FORT SMITH — The chief executive officer of Arkansas Best Corp. in Fort Smith said Wednesday that a weakening manufacturing sector will lead to a decrease in third-quarter revenue.
“We’ve seen some pretty weak readings over the last three months from that sector,” said Judy McReynolds, president and CEO of Arkansas Best, the parent company of ABF Freight System Inc.
“Revenue is down a halfpercent,” McReynolds said at the 2012 RBC Capital Markets Global Industrials Conference.
The event was webcast live from Las Vegas.
“Our operating ratio ... we expect it to be relatively flat,” she said. “Wedon’t think September is going to be helpful.”
On Sept. 6, Arkansas Best disclosed an expected 0.5 percent decrease in revenue for the quarter, along with a 2 percent decrease in the volume of the goods ABF transports each day.
“Clearly this quarter is not going to be very good for them,” said Ryan Mahoney, a transportation research associate with Stephens Inc. in Little Rock. Mahoney owns no stock in Arkansas Best. Stephens has handled investment banking series for the company.
Arkansas Best plans to release its third-quarter earnings on Oct. 24.
The CEO’s report comes at a time when shares in Arkansas Best are trading at their lowest levels in 13 years.
The company’s stock closed Wednesday at $8.35, down 12 cents. Its stock price has plunged 56 percent since the start of the year. Before this month, the stock hadn’t dipped below $9 since May 1999.
McReynolds said her firm is “investing in growth opportunities” - such as the acquisition in June of Panther Expedited Services Inc. of Seville, Ohio - that shouldencourage potential investors and create shareholder value.
“Our shareholders are suffering from a lack of returns,” she said. “We need to improve on that. When you think about our shareholders and what they expect from us, they expect better growth on their return than what we’ve been giving them.”
She admitted that she’s concerned as to why the stock has bottomed out, hitting an intraday low of $7.83 on Monday.
“It’s in a place that doesn’t make any sense to me at all,” she said.
The 52-week intraday high for the stock is $22.79, set on Jan. 26.
Mahoney said the stock price has been affected not only by the weak manufacturing sector but also a recent adverse court ruling.
In August, ABF lost a longrunning legal battle against the International Brotherhood of Teamsters, which has a current union agreement with the company that runsthrough March 2013.
U.S. District Judge Susan Webber Wright of the Western District of Arkansas dismissed - for the second time - a lawsuit brought by ABF against the Teamsters, seeking damages. The suit claimed that union concessions gave ABF’s main unionized competitor, YRC Worldwide Inc., an unfair competitive advantage.
Wright said ABF, which was seeking $750 million in damages, had failed to state facts that would allow the court to appoint a tribunal tohear its grievance.
In response, ABF told the Teamsters that it intends to withdraw from the National Master Freight Agreement that governs relations between trucking companies and the union.
McReynolds said ABF and the Teamsters are nonetheless in “pre-negotiations” with the union on their next contract.
“We feel like we have been harmed,” McReynolds said. “I believe in things that are worth fighting for.”
Business, Pages 21 on 09/13/2012