EX-99.1 3 ex99_1.htm EXHIBIT 99.1 PRESS RELEASE DATED MARCH 6, 2007 Exhibit 99.1 Press Release dated March 6, 2007
 
 
EXHIBIT 99.1
 

Contacts:
Stoney M. (“Mit”) Stubbs, Jr., CEO
Thomas G. Yetter, CFO
(214) 630-8090 
(800) 569-9200 
ir@ffex.net
 

 
Frozen Food Express Industries, Inc.
Announces Fourth Quarter, Year-End Results

Dallas, Texas, March 6, 2007--Frozen Food Express Industries, Inc. (Nasdaq: FFEX) today announced its financial and operating results for the three- and twelve-month periods ended December 31, 2006.

Fourth Quarter Recap
For the quarter ended December 31, 2006, freight revenue was $112.4 million, as compared to $139.8 million during the same quarter of 2005. Of the decline in freight revenue, 16% resulted from lower fuel surcharges and 25% was due to the absence during 2006 of revenue related to hurricane-relief efforts that was present during the fourth quarter of 2005. During the fourth quarter of 2006, freight revenue was also negatively impacted by industry-wide excess capacity relative to customer demand for freight services as compared to the same quarter of 2005.

Net income for the fourth quarter of 2006 was $4.3 million, down from $6.4 million for the fourth quarter of 2005. Fourth quarter 2006 net income per diluted share of common stock was $.24 as compared to $.34 for the fourth quarter of 2005. As previously reported, in December of 2006 the company completed the sale of the remaining half of one of its life insurance investments, resulting in a non-taxable gain of $5.1 million.

During the fourth quarter of 2006, the company incurred a $690 thousand loss from its freight operations versus income from freight operations of $9.4 million in the fourth quarter of 2005, which was the best quarter in the company’s 60 plus year history, due in large part to approximately $7.0 million in revenue associated with transportation services and trailer rentals for disaster relief activities in the wakes of Hurricanes Katrina and Rita.

Fourth quarter 2006 operating results were negatively impacted by severance pay related to the company’s ongoing headcount reduction efforts, as well as lower equipment utilization rates. Like many trucking companies, during the latter half of 2006, FFEX accelerated its acquisition of newly-manufactured semi-tractors in order to avoid uncertainties and incremental costs associated with trucks placed into service after 2006.

Stoney M. (“Mit”) Stubbs, President and CEO commented, “We knew the fourth quarter was going to be slow and our revenue results certainly reflected that. The pre-buy of tractors during the latter half of 2006, together with most companies having their trucks fully seated with drivers, resulted in too many trucks chasing the reduced amount of available freight. Utilization and asset productivity rates were down in all major categories.

“Most industry analysts predict that for the first part of 2007 the excess freight capacity will continue to challenge trucking companies. Our preliminary first quarter 2007 revenue and asset utilization forecasts across all of our service lines reflect those challenges. We are cautiously optimistic, however, that as shippers’ inventory levels bottom out later in 2007, also as predicted, the excess capacity currently plaguing our industry will become more in balance with increased freight demand levels. Beyond the first part of 2007, this should help our overall asset utilization and equipment productivity, resulting in improving margins during the latter half of 2007.

“That being said, we are confident that we are making progress in our long-term strategies to cut our overhead, improve non-driver employee productivity and to continue to optimize our freight network to improve efficiency and utilization of our core, revenue-producing assets.”

12-Month Recap
For the 12 months ended December 31, 2006, freight revenue was $483.7 million, as compared to $514.0 million during the twelve-month period of 2005. Freight revenue during 2006 included fuel surcharge revenue of $75.1 million, compared to $63.5 million during 2005.

Income from freight operations for the year ended December 31, 2006 decreased to $11.6 million from $29.7 million for 2005. Contributing factors other than the loss of revenue to the decline in operating income during 2006 as compared to the same period of 2005 were costs associated with hiring and retaining qualified drivers in a tight labor market and lower gains on the sale of equipment.

Net income for the year ended December 31, 2006 was $11.2 million as compared to $20.4 million during 2005. Diluted net income per share of common stock for 2006 was $.61 as compared to $1.09 during 2005.

