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Frozen Food Express Industries, Inc. Announces Fourth Quarter and 2012 Financial Results

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DALLAS, March 19, 2013 (GLOBE NEWSWIRE) -- Frozen Food Express Industries, Inc. (Nasdaq:FFEX) today announced its financial and operating results for the quarter and year ended December 31, 2012. Highlights for the year include:

  • 4Q12 total operating revenue, net of fuel surcharges, was $78.4 million, a 5.6% increase versus 4Q11.
  • 2012 total operating revenue, net of fuel surcharges, was $301.5 million, a 2% decrease versus 2011.
  • 4Q12 operating loss of $4.4 million compared to a loss of $12.2 million in the same period of 2011.
  • 2012 operating loss of $13.4 million, a $24.9 million improvement versus 2011.
  • 2012 net loss per share of diluted common stock was ($0.84), compared to a net loss per diluted common share of ($2.08) in the same period of 2011.
  • As of December 31, 2012, shareholders' equity was $28.3 million, or $1.60 per share.
  • As of December 31, 2012, borrowing availability was $14.6 million

Revenue (in $ millions) from: 4Q12 4Q11 %
Change
2012 2011 %
Change
Total Truckload ("TL") 38.3 36.9 3.8% 146.9 173.8 (15.4%)
Less-than-truckload ("LTL") 34.0 26.1 30.1% 127.9 112.0 14.2%
Brokerage, Logistics and Equipment Rental 6.1 11.2 (45.9%) 26.7 22.0 21.3%
Operating Revenue (Excluding Fuel Surcharges) 78.4 74.2 5.6% 301.5 307.8 (2.0%)
Fuel Surcharges 20.1 18.0 11.6% 76.2 80.7 (5.5%)
Total Operating Revenue 98.5 92.2 6.8% 377.7 388.5 (2.8%)

"During 2012, we reduced our operating loss by approximately $25 million, but just as important, with fourth quarter revenue growth of 6.8%, have put the top line back on a modest growth trajectory with our first quarter of year over year revenue growth in 2012," said Russell Stubbs, President and Chief Executive Officer of the Company. "We began 2012 with 147 less trucks in service than we began 2011, due in part to the 225 plus units we sold in the fourth quarter of 2011 while exiting our dry van services. This reduction in trucks caused us to average 220 fewer trucks, per week, in service in 2012 versus 2011, which prevented us from attaining year over year revenue growth in the first three quarters of 2012. With the dedication of our employees, support of our customers and the growth in drivers attained through our Driver Academy and retention programs, we were able to add back 151 trucks to our fleet in 2012. This was reflected in us achieving year over year revenue improvement in the fourth quarter. While we still have progress to make, we have successfully repositioned our Company, and I am confident that we have the right plan in place to restore the Company to profitability during 2013 and restore more meaningful profitability in the years to come."

Strategic Plan Update

Improve operating efficiencies — The year-over-year decrease in operating expenses was primarily related to strategic decisions implemented during 2011 to exit less profitable services, refresh the average age of the fleet and increase operating efficiencies. These actions removed a line of lower margin services from our revenue mix, which was the primary reason for the 15.4% decrease in truckload revenue during 2012. These strategic actions also resulted in a 12.6% decrease in the average number of trucks in service and a reduction in the average tractor age from 2.2 years to 1.7 years. Despite a 3.9% increase in fuel prices, fewer but more fuel-efficient trucks in service led to a 17.4% decrease in gallons used and a $13.2 million, or 14.2%, decrease in fuel costs. Supplies and maintenance costs decreased $3.4 million, or 6.0%, to $53.0 million.

Reinvest in growth businesses — The Company began providing bulk tank water transportation and other services for the crude oil drilling industry during the fourth quarter of 2011. Due to the 24/7 nature of drilling operations, equipment utilization rates are very high and present attractive return characteristics. Contribution from water transport services was the major contributor for the 20.4% increase in brokerage and logistics services revenue during 2012. "As expected, contribution from our water transport business has proven to be somewhat volatile and difficult to track on a quarterly basis," said Mr. Stubbs. "However, on an annual basis we are satisfied with the return we are achieving from this investment."

