DALLAS, March 29, 2012 (GLOBE NEWSWIRE) -- Frozen Food Express Industries, Inc. (Nasdaq:FFEX) today announced detailed plans to restore profitability during fiscal 2012. In addition, the Company announced fourth quarter and fiscal 2011 financial results.
"It is important that we communicate with our investors to assure them that we have a solid plan to return to the profitable operations we have enjoyed in the past," stated Russell Stubbs, President and Chief Executive Officer of the Company. "We faced strong headwinds during 2011 with an uncertain economy, unstable fuel costs, driver shortages, and increased commodity costs. In addition, we made several decisions and incurred expenses to implement our strategic plan in the third and fourth quarters, which had a temporary negative effect on our financial results. Nevertheless, we have repositioned the Company, maintained a well-capitalized balance sheet, and are confident that we have the right plan in place to restore meaningful profitability. Today, we intend to outline steps we have taken and discuss the overall direction of the Company."
Key elements of the Company's strategic plan to restore profitability during fiscal 2012 include:
- Exit low margin/ low return businesses - As previously announced, the Company no longer provides dry van services via a dedicated fleet of dry van trailers. We have sold approximately 435 dry van trailers and 228 tractors, netting approximately $13.6 million in cash proceeds. This action removes a line of lower margin services, and by lowering the average age of the fleet, is expected to significantly improve operating efficiency.
- Reinvest in growth businesses - The Company began providing bulk tank water transportation services for the crude oil drilling industry during the fourth quarter of 2011. FFE plans to expand its fleet of trucks that provide this service from approximately 40 to 70 by the end of fiscal 2012. Due to the 24/7 nature of drilling operations, equipment utilization rates are very high and present attractive return characteristics. These new services are expected to add approximately $40 million in incremental annual gross revenue. We continue to look for other businesses in which we can deploy resources and generate increased revenues.
- Improve operating efficiencies – The Company expects to realize annualized cost savings of approximately $5 million, as the result of its previously announced 12% reduction in non-driver staffing levels. Additional operating efficiencies are expected from a reduction in the average fleet age from 2.8 years to 2.1 years. With a younger fleet, we expect to reduce tractor maintenance expense by 2 to 4 cents per mile and overall improvement in fuel economy of approximately 5 percent.
- Improving yields in core temperature controlled business – Market conditions are improving in our core truckload (TL) and less-than-truckload (LTL) shipping markets. As a result, we expect to benefit from both volume and rate increases during fiscal 2012.
The Company plans to host a conference call Thursday, March 29th 4:00 P.M Central Time to discuss the strategic plan and 2011 financial results. Parties interested in participating in the conference call may dial-in at 1-866-757-6808. The conference call will be webcast and can be accessed at www.ffex.net.
Highlights of Fourth Quarter and 2011 Financial Results
- 4Q11 operating revenue, net of fuel surcharges, was $74.2 million, compared to $78.6 million during 4Q10.
- 2011 operating revenue, net of fuel surcharges, was $307.8 million, compared to $311.4 million during fiscal 2010.
- 4Q11 net loss was $11.8 million, or $0.67 per share, compared to a net loss of $1.5 million, or $0.09 per share during 4Q10.
- 2011 net loss was $36.7 million, or $2.08 per share, compared to a net loss of $11.9 million, or $0.69 per share during fiscal 2010.
- As of December 31, 2011, shareholders' equity was $42.9 million, or $2.42 per share.
- As of December 31, 2011, bank debt increased to $19.9 million compared to $5.7 million at December 31, 2010.
- As of December 31, 2011, borrowing capacity was $23.9 million.
Outlook
The Company said that it expects to report a loss during its seasonally weakest first quarter. As a result of its strategic plan, quarterly results are expected to improve throughout the year and the Company expects to produce near breakeven profitability during fiscal 2012.
The Company also said that its strategic plan for 2012 requires limited additional capital expenditures of approximately $3 million to $5 million, net of proceeds from disposition. In addition, the Company expects to remain cash flow positive throughout the balance of fiscal 2012.
Mr. Stubbs concluded, "As a result of our efforts, we expect to see significant improvements in our cash flows and enhanced liquidity. We are committed to enhancing shareholder value, returning to profitability during 2012, and positioning the Company to achieve attractive returns for the long term."
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. The Company also provides transportation of water to support domestic crude oil exploration, brokerage/logistics and dedicated services to its 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.
