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