 Mr. Stubbs commented, “As the market slowed, we continued to experience pricing pressure from customers of our truckload operation. We are working to position our company so that we can support an expense base that enables us to offer attractive pricing while improving margins. Our main focus is on the bottom line. We must continue to work towards improved profitability, even if we have to walk away from less rewarding revenue in the short-term. And we should come out of the other side of this capacity bubble with a company that is better able to compete and prosper in any operating environment.”
 

Key Performance Indicators - Fourth Quarter 2006
Mr. Stubbs added, “We experienced an overall decline in fourth quarter 2006 freight volumes, asset productivity and pricing for our services, as compared to the same period last year, due in large part to the efforts associated with disaster relief activity during 2005. For example, we received extra compensation for capacity relocation last year during the fourth quarter as we moved trucks and trailers beyond our preferred freight geographical footprint and placed them in staging areas where relief efforts were required. Fourth quarter 2006 truckload shipments were down 6.4% and revenue per loaded mile was down 3.3% to $1.48 from $1.53 during the fourth quarter of 2005. Lower pricing and freight volumes contributed to the decline in truckload freight revenue (excluding fuel adjustments) of 20.4% to $60.0 million from $75.4 million during the same period of 2005.

“For our less-than-truckload (“LTL”) services, we saw similar results in freight volumes. Tonnage and total shipments were down 8.9% and 3.6%, respectively, as compared to the fourth quarter of 2005. Revenue per hundredweight, however, increased by about 1% and we believe that we will be able to continue to hold the line on pricing for our LTL services. LTL revenue (excluding fuel adjustments) was down 8.1% to $32.7 million from $35.6 million between the 2005 and 2006 three-month periods.

“Asset productivity for our combined fleet services, measured by revenue per truck per week, declined during the fourth quarter of 2006 to $3,252 from $3,696 as compared to the fourth quarter of 2005. With industry capacity plentiful and demand soft during the fourth quarter, we experienced lower utilization than we would like to see but not too unusual for a typical fourth quarter. As we have said for quite some time, the fourth quarter of 2005 was by far our best-ever quarter due to a number of factors.”

Mr. Stubbs concluded, “We have used this slow period to begin to drive much of the change through our organization. We need to become a stronger organization long-term. We made some tough decisions in the fourth quarter that we believe will begin paying off in the not-too-distant future.”

FFEX will hold a conference call on Wednesday, March 7, 2007 at 10:00 a.m. Eastern Time (9:00 a.m. Central Standard Time) to discuss the three-month and twelve-month 2006 operating results. Individuals wishing to participate in the conference call may do so by dialing (866) 356-3377 for domestic calls, (617) 597-5392 for international calls and entering the passcode 75613783 prior to the beginning of the call. There will also be a live webcast of the conference call that can be accessed by clicking on the webcast icon at http://www.ffex.net. A replay of the webcast will be available on the company's website within two hours after conclusion of the call or by telephone at (888) 286-8010 for domestic calls and (617) 801-6888 for international calls after 12:00 p.m. Eastern Time (11:00 a.m. Central Standard Time) for 30 days following the live webcast. The passcode for the replay will be 95583269.

About FFEX
Frozen Food Express Industries, Inc. is the largest publicly-owned, temperature-controlled carrier of perishable goods (primarily food products, health care supplies and confectionery items) on the North American continent. Its services extend from Canada, throughout the 48 contiguous United States, into Mexico. The refrigerated trucking company is the only one serving this market that is full-service - providing full-truckload, less-than-truckload and dedicated fleet transportation of refrigerated and frozen products. Its refrigerated less-than-truckload operation is also the largest on the North American continent. The company also provides full-truckload transportation of non-temperature-sensitive goods through its non-refrigerated trucking fleet, American Eagle Lines. Additional information about Frozen Food Express Industries, Inc. can be found at the company's web site, http://www.ffex.net

Forward-Looking Statements
This report contains information and forward-looking statements that are based on management's current beliefs and expectations and assumptions which are based upon information currently available. 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. These statements are based on current expectations and are subject to uncertainty and change.

Although 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 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 the company's filings with the Securities and Exchange Commission.


FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Three and Twelve Months Ended December 31,
(In thousands, except per-share amounts)
(Unaudited)

 
 
Three Months
 
Twelve Months
 
 
 
2006
 
2005
 
2006
 
2005
 
Revenue
 
 
 
 
 
 
 
 
 
      Freight revenue
 
$
112,436
 
$
139,759
 
$
483,721
 
$
514,017
 
      Non-freight revenue
 
 
1,086
 
 
2,120
 
 
9,652
 
 
10,110
 
 
 
 
113,522
 
 
141,879
 
 
493,373
 
 
524,127
 
Costs and expenses
 
 
  
 
 
  
 
 
  
 
 
  
 
      Salaries, wages and related expenses
 
 
32,866
 
 
36,393
 
 
130,554
 
 
133,545
 
      Purchased transportation
 
 
26,543
 
 
31,786
 
 
114,777
 
 
125,147
 
      Fuel
 
 
19,789
 
 
22,480
 
 
87,757
 
 
81,151
 
      Supplies and expenses
 
 
14,508
 
 
14,956
 
 
59,244
 
 
63,023
 
      Revenue equipment rent
 
 
7,398
 
 
8,035
 
 
30,551
 
 
29,338
 
      Depreciation
 
 
5,281
 
 
5,019
 
 
20,606
 
 
21,857
 
      Communications and utilities
 
 
1,115
 
 
1,272
 
 
4,291
 
 
4,285
 
      Claims and insurance
 
 
4,639
 
 
9,029
 
 
18,279
 
 
19,910
 
      Operating taxes and licenses
 
 
1,130
  
 
1,272
  
 
4,513
  
 
4,692
  
      Gains on sale of equipment
 
 
(770)
  
 
(1,167)
  
 
(3,379)
  
 
(4,740)
  
      Miscellaneous operating expenses
 
 
627
  
 
1,300
  
 
4,969
  
 
6,144
 
 
 
 
113,126
  
 
130,375
 
 
472,162
  
 
484,352
 
Non-freight costs and operating expenses
 
 
1,112
  
 
2,411
 
 
9,818
  
 
10,161
 
 
 
 
114,238
  
 
132,786
 
 
481,980
  
 
494,513
 
(Loss) Income from operations
 
 
(716
)
 
9,093
 
 
11,393
  
 
29,614
 
 
 
 
    
 
  
 
 
    
 
  
 
Interest and other expense (income)
 
 
    
 
    
 
    
 
    
Interest expense
 
 
211
  
 
1
 
 
470
  
 
278
 
Interest income
    
(174)
    
(135)
    
(566)
    
(329)
  
Equity in earnings of limited partnership
    
(637)
    
(247)
    
(1,115)
    
(686)
  
Life insurance and other
    
(5,119)
    
(562)
    
(5,090)
    
(3,022)
  
     
(5,719)
    
(943)
    
(6,301)
    
(3,759)
  
Income before income tax
 
 
5,003
  
 
10,036
 
 
17,694
 
 
33,373
 
Income tax provision
 
 
687
 
 
3,681
 
 
6,468
 
 
12,936
 
Net income
 
$
4,316
 
$
6,355
 
$
11,226
 
$
20,437
 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
Net income per share of common stock
 
 
  
 
 
  
 
 
  
 
 
  
 
      Basic
 
$
0.25
 
$
0.36
 
$
0.63
 
$
1.15
 
      Diluted
 
$
0.24
 
$
0.34
 
$
0.61
 
$
1.09
 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
Weighted average shares outstanding
 
 
  
 
 
  
 
 
  
 
 
  
 
      Basic
 
 
17,504
 
 
17,770
 
 
17,853
 
 
17,802
 
      Diluted
 
 
17,941
 
 
18,648
 
 
18,517
 
 
18,739
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES
Operating Statistics
Three and Twelve Months Ended December 31,
(Unaudited)
 
 
 
 
Three Months
 
Twelve Months
 
Freight revenue from [a]: 
 
2006
  
2005
  
2006
  
2005
 
Full-truckload linehaul services
 
$
55.4
 
$
62.6
 
$
237.5
 
$
263.2
 
Dedicated Fleets
 
  
4.6
 
  
12.8
 
  
21.1
 
  
31.5
 
Total full-truckload
 
  
60.0
 
  
75.4
 
  
258.6
 
  
294.7
 
Less-than-truckload (“LTL”) services
 
  
32.7
 
  
35.6
 
  
129.8
 
  
131.2
 
Fuel surcharges
 
  
15.7
 
  
20.0
 
  
75.1
 
  
63.5
 
Freight brokerage
 
  
2.8
 
  
4.0
 
  
12.5
 
  
15.6
 
Equipment rental
 
  
1.2
 
  
4.8
 
  
7.7
 
  
9.0
 
Total freight revenue
 
  
112.4
 
  
139.8
 
  
483.7
 
  
514.0
 
Freight operating expenses 
 
  
113.1
 
  
130.4
 
  
472.2
 
  
484.4
 
Income from freight operations
 
$
(0.7
) 
$
9.4
 
$
11.6
 
$
29.7
 
Freight operating ratio [b] 
 
