Frozen Food Express income eases 45% in fiscal 2006

by Staff
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DALLAS — Declines in freight volumes, asset productivity and pricing for services led to reduced earnings at Frozen Food Express Industries, Inc. in fiscal 2006. Net income in the year ended Dec. 31, 2006, was $11,226,000, equal to 63c per share on the common stock, down 45% from $20,437,000 in fiscal 2005. Net sales for the year were $493,373,000, down 6% from $524,127,000.

"As the market slowed, we continued to experience pricing pressure from customers of our truckload operation," said Stoney M. Stubbs, president and chief executive officer. "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."

Net income during the fourth quarter of 2006 was $4,316,000, or 25c per share, down 32% from $6,355,000, or 36c, during the same quarter of 2005. Frozen Food said the fourth-quarter of 2005 benefited from greater demand for its services in light of disaster relief efforts after Hurricanes Katrina and Rita.

"We knew the fourth quarter was going to be slow and our revenue results certainly reflected that," Mr. Stubbs said. "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." During the last quarter of 2006, Frozen Food Express had a loss of $690,000 in freight operations compared with the same quarter of 2005.

Mr. Stubbs said industry analysts are predicting excess freight capacity will challenge trucking companies, and preliminary figures for the company reflect that.

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