by Lance Turner
Posted 11/11/2013 07:52 am
Updated 9 months ago
Arkansas Best Corp. of Fort Smith on Monday reported third-quarter net income of $14 million, up 115 percent from the $6.5 million it reported in the same quarter last year.
The trucking company, which last month reached a five-year labor agreement with the Teamsters union, beat analysts estimates for earnings per share and quarterly revenue.
The company reported earnings per share of 52 cents, up from 24 cents last year and above analysts' expectations of 36 cents per share.
Third-quarter results included pension settlement charges of 4 cents per share, along with a tax benefit of 2 cents per share. Without those one-time items, profit would have been $14.5 million or 54 cents per share.
Revenue reached $623.4 million, up 8 percent from last year and above expectations of $605.9 milion.
"This was our strongest quarter of the year thanks to the solid performances of our emerging businesses and a tonnage uptick for ABF Freight," Arkansas Best President and CEO Judy R. McReynolds said in a news release. "In particular, Panther Expedited Services, which we acquired in June 2012, showed improved demand in several of the industries it serves."
Panther, which Arkansas Best purchased in a $180 million deal, provides ground, air and ocean logistics services to its customers. It's among Arkansas Best's non-asset-based businesses, which this year has reported growth in revenue, margins and cash flow.
In the third quarter, those non-asset-based businesses accounted for 26 percent of Arkansas Best's consolidated revenue, and they generated earnings before interest, taxes, depreciation and amortization of $9.7 million, up 45 percent increase from EBITDA generated in the same quarter of 2012.
"We are pleased that our strategy of utilizing the strengths of our companies to offer end-to-end logistics solutions is benefitting our customers and positively contributing to our financial results," McReynolds said.
Still, the company is continuing to work on its largest subsidiary, ABF Freight Inc. For the most recent nine-month period, the subsidiary's operating income "was just above break-even," which Arkansas Best attribited to "the high cost structure associated with the previous labor agreement" the subsidiary had with the Teamsters union.
ABF Freight System and the Teamsters ratified a new five-year labor agreement on Oct. 31. The agreement, which runs through March 31, 2018, calls for 7 percent wage reduction, along with other benefit cuts, that would be recovered by workers during the life of the contract. The company expects the deal will save the less-than-truckload carrier between $55 million and $65 million annually.
On Monday, McReynolds called the Teamsters agreement "a major milestone."
"While this is a significant step toward increasing ABF's profitability, there are other initiatives underway intended to improve operational efficiency," McReynolds said. She added that ABF is conducting a network analysis, the results of which are expected to be announced in the first half of 2014.