Arkansas Best lifts net 115% over ’12

Arkansas Best Corp. recorded third-quarter revenue of $623 million and reported $14 million in net income, a 115 percent increase from the same period last year.

Earnings per share were 52 cents, outpacing the 36 cents analysts estimated for the trucking and transportation company’s third quarter.Arkansas Best pointed to improvement in its nonasset based business segments and increased tonnage for subsidiary ABF Freight System Inc.

“More than ever in our recent quarters and certainly since the great recession, we at Arkansas Best feel strongly that the window of opportunity before us is wide open, with substantial growth avenues ahead of us,” CEO and President Judy McReynolds said. “We’re excited to see the stronger performance in our nonasset-based businesses in the second half of the year.”

Panther Expedited, a freight-logistics company purchased last year by Arkansas Best for $180 million, reported $3.1 million in operating profit, nearly triple the same quarter for 2012. Panther’s third-quarter revenue was $66 million.

Total revenue for nonasset-based business was $162 million. Revenue increased 65 percent for Arkansas Best’s Domestic & Global Transportation Management segment, which includes ABF Logistics, brokerage, intermodal, global shipping and supply chain businesses.

“During what is typically the best-performing period of the year, our third quarter results were positively affected by operating profits and increased revenues at all of our subsidiaries,” McReynolds said. “Our emerging nonasset-based businesses continue to experience success through continued growth in revenues, operating income and cash generation.”

Improved financial numbers came despite the lack of an updated operating agreement between ABF and the Teamsters. While a majority of union employees approved a five-year national master freight agreement with ABF in June, it wasn’t fully ratified until October, delaying cost cutting measures that the company was hoping would be reflected in its third-quarter bottom line.

A deal between the trucking company and its approximately 7,500 union employees is in place until March 31, 2018. Arkansas Best expects the new contract to save between $55 million and $65 million per year. Cuts to wages and vacation time are expected to create a better financial outlook for ABF.

“We have begun to realize cost savings associated with wage and vacation reductions that are essential to returning ABF to its historic sustained profitability,” said Arkansas Best Chief Financial Officer Michael Newcity said.

Total tonnage for ABF was up 3.5 percent compared with the third quarter in 2012. July brought a 4.6 percent increase over the same month last year, the biggest tonnage improvement for the third quarter. Tonnage nationally increased about 5 percent for the quarter, according to numbers compiled by Bob Costello, chief economist for the American Trucking Associations.

Arkansas Best also announced Monday that it was no longer pursuing legal action against the Teamsters and YRC Worldwide. The United State Court of Appeals for the 8th Circuit dismissed in September a lawsuit filed by Arkansas Best in November 2010, alleging that the Teamsters and YRC Worldwide violated a collective bargaining agreement.

Business, Pages 23 on 11/12/2013

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