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8-K - Q3 2011 EARNING RELEASE - FROZEN FOOD EXPRESS INDUSTRIES INCform8k.htm
Exhibit 99.1

 
Frozen Food Express Industries, Inc. Announces Third Quarter 2011 Financial Results
 
 
DALLAS, October 28, 2011 (GLOBE NEWSWIRE) -- Frozen Food Express Industries, Inc. (Nasdaq: FFEX) today announced its financial and operating results for the quarter ended September 30, 2011. Highlights for the quarter include:
 
 
• Total operating revenue increased $8.9 million to $102.8 million in the third quarter of 2011 compared to $93.9 million in the same period of 2010.
 
 
• Total operating revenue, net of fuel surcharges, increased 2.6% to $81.5 million, compared to $79.5 million in the third quarter of 2010.
 
 
• Net loss increased to $13.7 million in the third quarter of 2011, compared to a $2.3 million loss in the same period of 2010.
 
 
• Net loss per share of diluted common stock was ($0.77) in the third quarter of 2011 compared to ($0.13) in the same period of 2010.
 
 
For the three months ended September 30, 2011, total operating revenue increased $8.9 million to $102.8 million compared to $93.9 million in the same period of 2010. Total operating revenue, net of fuel surcharges, increased to $81.5 million, compared to $79.5 million in the same period of 2010. The net loss for the three months ended September 30, 2011 was $13.7 million, or ($0.77) per diluted share, compared to $2.3 million, or ($0.13) per diluted share in the same period of 2010.
 
Revenue (in $ millions) from:
Q3-11
 
Q3-10
% Change
Total Truckload
44.5
 
47.1
(5.5%)
Less-than-truckload
30.7
 
29.4
4.5%
Brokerage, Logistics and Equipment Rental
6.3
 
3.0
109.6%
Operating Revenue (Excluding Fuel Surcharges)
81.5
 
79.5
2.6%
Fuel Surcharges
21.3
 
14.4
48.1%
Total Operating Revenue
102.8
 
93.9
9.5%
 
For the nine months ended September 30, 2011, total operating revenue increased 7.9%, or $21.6 million, to $296.3 million compared to $274.7 million in the same period of 2010. Total operating revenue, excluding fuel surcharges, increased 0.3% to $233.6 million from $232.8 million in the same period of 2010. Net loss for the nine months ended September 30, 2011 was $24.9 million, compared to a net loss of $10.4 million in the same period of 2010. In the nine months ended September 30, 2011, on a per share basis, the net loss equated to ($1.42) per diluted share in 2011 compared to ($0.61) per diluted share in the same period of 2010.
 
"While truckload pricing increased 4.5% during the third quarter, our planned reduction of dry freight services and a continued shortage of drivers resulted in fewer weekly average trucks in service and a 5.5% decline in truckload revenue," said Russell Stubbs, the Company's President and Chief Executive Officer. "Both pricing and demand for our less-than-truckload services continued to improve during the third quarter.  As a result, our LTL revenue increased 4.5% during the quarter, which marks the fifth consecutive quarter of year-over-year improvement."
 
 
 

 
In the third quarter of 2011, total operating expenses increased $15.6 million, or 15.5% to $116.3 million compared to $100.7 million in the same period of 2010.  The Company was able to offset the impact of increased fuel prices through a reduction in overall miles driven, combined with fuel efficiency programs and fuel surcharges.  Excluding the effects of fuel, the increase in operating costs were primarily driven by increased supplies and maintenance costs related to an increase in the average age of the fleet, increasing tire costs, and costs related to the new driver academy.  In addition and as previously reported, the company recorded incremental expense related to an unfavorable settlement of a claim that occurred during 2005, which was significantly higher than the reserve, and as a result, claims and insurance costs increased by $4.0 million to $7.5 million during the third quarter of 2011.
 
                "As previously announced, we have taken steps to streamline our operations by limiting our dry-freight services to refrigerated equipment in limited lanes, and place greater management focus on continued improvement in our refrigerated truckload and LTL services.  Focus in these areas, and growth in our logistics offerings, will be a key to restoring our company to meaningful profitability.  At the same time, we expect our streamlining efforts to significantly reduce the average age of our fleet, which should directly address increasing maintenance costs, as well as improve fuel efficiency,” concluded Mr. Stubbs.
 
