Dallas-based refrigerated carrier Frozen Food Express Industries (FFE) said its net income for the third quarter doubled that of the same quarter in 2003 on 9% higher revenues. This indicates demand remains strong in a period when it usually lags, according to chairman & CEO Stoney ‘Mit’ Stubbs Jr.
“Historically, our year has been seasonal, with demand for our refrigerated services highest during the warm months,” he said. “The first quarter has almost always been our weakest, the second quarter our best, followed by a not-quite-as-strong third quarter and a somewhat softer fourth quarter. But net income for our third quarter was slightly higher than this year's second quarter profit, which tells me that the growth of demand continues to take much of the seasonality out of our operations.”
For the third quarter, FFE earned $3.52 million on revenue of $117.1 million, compared to $1.7 million and $107.8 million, respectively, in the third quarter last year. For the first nine months of 2004, FFE posted profits of $8.95 million on revenue of $335.3 million, compared to net income of $3.58 million on revenue of $304.1 million over the same period in 2003.
Stubbs said FFE’s results would have been higher had it not been for higher insurance and claims costs plus continued increases in the price of diesel fuel.
“Our inability to recover 100% of the higher third-quarter fuel prices cost us more than $500,000 in pre-tax income when compared to the fuel situation in the third quarter of 2003,” he added. Insurance and claims expenses were up 38% to $5.59 million in a quarter-to-quarter comparison.
“It is a fact of life in this business that the expenses that are the hardest to control are those related to traffic accidents,” Stubbs said. “We’ve had a very good record since 2000 even with the spike of accident costs in this year’s third quarter, which amounted to 4.9% of freight revenue for the quarter. Claims and insurance expense for the first nine months of the year amounted to 3.5% of our freight revenue.”
Stubbs also said FFE’s fleet size declined by about 2% since the end of the third quarter last year, primarily due to the loss of owner-operators and the continuing driver shortage that forced the company to park from 20 to 40 trucks, or up to 2% of its fleet, on any given day during the third quarter this year.