Arkansas Best turned in a net loss of $7.9 million in the fourth quarter, a swift change from 2011’s fourth-quarter net income of $1.4 million.
The fourth-quarter loss was primarily driven by $2.4 million related to a workers’ compensation increase. This loss emerged despite a fourth quarter revenue of $537 million, a significant increase over 2011’s fourth-quarter total of $463.2 million.
Big drivers of revenue included Arkansas’ acquisition of Panther Expedited Services, which occurred in June, and non-asset-related growth in freight brokerage, preventative maintenance and vehicle roadside services. These emerging businesses added more than 20 percent to the company’s revenue, according to Arkansas Best’s Chief Executive Officer Judy McReynolds.
“Expanding our portfolio of expedited and premium logistics services was a major initiative in 2012 as our customers’ supply chains grow ever more complex,” she said in a statement. “We are encouraged by the trends we have seen in these businesses.”
For the entire year, net loss eased back to $7.7 million. In 2011, Arkansas Best turned in a net income of $6.2 million. Revenue for 2012 stood at $2.1 billion, compared to 2011’s $1.9 billion.
McReynolds blamed some of the year-long loss on poor union contracts that aren’t uniform for all of Arkansas’ operations throughout the country. The firm is also the only union less-than-truckload carrier that is still paying National Master Freight Agreement rates, a burdensome cost structure that could amount in the firm making network and personnel changes.
“We are focused on a return to profitability at ABF by substantially lowering our costs in the next labor contract through negotiations that are now underway,” McReynolds stated. “ABF’s management team is hopeful it will reach an agreement with the Teamsters that allows us to preserve good-paying jobs and protect our employees’ retirements through a lower cost structure that truly reflects the competitive nature of today’s LTL marketplace.”
According to analysts at Stifel Nicolaus, Arkansas Best’s current union arrangement means the company is operating at a significant disadvantage. UPS and YRC have more flexible Teamsters contracts, but the analysts see that the union is, for some reason, punishing Arkansas.
“The company should get the same contract as YRC or UPS, which would dramatically improve the EPS outlook,” the analysts wrote in a guidance report. “However, we are more interested in what is likely to actually happen, and that is much more unclear and likely not as favorable as what we believe is fair for ABF.” - Jon Ross