About FFEX

Frozen Food Express Industries, Inc. is one of the leading temperature-controlled truckload and less-than-truckload carriers in the United States with core operations in the transport of temperature-controlled products and perishable goods including food, health care and confectionery products. Service is offered in over-the-road and intermodal modes for temperature-controlled truckload and less-than-truckload, as well as dry truckload. We also provide brokerage/logistics and dedicated services to our customers. Additional information about Frozen Food Express Industries, Inc. can be found at http://www.ffeinc.com.  To join our email alert list, please click on the following link: http://financials.ffex.net/alerts.cfm.  The Company’s common stock is traded on the Nasdaq Global Select market under the symbol FFEX.

Forward-Looking Statements

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements relating to plans, strategies, objectives, expectations, intentions, and adequacy of resources, and may be identified by words such as "will", "could", "should", "believe", "expect", "intend", "plan", "schedule", "estimate", "project", and similar expressions. Those statements are based on current expectations and are subject to uncertainty and change.
Although our management believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Should one or more of the risks or uncertainties underlying such expectations not materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Among the key factors that are not within our management's control and that may cause actual results to differ materially from those projected in such forward-looking statements are demand for the company's services and products, and its ability to meet that demand, which may be affected by, among other things, competition, weather conditions and the general economy, the availability and cost of labor and owner-operators, the ability to negotiate favorably with lenders and lessors, the effects of terrorism and war, the availability and cost of equipment, fuel and supplies, the market for previously-owned equipment, the impact of changes in the tax and regulatory environment in which the company operates, operational risks and insurance, risks associated with the technologies and systems used and the other risks and uncertainties described in our filings with the Securities and Exchange Commission.  Given the volatility in fuel prices and the impact fuel surcharge revenues have on total operating revenues, we often make reference to total operating revenue excluding fuel surcharges to provide a more consistent basis for comparison of operating revenue without the impact of fluctuating fuel prices.  Readers should review and consider these factors along with the various disclosures by the Company in its press releases, stockholder reports and filings with the Securities and Exchange Commission. The company does not assume, and specifically disclaims, any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

 
 

 

Frozen Food Express Industries, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited and in thousands)

Assets
 
September 30, 2011
   
December 31, 2010
 
Current assets
           
Cash and cash equivalents
 
$
2,148
   
$
1,203
 
Accounts receivable, net
   
46,695
     
41,921
 
Tires on equipment in use, net
   
6,999
     
5,982
 
Deferred income taxes
   
1,150
     
1,150
 
Other current assets
   
8,307
     
6,575
 
Assets held for sale, net of accumulated depreciation
   
10,818
     
-
 
Total current assets
   
76,117
     
56,831
 
                 
Property and equipment, net
   
63,507
     
72,993
 
Other assets
   
6,185
     
5,081
 
Total assets
 
$
145,809
   
$
134,905
 
                 
Liabilities and Shareholders' Equity
               
Current liabilities
               
Accounts payable
 
$
26,986
   
$
27,443
 
Insurance and claims accruals
   
11,160
     
8,697
 
Accrued payroll and deferred compensation
   
4,959
     
5,032
 
Accrued liabilities
   
1,196
     
709
 
Current maturities of notes payable and capital lease obligations
   
1,407
     
-
 
Total current liabilities
   
45,708
     
41,881
 
                 
                  Long-term debt 
   
28,352
     
5,689
 
Long-term notes payable and capital lease obligations
   
8,146
     
-
 
Deferred income taxes
   
1,506
     
3,153
 
Insurance and claims accruals
   
7,541
     
5,373
 
Total liabilities
   
91,253
     
56,096
 
                 
Shareholders’ equity
               
Common stock, $1.50 par value per share; 75,000 shares authorized;
               
     18,572 shares issued
   
27,858
     
27,858
 
Additional paid-in capital
   
188
  
   
1,353
 
Accumulated other comprehensive loss
   
(69
)
   
