(Fort Smith, Arkansas, July 31, 2012) – Arkansas Best Corporation (Nasdaq: ABFS) today announced second quarter 2012 net income of $11.8 million, or $0.44 per share, on revenue of $511 million, compared with net income of $5.3 million, or $0.20 per share, and revenue of $499 million in the second quarter of 2011.
The second quarter 2012 results included a tax benefit of $8.0 million, or $0.31 per share, related to the reversal of previously established deferred tax asset valuation allowances, and transaction costs of $2.1 million ($1.3 million, after tax), or $0.05 per share, associated with the June 15, 2012 acquisition of Panther Expedited Services, Inc. (“Panther”). Excluding both of these items, Arkansas Best had second quarter 2012 net income of $5.2 million, or $0.18 per share.
“A number of significant developments occurred during the second quarter, including closing the acquisition of Panther, our premium logistics provider,” said Arkansas Best President and CEO Judy R. McReynolds. “This transaction represents a major step in our long-term strategy to grow our non-asset-based businesses. If Panther had been included, total 2011 revenues for Arkansas Best’s non-asset businesses would have exceeded $400 million. The addition of Panther and the services provided by our other non-asset-based subsidiaries complement our offerings at ABF and allow us to strengthen customer relationships.”
ABF implemented a 6.9% increase in its general rates and charges on June 25, 2012 that was in effect during the last week of the second quarter. Second quarter price increases on ABF accounts under contract and deferred pricing agreements remained at favorable levels. In the second quarter of 2011, ABF began an aggressive initiative to address inadequate pricing and improve the profitability of many accounts across its network. This effort continues in 2012. As a result, the incremental profitability of ABF’s account base has improved.
“While we are encouraged by ABF’s yield initiatives, we continue to focus on various paths to reduce ABF’s overall cost structure,” said Ms. McReynolds. “On-going efforts that offer opportunities to reduce ABF’s cost structure include ABF’s labor contract lawsuit, collaborative work to develop a permanent solution to correct our payment of non-ABF multiemployer pension benefits and preparations for negotiation of a new April 2013 labor contract.”
ABF’s second quarter 2012 daily tonnage levels continued to be below those of the same period last year as the U.S. economy remained inconsistent. However, in each month of this year’s second quarter, abf freight tracking the level of tonnage decrease improved versus 2011. During the second half of 2012, monthly tonnage levels will be compared back to the second half of 2011, when ABF experienced declining tonnage versus 2010.
Acquisition of Panther Expedited Services, Inc.
As previously announced, Arkansas Best acquired Panther on June 15, 2012. The aggregate purchase price of approximately $181 million included a preliminary post-closing adjustment to net working capital. Arkansas Best did not assume any of Panther’s debt that existed prior to the acquisition.
In connection with this purchase, Arkansas Best entered into a $100 million secured term loan facility with a syndicate of banks to finance a portion of the transaction. The balance of the proceeds needed to pay the full purchase price and transaction costs was funded out of Arkansas Best’s available cash.
Changes in the accompanying Arkansas Best consolidated balance sheet from December 31, 2011 to June 30, 2012 include $230 million of acquired assets and $49 million of liabilities, primarily deferred tax liabilities. Additional details of these preliminary fair value assessments are included in the financial tables section of this press release.
“Arkansas Best is focused on listening to our customers and providing solutions that meet their needs,” said Ms. McReynolds. “The addition of Panther and the investments we are making in our other non-asset-based subsidiaries will further that objective and improve our opportunities to grow our relationships and our company. Our efforts to lower ABF’s cost structure will continue until we find the right solution.”
Arkansas Best Corporation will host a conference call with company executives to discuss the 2012 second quarter results. The call will be today, Tuesday, July 31, at 9:30 a.m. ET (8:30 a.m. CT). Interested parties are invited to listen by calling (800) 618-4645. Following the call, a recorded playback will be available through the end of the day on August 31, 2012. To listen to the playback, dial (800) 633-8284 or (402) 977-9140 (for international callers). The conference call ID for the playback is 21598607. The conference call and playback can also be accessed, through August 31, on Arkansas Best’s website at arkbest.com.
Arkansas Best Corporation, headquartered in Fort Smith, Arkansas, is a freight transportation services and solutions provider. Through its various subsidiaries, Arkansas Best offers a wide variety of logistics solutions including: domestic and global transportation of less-than-truckload (“LTL”) and full load shipments, expedited ground and time-definite delivery solutions, freight forwarding services, freight brokerage, oversight of roadside assistance and equipment services for commercial vehicles and household goods moving market services for consumers, corporations and the military. More information is available at arkbest.com, abf.com and pantherexpedite.com.
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Statements contained in this report that are not based on historical facts are “forward-looking statements.” Terms such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “predict,” “prospects,” “scheduled,” “should,” “would,” and similar expressions and the negatives of such terms are intended to identify forward-looking statements.
Such statements are by their nature subject to uncertainties and risk including, but not limited to, general economic conditions and related shifts in market demand that impact the performance and needs of industries served by Arkansas Best Corporation’s subsidiaries and limit our customers’ access to adequate financial resources; the successful integration of Panther; relationships with employees, including unions; union and nonunion employee wages and benefits, including changes in required contributions to multiemployer pension plans; competitive initiatives, pricing pressures, the effect of volatility in fuel prices and the associated changes in fuel surcharges on securing increases in base freight rates and the inability to collect fuel surcharges; availability of fuel; availability and cost of reliable third-party services; the timing and amount of capital expenditures; future costs of operating expenses such as fuel and related taxes; self-insurance claims and insurance premium costs; governmental regulations and policies; future climate change legislation; availability and cost of capital and financing arrangements; the cost and timing of growth initiatives; the impact of our brand and corporate reputation; the cost, integration, and performance of any future acquisitions; costs of continuing investments in technology and the impact of cyber incidents; weather conditions; and other financial, operational, and legal risks and uncertainties detailed from time to time in Arkansas Best Corporation’s Securities and Exchange Commission (“SEC”) public filings.