The Frozen Food Express Industries, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3209
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, adequacy of resources, including whether the Company will return to profitability in fiscal 2012, 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 demand for bulk tank water transportation services, the availability and cost of labor and owner-operators, the ability to negotiate favorably with lenders and lessors, continued availability of credit on commercially reasonable terms, 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 of lawsuits and unfavorable judgements, 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 Balance Sheets | ||
| December 31, | ||
| (in thousands) | ||
| Assets | 2011 | 2010 |
| Current assets | ||
| Cash and cash equivalents | $1,048 | $1,203 |
| Accounts receivable, net | 43,450 | 41,921 |
| Tires on equipment in use, net | 5,968 | 5,982 |
| Deferred income taxes | -- | 1,150 |
| Equipment held for sale | 3,437 | -- |
| Other current assets | 7,868 | 6,575 |
| Total current assets | 61,771 | 56,831 |
| Property and equipment, net | 57,757 | 72,993 |
| Deferred income taxes | 1,009 | -- |
| Other assets | 5,867 | 5,081 |
| Total assets | $126,404 | $134,905 |
| Liabilities and Shareholders' Equity | ||
| Current liabilities | ||
| Accounts payable | $30,339 | $27,443 |
| Insurance and claims accruals | 10,667 | 8,697 |
| Accrued payroll and deferred compensation | 4,047 | 5,032 |
| Accrued liabilities | 1,251 | 709 |
| Current maturities of notes payable and capital lease obligations | 1,936 | -- |
| Deferred income taxes | 690 | -- |
| Total current liabilities | 48,930 | 41,881 |
| Long-term debt | 19,888 | 5,689 |
| Long-term notes payable and capital lease obligations | 8,901 | -- |
| Deferred income taxes | -- | 3,153 |
| Insurance and claims accruals | 5,783 | 5,373 |
| Total liabilities | 83,502 | 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 | 427 | 1,353 |
| Accumulated other comprehensive loss | (67) | -- |
| Retained earnings | 21,572 | 58,242 |
| Total common shareholders' equity | 49,790 | 87,453 |
| Treasury stock (980 and 1,146 shares), at cost | (6,888) | (8,644) |
| Total shareholders' equity | 42,902 | 78,809 |
| Total liabilities and shareholders' equity | $126,404 | $134,905 |
| FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Operations | ||||
|
For the Three and Twelve Months Ended December 31, |
||||
| (in thousands, except per-share amounts) | ||||
| Three Months | Twelve Months | |||
| 2011 | 2010 | 2011 | 2010 | |
| Total operating revenue | $92,191 | $94,153 | $388,461 | $368,822 |
| Operating expenses | ||||
| Salaries, wages and related expenses | 29,966 | 29,846 | 120,834 | 117,134 |
| Purchased transportation | 20,826 | 16,325 | 72,682 | 72,297 |
| Fuel | 19,563 | 19,784 | 93,217 | 71,566 |
| Supplies and maintenance | 13,849 | 11,876 | 56,410 | 47,886 |
| Revenue equipment rent | 10,037 | 8,731 | 36,590 | 35,847 |
| Depreciation | 3,906 | 4,208 | 17,781 | 16,322 |
| Communications and utilities | 1,164 | 1,317 | 4,682 | 4,975 |
| Claims and insurance | 7,349 | 2,253 | 20,553 | 13,017 |
| Operating taxes and licenses | 1,061 | 953 | 4,150 | 4,162 |
| Gain on sale of property and equipment | (4,507) | (511) | (5,741) | (1,103) |
| Miscellaneous | 1,188 | 1,288 | 5,540 | 4,389 |
| Total operating expenses | 104,402 | 96,070 | 426,698 | 386,492 |
| Loss from operations | (12,211) | (1,917) | (38,237) | (17,670) |
| Interest and other (income) expense | ||||
| Interest income | -- | (2) | -- | (32) |
| Interest expense | 365 | 162 | 844 | 470 |
| Equity in earnings of limited partnership | (363) | (373) | (914) | (816) |
| Life insurance and other | 189 | 125 | 621 | 209 |