-
 
Retained earnings
   
33,332
     
58,242
 
Total common shareholders’ equity
   
61,309
     
87,453
 
Treasury stock (960 and 1,146 shares), at cost
   
(6,753
)
   
(8,644
)
Total shareholders’ equity
   
54,556
     
78,809
 
Total liabilities and shareholders’ equity
 
$
145,809
   
$
134,905
 


 
 

 


Frozen Food Express Industries, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited and in thousands, except per-share amounts)


   
Three Months
Ended September 30,
   
Nine Months
Ended September 30,
 
   
2011
   
2010
   
2011
   
2010
 
Total operating revenue
 
$
102,834
   
$
93,870
   
$
296,270
   
$
274,669
 
Operating expenses
                               
Salaries, wages and related expenses
   
31,766
     
30,243
     
90,868
     
87,288
 
Purchased transportation
   
18,357
     
18,132
     
51,856
     
55,972
 
Fuel
   
25,854
     
18,469
     
73,654
     
51,782
 
Supplies and maintenance
   
15,710
     
13,447
     
42,561
     
36,010
 
Revenue equipment rent
   
9,200
     
9,353
     
26,553
     
27,116
 
Depreciation
   
4,827
     
4,216
     
13,875
     
12,114
 
Communications and utilities
   
1,171
     
1,287
     
3,518
     
3,658
 
Claims and insurance
   
7,476
     
3,486
     
13,204
     
10,764
 
Operating taxes and licenses
   
985
     
1,003
     
3,089
     
3,209
 
Gain on sale of property and equipment
   
(661
)
   
(12
)
   
(1,234
)
   
(592
)
Miscellaneous
   
1,626
     
1,109
     
4,352
     
3,101
 
 Total operating expenses
   
116,311
     
100,733
     
322,296
     
290,422
 
Loss from operations
   
(13,477
)
   
(6,863
)
   
(26,026
)
   
(15,753
)
Interest and other expense (income)
                               
Interest income
   
-
     
(15
)
     
-
   
(30
)
Interest expense
   
247
     
105
     
479
     
308
 
Equity in earnings of limited partnership
   
(192
)
   
(246
)
   
(551
)
   
(443
)
Life insurance and other
   
63
     
(43
)
   
432
     
84
 
 Total interest and other expense (income)
   
118
     
(199
)
   
360
     
(81
)
Loss before income taxes
   
(13,595
)
   
(6,664
)
   
(26,386
)
   
(15,672
)
Income tax expense (benefit)
   
73
     
(4,383
)
   
(1,476
)
   
(5,241
)
Net loss
 
$
(13,668
)
 
$
(2,281
)
 
$
(24,910
)
 
$
(10,431
)
                                 
Net loss per share of common stock
                               
Basic
 
$
(0.77
)
 
$
(0.13
)
 
$
(1.42
)
 
$
(0.61
)
Diluted
 
$
(0.77
)
 
$
(0.13
)
 
$
(1.42
)
 
$
(0.61
)
Weighted average shares outstanding
                               
Basic
   
17,663
     
17,384
     
17,557
     
17,223
 
Diluted
   
17,663
     
17,384
     
17,557
     
17,223
 





 
 

 



The following table summarizes and compares the significant components of revenue and presents our operating ratio and revenue per truck per week for each of the three- and nine-month periods ended September 30:   

   
Three Months
   
Nine Months
 
Revenue from: (a)
 
2011
   
2010
   
2011
   
2010
 
Temperature-controlled fleet
 
$
29,875
   
$
29,776
   
$
90,231
   
$
85,935
 
Dry-freight fleet
   
10,444
     
12,906
     
33,567
     
42,197
 
Total truckload linehaul services
   
40,319
     
42,682
     
123,798
     
128,132
 
Dedicated fleets
   
4,140
     
4,374
     
13,051
     
12,985
 
Total truckload
   
44,459
     
47,056
     
136,849
     
141,117
 
Less-than-truckload linehaul services
   
30,740
     
29,408
     
85,908
     
82,412
 
Fuel surcharges
   
21,298
     
14,382
     
62,683
     
41,886
 
Brokerage and logistics services
   
5,585
     
1,623
     
8,269
     
5,388
 
Equipment rental  
   
752
     
1,401
     
2,561
     
3,866
 
Total operating revenue
   
102,834
     
93,870
     
296,270
     
274,669
 
                                 
Operating expenses
   
116,311
     
100,733
     
322,296
     
290,422
 
Loss from operations
 
$
(13,477
)
 