  
100.6
%
  
93.3
%
  
97.6
%
  
94.2
%
 
 
    
 
    
 
    
 
    
 
Total full-truckload revenue
 
$
60.0
 
$
75.4
 
$
258.6
 
$
294.7
 
LTL revenue
 
  
32.7
 
  
35.6
 
  
129.8
 
  
131.2
 
Total linehaul and dedicated fleet revenue
 
$
92.7
 
$
111.0
 
$
388.4
 
$
425.9
 
Weekly average trucks in service
 
  
2,169
 
  
2,285
 
  
2,222
 
  
2,282
 
Revenue per truck per week [c]
 
$
3,252
 
$
3,696
 
$
3,352
 
$
3,579
 
 
Statistical and revenue data [d]: 
 
    
 
    
 
    
 
    
 
Full-truckload total linehaul miles [e]
 
  
41.5
 
  
45.7
 
  
177.6
 
  
192.9
 
Full-truckload loaded miles [e]
 
  
37.4
 
  
41.0
 
  
160.6
 
  
173.3
 
Full-truckload empty mile ratio [f]
 
  
9.9
%
  
10.3
%
  
9.6
%
  
10.2
%
Full-truckload linehaul revenue per total mile
 
$
1.33
 
$
1.37
 
$
1.34
 
$
1.36
 
Full-truckload linehaul revenue per loaded mile
 
$
1.48
 
$
1.53
 
$
1.48
 
$
1.52
 
Full-truckload linehaul shipments [g]
 
  
39.4
 
  
42.1
 
  
168.3
 
  
181.6
 
Full-truckload loaded miles per shipment
 
  
949
 
  
974
 
  
954
 
  
954
 
LTL hundredweight [g]
 
  
2,094
 
  
2,298
 
  
8,410
 
  
8,800
 
LTL linehaul revenue per hundredweight
 
$
15.62
 
$
15.49
 
$
15.43
 
$
14.91
 
 
 
    
 
    
 
    
 
    
 
Tractors in service as of December 31
 
  
2,187
 
  
2,266
 
  
2,187
 
  
2,266
 
Trailers in service as of December 31
 
  
3,919
 
  
4,293
 
  
3,919
 
  
4,293
 
Non-driver employees as of December 31
 
 
997
 
 
1,024
 
 
997
 
 
1,024
 

Notes:
a)  
Revenue amounts are stated in millions of dollars.  The amounts presented in the table may not agree to the amounts shown in the accompanying statements of income due to rounding.
b)  
Freight operating expenses divided by total freight revenue.
c)  
Total linehaul and dedicated fleet revenue divided by number of weeks in period divided by average trucks in service.
d)  
The year-to-date and quarterly data presented in the table for the third quarters of 2006 and 2005 reflect changes in the manner in which data regarding the numbers of miles, shipments and hundredweight is tabulated.  Accordingly, the addition of the quarterly data presented in the table to the year-to-date data reported in previous reports will not necessarily agree with the year-to-date data reported in this table. 
e)  
In millions.
f)  
One minus the quotient of full-truckload loaded miles divided by full-truckload total linehaul miles.
g)  
In thousands.





Other selected, unaudited, financial information for the three and twelve months ended December 31, 2006 and 2005 is as follows:
  
 
  
Three Months
  
Twelve Months
  
 
  
2006
  
2005
  
2006
  
2005
  
Depreciation and amortization expense
 
$
6,362
  
$
6,372
  
$
25,702
  
$
26,979
  
Expenditures for property, plant and equipment
    
8,647
    
13,433
    
39,667
    
41,974
  
Proceeds from sale of property, plant and equipment
    
1,183
    
1,516
    
14,462
    
15,470
  


Selected, unaudited, financial information as of December 31, 2006 and 2005 is as follows:
  
 
  
2006
  
2005
  
Cash
  
$
9,589
  
$
10,957
  
Long term debt
   
4,900
    
-