Dahlman Rose Comments On Arkansas Best Corp Following Dismal Earnings

Arkansas Best ABFS reported 4Q10 loss/sh of $0.12, which was below Dahlman Rose's and consensus estimates of losses of $0.06/sh and $0.09/sh, respectively. The company indicated that the fourth quarter saw signs of some pricing rationality returning to the LTL marketplace and several positive signs indicating that industry pricing is moving upward in the right direction. During 4Q10, price increases on contract and deferred pricing agreements saw an increase of 4.3%, which was the best pricing that the company has seen since the fourth quarter of 2006. Also, this pricing trend continued for new contracts that came up in November and December, which saw price improvement in the 4-5% range. This improvement in the pricing environment was attributable to the successful implementation of the second rate increase of 5.9% in October 2010. Jefferies is maintaining its 2011 and 2012 estimates of $0.65/sh and $1.60/sh, respectively. it is also maintaining a Hold rating as it continues to monitor the carrier's ongoing efforts to manage its industry-high cost structure, improve pricing, seek legal remedy against the IBT and YRCW, and inch closer to profitability. Dahlman Rose has a Hold rating on ABFS ABFS is trading lower at $24.28