Improve yields in core temperature controlled business – In addition to repositioning the service mix, the Company took several proactive steps to improve yields, including enhancing its inside sales efforts, securing new national accounts, and exiting less profitable lanes. Overall market conditions also improved in the Company's core refrigerated truckload (TL) and less-than-truckload (LTL) shipping markets, contributing to a year-over-year increase in yields. "As a result of our actions and more favorable market conditions, the productivity of our fleet, as measured by revenue per truck per week, improved by nearly ten percentage points during 2012," commented Mr. Stubbs. "Of particular importance, the growth in our LTL business accelerated in the second half of the year, as customers increasingly recognized our differentiated value proposition of being the only asset based national temp controlled LTL network in existence in the US marketplace."

For the fourth quarter ended December 31, 2012, total operating revenue increased 6.8%, or $6.3 million, to $98.5 million compared to $92.2 million in the same period of 2011. Total operating revenue, excluding fuel surcharges, increased 5.6% to $78.4 million from $74.2 million during the same period a year ago. During the fourth quarter of 2012, total operating expenses decreased $1.5 million, or 1.5%, to $102.9 million compared to $104.4 million during the fourth quarter of 2011, which yielded an operating ratio of 104.5% compared to a 113.2% for the same period in 2011.

For the year ended December 31, 2012, total operating revenue decreased 2.8%, or $10.7 million, to $377.7 million compared to $388.5 million in the same period of 2011. Total operating revenue, excluding fuel surcharges, decreased 2.0% to $301.5 million from $307.8 million during the same period a year ago. During 2012, total operating expenses decreased $35.6 million, or 8.3%, to $391.1 million compared to $426.7 million during 2011, which yielded an operating ratio of 103.5% compared to a 109.8% for 2011. During the first quarter of 2013, the Company sold its 19.9% equity interest in W&B Service Company for $3.2 million which resulted in a gain of $1.6 million, which will be recognized in the first quarter of 2013.

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 on a non-dedicated fleet basis. The Company also provides bulk tank water transportation, 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 the 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, 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 continued growth of hydraulic fracturing techniques for oil and gas drilling in West Texas, 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 Balance Sheets
December 31,
(in thousands)
Assets 2012 2011
Current assets
Cash and cash equivalents $ 2,907 $ 1,048
Accounts receivable, net 40,069 43,450
Tires on equipment in use, net 8,176 5,968
Equipment held for sale 832 3,437
Other current assets 7,840 7,868
Total current assets 59,824 61,771
Property and equipment, net 54,680 57,757
Deferred income taxes 3,039 1,009
Other assets 6,096 5,867
Total assets $ 123,639 $ 126,404
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 26,178 $ 30,339
Insurance and claims accruals 10,033 10,667
Accrued payroll and deferred compensation 3,951 4,047
Accrued liabilities 1,429 1,251
Current maturities of notes payable and capital lease obligations 3,040 1,936
Deferred income taxes 2,727 690
Total current liabilities 47,358 48,930
Long-term debt 26,215 19,888
Long-term notes payable and capital lease obligations 16,891 8,901
Insurance and claims accruals 4,904 5,783
Total liabilities 95,368 83,502
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 1,165 427
Accumulated other comprehensive loss (79) (67)
Retained earnings 6,516 21,572
Total common shareholders' equity 35,460 49,790
Treasury stock (1,026 and 980 shares), at cost (7,189) (6,888)
Total shareholders' equity 28,271 42,902
Total liabilities and shareholders' equity $ 123,639 $ 126,404
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
2012 2011 2012 2011
Total operating revenue $ 98,451 $ 92,191 $ 377,715 $ 388,461
Operating expenses
Salaries, wages and related expenses 28,515 29,966 115,333 120,834
Purchased transportation 18,031 20,826 68,303 72,682
Fuel 19,966 19,563 79,982 93,217
Supplies and maintenance 13,922 13,849 53,028 56,410
Revenue equipment rent 11,790 10,037 42,995 36,590
Depreciation 2,845 3,906 11,513 17,781
Communications and utilities 1,099 1,164 4,398 4,682
Claims and insurance 5,222 7,349 12,725 20,553
Operating taxes and licenses 1,007 1,061 4,083 4,150
Gain on sale of property and equipment (953) (4,507) (5,892) (5,741)
Miscellaneous 1,410 1,188 4,602 5,540
Total operating expenses 102,854 104,402 391,070 426,698
Loss from operations (4,403) (12,211) (13,355) (38,237)
Interest and other (income) expense
Interest expense 492 365 1,649 844
Equity in earnings of limited partnership (326) (363) (868) (914)
Life insurance and other 198 189 717 621
Total interest and other (income) expense 364 191 1,498 551
Loss before income taxes (4,767) (12,402) (14,853) (38,788)
Income tax expense (benefit) 48 (642) 203 (2,118)
Net loss $ (4,815) $ (11,760) $ (15,056) $ (36,670)
Net loss per share of common stock
Basic $ (0.27) $ (0.67) $ (0.84) $ (2.08)
Diluted $ (0.27) $ (0.67) $ (0.84) $ (2.08)
Weighted average shares outstanding
Basic 17,893 17,686 17,852 17,589
Diluted 17,893 17,686 17,852 17,589

