ArcBest Corp (ARCB) 2007 Q1 法說會逐字稿

Good morning. My name is Lynn and I will be your conference operator today. At this time, I would like to welcome everyone to the Arkansas Best first quarter 2007 earnings conference call. All lines have been placed to mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [OPERATOR INSTRUCTIONS]

I would now like to turn the conference over to Mr. David Humphrey, Director of Investor Relations. Please go ahead, sir.

Welcome to the Arkansas Best Corporation first quarter 2007 earnings conference call. We will have a short discussion of the first quarter results then we will open up for a question and answer period.

Our presentation this morning will be done by Mr. Robert A. Davidson, President and Chief Executive Officer of Arkansas Best Corporation and Ms. Judy R. McReynolds, Senior Vice President, Chief Financial Officer and Treasurer of Arkansas Best Corporation.

We thank you for joining us today. In order to help you better understand Arkansas Best Corporation and its results, some forward-looking statements could be made during this call. As we know, forward-looking statements by their very nature are subject to uncertainties and risks. For a more complete discussion of factors that could affect the Company's future results, please refer to the forward-looking statements section of the Company's earnings press release and the Company's most recent SEC public filings. We will now begin with Judy.

Thank you for joining us this morning. I'd like to update you on Arkansas Best and ABF first quarter results and then I will turn over to Bob for further discussion of some specific issues related to the quarter.

The total Company revenues and earnings figures that I'll report are from continuing operations. I will start with our total Company results.

Our first quarter revenues were $423 million, down just slightly from last year's figure of $425 million. Our diluted earnings per share for the quarter were $0.19 a share versus $0.23 a share for last year's first quarter.

As you know, we have an unfunded supplemental pension plan for our executive officers. In the first quarter, benefit distributions associated with this plan, resulted in us recording pretax charges of $1.1 million, or $0.03 a share net of taxes. In the first quarter of last year, benefit distributions associated with this plan resulted in pretax charges of $8.4 million, or $0.20 a share.

Without these charges, our first quarter earnings per share were $0.22 a share versus $0.43 a share in last year's first quarter. In each of the remaining quarters of 2007, we continue to expect to have charges related to this plan, but none of them will be significant to our results.

You'll recall that we closed this plan to new participants at the end of 2005, and now the majority of our officers are on a new performance-based plan.

Next, I'd like to turn to cash flows and I'd like to highlight for you some of the more significant items that we had in the first quarter. But if you're looking for the full details, it's in our GAAP cash flow statement that's attached to our earnings press release.

Our operating cash flows for the quarter were $15 million; net purchases of property and equipment were $19 million. We purchased treasury stock for nearly $5 million and we paid dividends on our common stock for $4 million. Our balance of cash and short-term investments was $127 million at the end of March and this compares to about $140 million at the end of last year.

With excess cash on our balance sheet and virtually no debt, we often get questions about how we will use our financial position. We plan to continue to use our balance sheet to support growth opportunities, primarily at ABF and we plan to continue paying our quarterly cash dividend. We also have $18 million left on our share repurchase program that we'll continue to use on an opportunistic basis. With less than a year left before the expiration of ABF Labor Agreement, we feel our conservative financial position is appropriate at this time.

Our liquidity and financial situation puts us in an excellent position to deal with opportunities that might arise during contract negotiations, including exploring solutions to deal with the underfunded multi-employer pension plan.

We continue to expect the range of our 2007 net capital expenditures to be between $110 and $135 million. At this point we would expect to be at the low point of this range, based on our current business levels.

As always, we have the flexibility to reduce our capital expenditures plans or sell excess equipment to match business levels which we've done in the first quarter of this year.

Now I would like to move on to ABF' results for the quarter. ABF reported first quarter revenues of $407 million, a decline of 1.5% per day from last year's revenues of $414 million. For the first quarter, ABF daily average tonnage declined 5.8%. If you exclude the pension settlement charges I mentioned before, from both periods, ABF first quarter operating ratio was 98-3 compared to a 95-9 in the first quarter of last year.

And now I will turn over to Bob for his comments about our first quarter performance.

Thank you, Judy. It's oak pollen season in the Ozarks and I'll apologize for my voice. I've always had a face that was perfect for radio and now I've got the baritone voice to match that.

We can't really be satisfied with an increase in operating ratio of 240 basis points. However, it's not a bad result when you consider ABF decline in daily tonnage, the impact of adverse weather and our ongoing investment in a regional expansion.

This year's first quarter results were dominated by the 5.8% tonnage decline, particularly against tough comps in the first quarter of '06. A year ago, in that first quarter of '06, ABF tonnage levels were up 4.4% compared to the previous year. Considering this year's swing in business levels, the effect of negative operating leverage in ABF Network, was considerably less than the 300 or 350 basis points that we've seen in previous business declines, most recently in late 2001 and early 2002.

If you go back to the fourth quarter conference call, you'll recall that we told you that ABF, along with most of the industry, saw a significant year-over-year reversal of tonnage trends beginning in October of 2006, although other carriers may have seen the softness beginning a month sooner.

In effect, we geared up to handle the seasonal fall peak in business, which never occurred, despite assurances from our customers. So in November, ABF initiated cost reductions in order to better align our network with the available business levels. And with the exception of a slight improvement in February, the tonnage declines that we experienced in last year's fourth quarter have continued into 2007. However, the reductions made in ABF's expenses, combined with our ongoing pricing discipline, have lessened the impact of the negative operating leverage compared to previous downturns or compared to the fourth quarter of 2006.