| Total interest and other (income) expense | 191 | (88) | 551 | (169) |
| Loss before income taxes | (12,402) | (1,829) | (38,788) | (17,501) |
| Income tax benefit | (642) | (330) | (2,118) | (5,571) |
| Net loss | $(11,760) | $ (1,499) | $ (36,670) | $ (11,930) |
| Net loss per share of common stock | ||||
| Basic | $ (0.67) | $ (0.09) | $ (2.08) | $ (0.69) |
| Diluted | $ (0.67) | $ (0.09) | $ (2.08) | $ (0.69) |
| Weighted average shares outstanding | ||||
| Basic | 17,686 | 17,429 | 17,589 | 17,275 |
| Diluted | 17,686 | 17,429 | 17,589 | 17,275 |
| Dividends declared per common share | $-- | $-- | $-- | $-- |
The following table summarizes and compares the signicant components of revenue and presents our operating ratio and revenue per truck per week for each of the three- and twelve-month periods ended December 31:
| Three Months | Twelve Months | |||
| Revenue from (a) | 2011 | 2010 | 2011 | 2010 |
| Temperature-controlled services | $25,582 | $31,176 | $115,813 | $117,111 |
| Dry-freight services | 6,922 | 12,084 | 40,489 | 54,281 |
| Total truckload linehaul services | 32,504 | 43,260 | 156,302 | 171,392 |
| Dedicated services | 4,418 | 4,482 | 17,469 | 17,467 |
| Total truckload | 36,922 | 47,742 | 173,771 | 188,859 |
| Less-than-truckload linehaul services | 26,122 | 28,055 | 112,030 | 110,467 |
| Fuel surcharges | 18,022 | 15,524 | 80,705 | 57,410 |
| Brokerage and logistics services | 10,255 | 1,410 | 18,524 | 6,798 |
| Equipment rental | 870 | 1,422 | 3,431 | 5,288 |
| Total operating revenue | 92,191 | 94,153 | 388,461 | 368,822 |
| Operating expenses | 104,402 | 96,070 | 426,698 | 386,492 |
| Loss from operations | $ (12,211) | $ (1,917) | $ (38,237) | $ (17,670) |
| Operating ratio (b) | 113.2 | 102.0 | 109.8 | 104.8 |
| Total truckload revenue | $36,922 | $47,742 | $173,771 | $188,859 |
| Less-than-truckload linehaul revenue | 26,122 | 28,055 | 112,030 | 110,467 |
| Total linehaul and dedicated services revenue | $63,044 | $75,797 | $285,801 | $299,326 |
| Weekly average trucks in service | 1,648 | 1,790 | 1,751 | 1,782 |
| Revenue per truck per week (c) | $2,911 | $3,222 | $3,130 | $3,221 |
| Computational notes: | |
| (a) | Revenue and expense amounts are stated in thousands of dollars. |
| (b) | Operating expenses divided by total revenue. |
| (c) | Average daily revenue times seven divided by weekly average trucks in service. |
The following table summarizes and compares selected statistical data relating to our freight operations for each of the three- and twelve-month periods ended December 31:
|
|
Three Months | Twelve Months | ||
| Truckload | 2011 | 2010 | 2011 | 2010 |
| Total linehaul miles (a) | 21,317 | 31,247 | 109,065 | 126,090 |
| Loaded miles (a) | 18,658 | 27,732 | 96,547 | 111,537 |
| Empty mile ratio (b) | 12.5% | 11.2% | 11.5% | 11.5% |
| Linehaul revenue per total mile (c) | $1.52 | $1.38 | $1.43 | $1.36 |
| Linehaul revenue per loaded mile (d) | $1.74 | $1.56 | $1.62 | $1.54 |
| Linehaul shipments (a) | 21.2 | 30.8 | 107.6 | 124.3 |
| Loaded miles per shipment (e) | 877 | 900 | 897 | 897 |
| LTL | ||||
| Hundredweight (a) | 1,843 | 2,010 | 8,038 | 8,001 |
| Shipments (a) | 61.5 | 64.9 | 259.8 | 256.5 |
| Linehaul revenue per hundredweight (f) | $14.17 | $13.96 | $13.94 | $13.81 |
| Linehaul revenue per shipment (g) | $425 | $432 | $431 | $431 |
| Average weight per shipment (h) | 3,000 | 3,096 | 3,094 | 3,119 |
| 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 truckload total 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 independent contractors as of December 31:
| 2011 | 2010 | |
| Total company tractors available | 1,390 | 1,499 |
| Total owner-operator tractors available | 266 | 304 |
| Total tractors available | 1,656 | 1,803 |
| Total trailers available | 3,388 | 3,503 |