The following table summarizes and compares the significant components of revenue and presents our operating ratio and revenue per truck per week for the three and twelve months ended December 31:

Three Months Twelve Months
Revenue from 2012 2011 2012 2011
Temperature-controlled services $ 28,382 $ 25,582 $ 106,203 $ 115,813
Dry-freight services 5,908 6,922 22,539 40,489
Total truckload linehaul services 34,290 32,504 128,742 156,302
Dedicated services 4,037 4,418 18,202 17,469
Total truckload 38,327 36,922 146,944 173,771
Less-than-truckload linehaul services 33,986 26,122 127,903 112,030
Fuel surcharges 20,114 18,022 76,238 80,705
Brokerage and logistics services 4,732 10,255 22,310 18,524
Equipment rental 1,292 870 4,320 3,431
Total operating revenue 98,451 92,191 377,715 388,461
Operating expenses 102,854 104,402 391,070 426,698
Loss from operations $ (4,403) $ (12,211) $ (13,355) $ (38,237)
Operating ratio (a) 104.5 % 113.2 % 103.5 % 109.8 %
Total truckload revenue $ 38,327 $ 36,922 $ 146,944 $ 173,771
Less-than-truckload linehaul revenue 33,986 26,122 127,903 112,030
Total linehaul and dedicated services revenue $ 72,313 $ 63,044 $ 274,847 $ 285,801
Weekly average trucks in service 1,577 1,648 1,531 1,751
Revenue per truck per week (b) $ 3,489 $ 2,911 $ 3,433 $ 3,130
Computational notes:
(a) Operating expenses divided by total operating revenue.
(b) 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 the three and twelve months ended December 31:

Three Months Twelve Months
Truckload 2012 2011 2012 2011
Total linehaul miles (a) 22,625 21,317 86,186 109,065
Loaded miles (a) 19,790 18,658 75,680 96,547
Empty mile ratio (b) 12.5 % 12.5 % 12.2 % 11.5 %
Linehaul revenue per total mile (c) $ 1.52 $ 1.52 $ 1.49 $ 1.43
Linehaul revenue per loaded mile (d) $ 1.73 $ 1.74 $ 1.70 $ 1.62
Linehaul shipments (a) 21.1 21.2 82.0 107.6
Loaded miles per shipment (e) 938 877 923 897
Less-than-truckload
Hundredweight (a) 2,236 1,843 8,761 8,038
Shipments (a) 74.6 61.5 291.5 259.8
Linehaul revenue per hundredweight (f) $ 15.20 $ 14.17 $ 14.60 $ 13.94
Linehaul revenue per shipment (g) $ 456 $ 425 $ 439 $ 431
Average weight per shipment (h) 2,999 3,000 3,006 3,094
Computational notes:
(a) 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 LTL shipments.

The following table summarizes and compares the makeup of our fleets between company-provided tractors and tractors provided by owner-operators as of December 31:

2012 2011
Total company tractors available for freight operations 1,490 1,390
Total owner-operator tractors available for freight operations 317 266
Total tractors available for freight operations 1,807 1,656
Total trailers available for freight operations 3,252 3,388

CONTACT: Frozen Food Express Industries, Inc. Russell Stubbs, President and CEO John Hickerson, EVP and COO John McManama, SVP and CFO (214) 630-8090 Dave Mossberg, Investor Relations Three Part Advisors, LLC 817 310-0051

Source:Frozen Food Express Industries, Inc.