Arkansas Best Second Quarter Profit Shrinks, Reports Loss for First Half of 2013
August 09, 2013
Arkansas Best, has reported second quarter 2013 net income but continued to sustain losses for the first six months of the year as costs for salaries, wages and benefits at less-than-truckload carrier subsidiary ABF Freight System, offset improving revenue and tonnage trends while the company’s emerging businesses continued to see growth and improved margins.
Second quarter 2013 revenue was $576.9 million compared to revenue of $510.5 million in the second quarter of 2012, while net income was $4.9 million, compared to $11.8 million during the same period
The second quarter 2012 results included a tax benefit of $8.0 million, associated with the June 15, 2012 acquisition of Panther Expedited Services. Excluding both of these items, Arkansas Best had second quarter 2012 net income of $5.2 million.
For the first half of 2013, Arkansas Best's net loss was $8.5 million on revenue of $1.1 billion compared to a net loss of $6.3 million on revenue of $951.4 million during the first half of 2012.
ABF's second quarter 2013 revenue rose slightly, but higher costs for salaries, wages and benefits continued to weigh on results. For the first six months of 2013, ABF's operating loss was $17.1 million compared to $14.2 million in the first half of 2012.
It says the June 27 ratification of the ABF National Master Freight Agreement by its Teamster employees is a major step toward returning the company to consistent profitability. Once the new contract is implemented, following the ratification of the remaining supplements, the combined effect of immediate cost reductions plus lower cost increases in affected areas, it claims, should put ABF on a path to improved financial performance.
At ABF, total second quarter revenue per hundredweight equaled that of the same period last year, however, the company notes when considering year-over-year changes in freight profile and account mix, ABF's pricing improved, reflecting the general rate increase it implemented in late May.
As in the first quarter 2013, Arkansas Best's emerging, non-asset-based businesses continued to show revenue growth, operating profit and cash flow generation. These businesses represented 23% of total corporate revenue during the quarter, and are on track to account for a greater proportion of total revenue going forward.
The company's freight brokerage segment led the emerging businesses in revenue gains, with a 63% increase. The household goods moving services segment raised its second quarter operating income by nearly five times on a small increase in revenue. Though Panther Expedited Services continued to be affected by reduced customer demand for expedited services and the effects of ongoing investments made in sales and service locations for future growth, revenue and margin trends improved throughout the quarter.
On a combined basis, Panther and all of the other non-asset-based businesses generated second quarter 2013 earnings before interest, taxes, depreciation and amortization of $7.1 million, versus $2.8 million of EBITDA in the second quarter of 2012.
More details, including about ABF’s new contract with the Teamsters, are on the company website.