FORT SMITH - After four months of ongoing contract negotiations aimed at reducing labor costs with the Teamsters union, Arkansas Best Corp. on Tuesday announced a net loss for the first quarter of $13.4 million, or 52 cents per share - and pointed squarely at high-priced union wages and benefits.
Revenue and tonnage growth in trucking, the company said in its Tuesday news release, “were offset by higher wage and benefit costs for employees represented by the International Brotherhood of Teamsters.”
First-quarter 2013 losses were smaller than in 2012, when the company lost $18.2 million, or 71 cents per share, the Fort Smith-based company reported.
The freight transportation service provider’s results fell short of 16 analysts’ estimates. On average, analysts projected losses at 41 cents per share, according to the website Yahoo Finance.
The company’s “high cost structure continues to weigh on results, underscoring the need for a more rational labor agreement,” company President and Chief Executive Officer Judy McReynolds said in the statement.
Arkansas Best’s largest segment, less-than-truckload carrier ABF Freight System Inc., is proposing a one-year, 6.5 percent cut in wages for its 7,500 Teamsters drivers and other unionized workers, as well as cuts in benefits, according to a Teamsters statement last month. Arkansas Best Corp said it operates at a disadvantage because the Teamsters granted wage concessions to its chief competitor, YRC Worldwide.
Last month, a union statement used the words “frustrating” and “disappointed” about the company’s wage cutting proposals. A union spokesman did not immediately respond to the company’s statements. Arkansas Best said Tuesday that “the negotiating teams continue to make progress.” The contract was set to expire on March 31. It has twice been extended for 30-day intervals.
Bright spots in Tuesday’s earnings announcement included first-quarter revenue of $520.7 million, up from $440.9 million in the first quarter of 2012. Growth in emerging segments of the business was notable. Freight brokerage revenue was up 82 percent and vehicle roadside and preventive maintenance grew 45 percent, according to the release.
“Arkansas Best’s emerging, non-asset-based businesses continue to display strength in their revenue growth and cash flow generation,” according to the company’s announcement. Revenue for Panthers Expedited Services Inc., purchased by Arkansas Best in 2012, were hurt by reduced demand for its premium service and by investments in sales and service locations for growth, the company said.
Describing the first quarter as seasonally weak, company officials said Arkansas Best is “well-positioned for growth in new and existing markets. … Current negotiations on a new labor agreement provide an opportunity to preserve good-paying jobs and protect the retirement benefits of our union employees through a lower cost structure and improved operational flexibility. A new labor contract, with lower more competitive costs, is a critical element in allowing ABF to effectively compete in a drastically different LTL marketplace.” Less-than-truckload shippers haul freight from more than one customer in the same truck.
Arkansas Best is ranked as the U.S. and Canada’s 13thlargest trucking company by industry publication Transport Topics.
The company’s stock closed Tuesday at $10.51 per share, down $1.04, or 9 percent. The stock has traded between $6.43 and $16.18 during the past year.
Business, Pages 25 on 05/01/2013