$
(6,863
)
 
$
(26,026
)
 
$
(15,753
)
Operating ratio (b)
   
113.1
%
   
107.3
%
   
108.8
%
   
105.7
%
                                 
Total truckload revenue
 
$
44,459
   
$
47,056
   
$
136,849
   
$
141,117
 
Less-than-truckload  revenue
   
30,740
     
29,408
     
85,908
     
82,412
 
Total linehaul and dedicated fleet revenue 
 
$
75,199
   
$
76,464
   
$
222,757
   
$
223,529
 
                                 
Weekly average trucks
   
1,772
     
1,813
     
1,772
     
1,779
 
Revenue per truck per week (c)
 
$
3,229
   
$
3,209
   
$
3,223
   
$
3,222
 
 

  Computational notes:
(a)
Revenue and expense amounts are stated in thousands of dollars.
(b)
Operating expenses divided by total operating revenue.
(c)
Average daily revenue, times seven, divided by weekly average trucks.
 

 
 

 

            
The following table summarizes and compares selected statistical data relating to our freight operations for each of the three- and nine-month periods ended September 30:
  
   
Three Months
   
Nine Months
 
Truckload
 
2011
   
2010
   
2011
   
2010
 
    Total linehaul miles (a)
   
27,994
     
30,923
     
87,748
     
94,843
 
    Loaded miles (a)
   
24,809
     
27,294
     
77,889
     
83,805
 
    Empty mile ratio (b)
   
11.4
%
   
11.7
%
   
11.2
%
   
11.6
%
    Linehaul revenue per total mile (c)
 
$
1.44
   
$
1.38
   
$
1.41
   
$
1.35
 
    Linehaul revenue per loaded mile (d)
 
$
1.63
   
$
1.56
   
$
1.59
   
$
1.53
 
    Linehaul shipments (a)
   
27.8
     
31.0
     
86.4
     
93.5
 
    Loaded miles per shipment (e)
   
891
     
882
     
902
     
896
 
LTL
                               
    Hundredweight
   
2,128,575
     
2,126,278
     
6,194,980
     
5,990,371
 
    Shipments (a)
   
70.3
     
68.6
     
198.3
     
191.6
 
    Linehaul revenue per hundredweight (f)
 
$
14.44
   
$
13.83
   
$
13.87
   
$
13.76
 
    Linehaul revenue per shipment (g)
 
$
437
   
$
429
   
$
433
   
$
430
 
    Average weight per shipment (h)
   
3,026
     
3,098
     
3,124
     
3,126
 
 
Computational notes:
(a)
Amounts are stated in thousands.
(b)
Total truckload linehaul miles less truckload loaded miles, divided by total truckload linehaul miles.
(c)
Revenue from truckload linehaul services divided by total truckload linehaul miles.
(d)
Revenue from truckload linehaul services divided by truckload loaded miles.
(e)
Total truckload loaded miles divided by number of truckload linehaul shipments.
(f)
LTL revenue divided by LTL hundredweight.
(g)
LTL revenue divided by number of LTL shipments.
(h)
LTL hundredweight times one hundred divided by number of shipments. 

The following table summarizes and compares the makeup of our fleets between company-provided tractors and tractors provided by owner operators as of September 30:

   
2011
   
2010
 
Total company tractors available
    1,613       1,507  
Total independent contractor tractors available
    286       312  
Total tractors available
    1,899       1,819  
Total trailers available
    3,826       3,600  


Contacts:
Frozen Food Express Industries, Inc.
        Russell Stubbs, President and CEO
                            John Hickerson, EVP and COO
                            John McManama, SVP and CFO
                            (214) 630-8090
                            ir@ffex.net