EX-99.1 2 ffex_8kex99-1.txt EXHIBIT 99.1 FOR: Frozen Food Express Industries, Inc. FROM: Mike Engleman LISTED: Nasdaq (FFEX) Mike Engleman/Associates COMPANY CONTACTS: 11308 Valleydale Stoney M. (Mit) Stubbs, Jr. (CEO) Dallas, TX 75230 F. Dixon McElwee, Jr. (CFO) (214) 373-6464 (214) 630-8090 FOR IMMEDIATE RELEASE --------------------- FROZEN FOOD EXPRESS INDUSTRIES REPORTS NET INCOME UP 37% FOR SECOND QUARTER Dallas, Texas, August 2, 2004--Frozen Food Express Industries, Inc. (Nasdaq: FFEX) today reported second quarter 2004 net income of $3,492,000 (19 cents per share, diluted) a 37% increase over 2003's second quarter, coming on a 9.3% increase in revenue. For the second quarter of 2003, net income was $2,547,000 (15 cents per share, diluted) and revenue was $103,731,000. Revenue for 2004's second quarter was $113,335,000. Operating profits improved from $2.5 million during the second quarter of 2003 to $5.1 million for 2004's second quarter. During the second quarter of 2003, AirPro, the non-freight business of FFEX incurred an operating loss of $381,000, compared to an operating profit of $556,000 during the 2004 second quarter. For the six months ended June 30, AirPro reported an operating loss of $976,000 for 2003 and operating income of $566,000 for the 2004 period. Freight revenue improved from $97.7 million during the 2003 quarter to $109.8 million during the second quarter of 2004. Higher fuel prices during the three and six months ended 2004, as compared to the same periods of 2003 resulted in significant increases in fuel surcharge revenue. For the three months ended June 30, 2003 and 2004, fuel surcharge revenue was $7.2 million and $3.8 million, respectively. For the six months ended June 30, 2004, revenue increased by $21.8 million (11.1%) as compared to the year-ago quarter. Net income for the six months ended June 30, 2004 improved to $5,432,000 (30 cents per share, diluted) from 2003's six-month net income of $1,879,000 (11 cents per share, diluted). Stoney M. (Mit) Stubbs, Jr., chairman and CEO, said that, while he was pleased with the 2004 quarter's results, "we expect things to get better." "Our business should continue to improve because, after the last few years of dealing with a softening demand for trucking transportation services caused by a sloppy economy, this new too-much-freight-for-too-few-trucks supply vs. demand environment should improve our ability to raise freight rates to pay us back for the last five years of non-reimbursed increases in our operating costs. "We're slowly getting our freight rates to where they need to be to compensate for years of rising expenses and declining operating profit margins. But we're not there yet." Mr. Stubbs pointed to this year's second quarter freight revenue gain and contrasted it to the quarter's operating income increase. "Much of the reason for our operating improvement this year has been caused by the supply/demand imbalance enabling us to use our fleet more efficiently. I believe that, for the second half of this year, net income gains in our industry will come from carriers who are finally able to raise their freight rates after wringing out every ounce of efficiency they can from their trucking operations." FFEX recently purchased a liability insurance policy that lowered its deductible from $5 million to $3 million. Mr. Stubbs commented, "We were able to afford the improved insurance in no small part because of the performance of our drivers. "Our drivers earned first place in a national safe-driving competition conducted by the trucking industry's primary national trade organization, the American Trucking Associations. The first-place award was in the General Commodities Truckload/Line-Haul Division for companies whose fleets log 100 million miles, or more, annually." Those same drivers placed second among fleets traveling 100 million miles, or more, a year in a safe-driving competition conducted by the Truckload Carriers Association. During 2003, FFEX trucks covered almost 250 million miles. "Were it not for our drivers' skill and safe driving, we would not have been able to afford our new reduced-retention liability coverage," said Mr. Stubbs. "One more thing I want to mention", said Mr. Stubbs. "Last month, we renegotiated our deal with the bankers. Our line of credit is now $50 million, compared to $40 million, our interest rate is down by a half percent and the deal we signed lasts through May 2007. "All in all, 2004 has been a pretty good year so far, and we have met several of the challenges that we face as we move forward. We still have much to do, and will continue to look for opportunities to improve." CONFERENCE CALL AND WEB CAST ---------------------------- As previously announced, FFEX will hold a telephonic conference call tomorrow morning, August 3, 2004 at 10:00 am central time (11:00 am eastern time) to discuss the three and six month 2004 operating results. Individuals wishing to participate in the conference call may do so by dialing (800) 659-2056 or (617) 614-2714 and entering the pass code 14743494 prior to the beginning of the call. There will also be a live web cast of the conference call that can be accessed by clicking on the web cast icon at www.ffex.net. A replay of the web cast will be available on the company's web site or by telephone at (888) 286-8010 or (617) 801-6888 for 90 days following the live web cast. The pass code for the replay will be 89524405. SUPPLEMENTARY INFORMATION ------------------------- Information about FFEX's operating results during the three and six month periods ended June 30, 2004 and 2003 is presented in the following table:
