolds said the company is not currently negotiating with the Teamsters, but is continuing to work on solutions to the impasse.

The company’s largest publicly held competitor, YRC Worldwide Inc., is expected to report a loss of 8 cents per share when it posts its second quarter results Aug. 3. YRC, based in Overland Park, Kan., posted a net loss of $309.04 million, or $3.53 per share, in the second quarter of 2009.

Arkansas Best’s shares fell 50 cents, or 2.34 percent, to close Wednesday at $20.89 on the Nasdaq. Shares have traded between $18.84 and $34.56 in the past year.

Business, Pages 25 on 07/22/2010

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