Third-quarter net income of $12.265 million for Fort Smith-based Arkansas Best Corp. marks the first time since the end of 2008 that the trucking company has posted two consecutive quarters of income gains.
When the company posted second-quarter net income of $5.298 million, it ended 10 consecutive quarters of losses. Arkansas Best is the parent company of ABF Freight System, one of the largest less-than-truckload carriers in the nation.
For the third quarter, net income of $12.265 million is much improved compared to the $585,000 loss during the same quarter of 2010. Total revenue for the quarter is $510.887 million, up 14.66% compared to the 2010 period.
For the first nine months of 2011, the company reports net income of $4.929 million, a big swing from the loss of $29.305 million in the same period of 2010. Revenue for the first nine months of 2011 is $1.444 billion, above the $1.216 billion in the 2010 period.
“We are pleased to report another quarter of profitability resulting from the value and superior service that ABF offers in the marketplace. The ABF team is to be congratulated for producing better results in the face of an uncertain economic environment,” Judy McReynolds, Arkansas Best president and CEO, noted in the earnings report.
The company, which employs about 9,500 nationwide, posted a 2010 net loss of $32.421 million, an improvement compared to a $127.522 million net loss in 2009. The 2009 income loss included a non-cash accounting charge of $64 million for the impairment of goodwill.
Income gains are courtesy of price improvements and a “better mix” of business, according to McReynolds. In previous statement, Arkansas Best management has said it is willing to lose customers because of price hikes rather than carry freight at losses or unacceptable margins.
The income gains are coming without gains in tonnage shipped.
“Since March of this year, ABF’s year-over-year change in monthly tonnage has moderated, and beginning in August, tonnage has been below that of the same period last year. So far in October, ABF’s tonnage is lower than last October by between six and seven percent, but because of greatly improved yields, ABF revenues continue to be ahead of the same period last year by approximately 5%,” McReynolds explained in the earnings report.
She said the tonnage dip is caused by “weakening economic conditions,” price hikes and relatively stronger tonnage levels in 2010. During the third quarter, per day tonnage dropped 2% compared to the 2010 period.
The American Trucking Associations recently reported that its Truck Tonnage Index increased 1.6% in September after falling a revised 0.5% in August. Compared with September 2010, the seasonally-adjusted tonnage was up 5.9%, and In August the index was 4.9% above a year earlier.
“I continue to believe the economy will skirt another recession because truck tonnage isn’t showing signs that we are in a recession,” ATA Chief Economist Bob Costello said in a statement. “Tonnage is suggesting that we are in a weak growth period for the economy, but not a recession.”
The index, according to Costello, does not point to another recession.
“In the third quarter, tonnage was up 0.4% from the second quarter. Prior to the two previous recessions truck tonnage was plummeting, but not this time,” he explained.
Shares of Arkansas Best (NASDAQ: ABFS) closed Thursday at $20.85, and appeared set to open at or above $22 in Friday trading. During the past 52 weeks, the share price has ranged from a $29.08 high to a $14.22 low.