Three Months Six Months 2004 2003 2004 2003 ---- ---- ---- ---- Full Truckload: Revenue (A) (B) $70.8 $63.4 $138.0 $120.7 Total Miles (A) 55.6 48.2 110.2 97.5 Shipments (C) 51.3 52.1 104.9 99.1 Per-mile revenue (B) $1.27 $1.32 $1.25 $1.24 Per-shipment revenue (B) $1,380 $1,217 $1,315 $1,218 Miles per shipment 1,084 925 1,050 984 Empty mile ratio 8.3% 9.5% 8.6% 9.1% Less-than-truckload: Revenue (A) (B) $30.2 $29.3 $58.9 $56.3 Total Miles (A) 10.3 10.3 19.9 19.8 Shipments (C) 87.7 80.4 172.7 158.2 Per-mile revenue (B) $2.93 $2.84 $2.96 $2.84 Per-shipment revenue (B) $ 344 $364 $ 341 $ 356 Empty mile ratio 8.1% 6.9% 8.0% 7.2% Other Information: As of June 30, Tractors in service 2,265 2,248 2,265 2,248 Trailers in service 3,861 3,670 3,861 3,670 (A) In millions (B) Excludes surcharge revenue (C) In thousands
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 distribution 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 arm, American Eagle Lines. 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 have a bearing on operating results 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, 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 (Unaudited and in thousands, except per-share amounts)
For the Three Months For the Six Months Ended June 30, Ended June 30, ---------------------- --------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Revenue Freight revenue $ 109,819 $ 97,695 $ 212,235 $ 187,420 Non-freight revenue 3,516 6,036 5,988 8,969 --------- --------- --------- --------- 113,335 103,731 218,223 196,389 --------- --------- --------- --------- Costs and expenses Freight operating expenses Salaries, wages and related expenses 26,744 26,787 52,293 50,565 Purchased transportation 27,354 23,673 53,693 45,407 Supplies and expenses 32,160 26,768 61,021 53,223 Revenue equipment rent 7,888 8,359 16,138 16,241 Depreciation 4,878 3,239 9,490 6,751 Communications and utilities 942 950 1,916 2,023 Claims and insurance 2,910 2,805 5,798 5,796 Operating taxes and licenses 1,163 817 2,291 1,891 Miscellaneous expense 1,193 1,439 1,698 2,576 --------- --------- --------- --------- 105,232 94,837 204,338 184,473 Non-freight costs and operating expenses 2,960 6,417 5,422 9,945 --------- --------- --------- --------- 108,192 101,254 209,760 194,418 --------- --------- --------- --------- Income from operations 5,143 2,477 8,463 1,971 Interest and other (225) (1,124) 1 (761) --------- --------- --------- --------- Income before income tax 5,368 3,601 8,462 2,732 Provision for income tax 1,876 1,054 3,030 853 --------- --------- --------- --------- Net income $ 3,492 $ 2,547 $ 5,432 $ 1,879 ========= ========= ========= ========= Net income per share of common stock Basic $ .20 $ .15 $ .32 $ .11 ========= ========= ========= ========= Diluted $ .19 $ .15 $ .30 $ .11 ========= ========= ========= ========= Weighted average shares outstanding Basic 17,209 16,762 17,174 16,736 ========= ========= ========= ========= Diluted 17,937 16,999 17,894 16,951 ========= ========= ========= =========
FROZEN FOOD EXPRESS INDUSTRIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited and in thousands)
June 30, Dec. 31, 2004 2003 -------- -------- Assets Current assets Cash and cash equivalents $ 2,852 $ 1,396 Accounts receivable, net 55,159 55,094 Inventories 3,222 4,054 Tires on equipment in use 4,819 5,657 Deferred income taxes 1,267 2,657 Other current assets 6,096 7,843 -------- -------- Total current assets 73,415 76,701 Property and equipment, net 64,279 66,551 Other assets 13,231 12,358 -------- -------- $150,925 $155,610 ======== ======== Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 24,758 $ 25,045 Accrued claims 7,213 7,195 Accrued payroll 6,675 3,813 Accrued liabilities 2,301 2,907 -------- -------- Total current liabilities 40,947 38,960 Long-term debt 1,000 14,000 Deferred income taxes 4,246 2,878 Accrued claims and liabilities 14,642 15,718 -------- -------- 60,835 71,556 -------- -------- Shareholders' equity Par value of common stock (17,379 and 17,281 shares issued) 26,069 25,921 Capital in excess of par value 1,192 1,097 Retained earnings 63,281 57,849 -------- -------- 90,542 84,867 Less - Treasury stock (128 and 195 shares), at cost 452 813 -------- -------- Total shareholders' equity 90,090 84,054 -------- -------- $150,925 $155,610 ======== ========