The first quarter's 5.8% tonnage decline was fairly consistent during each month, with January's decline a little worse than average, February a little better, and March a little worse. So far in April, the year-over-year tonnage trend is about the same as we saw in March.

April's tonnage is being affected by the calendar effects you always see with the variation in Easter timing and by even tougher comps in the second quarter of '06. As we previously told you, in this year's first quarter, ABF's regional performance model initiative did not have the significant impact on system revenue. The cost associated with RPM increased ABF's operating ratio by 120 basis points. Unusually severe weather in February added about a half a percentage point for the first quarter OR.

Compared to last year, ABF's first quarter operating ratio was improved by 70 basis points, due to lower expenses associated with worker's comp and third party casualty claims. You may recall in the first quarter of last year, we told you that those costs were unexpectedly high and out of the norm and that they'd return to normal, and indeed they did. The combined cost of these two programs in the first quarter of '07 were in line as a percent of revenue with ABF's recent five-year experience.

These claim statistics are positively affected by ABF's impressive safety record. You'll recall that in 2006, ABF's DLT reportable accidents per million miles decreased 14% over the road and 25% in the city, compared to 2005.

In the first quarter of this year, serious accidents on the road were down even further, although severe weather caused an increase in accidents in the city. Overall, that's remarkable improvement in serious accidents, despite the significant number of new drivers we hired last year and the freight that we've moved from the rail to the road.

We believe that ABF is the safest trucking company on the highway and as you can tell, we're proud of that record.

In this year's first quarter, ABF continued its previous record of superior cargo handling. Our cargo claims ratio as a percent of revenue was 0.72. During the first quarter, ABF handled over 99% of the shipments claim-free and both of these statistics were at the most favorable levels in the last 25 years. Damage-free handling of shipments sets ABF apart in the marketplace. This is one example of the value that ABF offers to customers and it helps strengthen the relationships that we have. It's also one of the things that helps us gain new business.

Despite competitive pricing associated with the difficult freight environment, in the first quarter, ABF was able to maintain acceptable price increases on all its business. Our total billed revenue per hundredweight in the first quarter was up 4%. This figure was positively impacted by the effects of profile changes, including a decline in the average revenue per shipment and also an increase in the shipment commodity class.

ABF secured average first quarter price increases of 3.4% from customers under contract and deferred pricing agreements and that's a statistic that's not affected by profile.

During the challenging business environment like we're experiencing now, ABF's emphasis on individual account profitability is even more important than normal. Because of the fixed cost element of our business, maintaining margins on the broad base of our accounts ensures that acceptable returns are generated. It also allows us to decide when an account is not making a contribution to profitability, even during a period of tonnage decline.

ABF's regional performance model, branded as RPM, is now fully operational in the eastern 2/3 of the United States and ABF is providing next-day and second-day service in 10 of our 12 operating regions. Full marketing of the initiative began in January and I can tell you our sales force is fully engaged and they're genuinely excited about the broad-base service that ABF now offers.

This business, of course, is already moving with other carriers. The establishment of long-term profitable relationships in the regional market will require patience on our part. However, the potential for significant future revenue growth will be an important element in ABF's ongoing success. We're very comfortable with the level of our investment in this market, especially compared to the huge potential that it holds for our company.

I think we're now ready to take some questions.

[OPERATOR INSTRUCTIONS] Justin Yagerman of Wachovia Capital Market.

I just wanted some clarification, Bob, on your comment, when you were talking about tonnage through the quarter and in April. I guess, was April in line with kind of the decline you saw in March? Are we to assume that it's a little bit worse than 5.8% decline?

Yes, that's true, Justin.

So, as you stand here, I guess in April and now we're almost through the month, so you've got a pretty good look at it, how is that trended maybe through April, if there's more granularity, has it gotten better in the later part of April? Are your customers saying anything about pick-up? Because we're now I guess two quarters into a decline in the freight environment and I'm just trying to gauge a sense, as I'm sure you are, of where the inflection point is and how far out it is.

Justin, I think it's hard enough to draw any conclusions on part of the month. It's even harder to judge the differences within the month, particularly when you consider that you had Good Friday occurring on different weekends last year versus this year. I think that the communication that tonnage in April looks like it's about on par with March is probably the best guidance we can give you on the current levels.

Okay. That's fair. I completely understand. And in terms of pricing, I guess to clarify the comments there, you had some pretty significant mix shift issues going on with weight per shipment and I guess any kind of comment on how length of haul changed in the quarter would be interesting as well. But if you had the mix-adjusted, was that 3.4% number--is that kind of how we should think about rate up in the quarter?

And then I guess, how does that correspond to the tonnage declines that you guys have been seeing? Are your customers paying up for service or how are those rate negotiations going when you talk to them?

Of course, the 4% nominal revenue per hundred increase was affected a little bit by the weight per shipment decline. It was affected a little bit because the class was higher. I think you could characterize our length of haul as flat, although it was actually down just a tick. And you had just a little bit of impact from fuel surcharge. But even when you factor all those elements out, I think although they're different statistics, the 3.4% increase on contract renewals is probably indicative of the pricing in the marketplace.

I think we also had some situations where we may have lost some low-yielding business and replaced it or partially replaced it with some higher-yielding business. But all in all, pricing is certainly competitive out there, but as you can tell from the numbers, not overly so.

I guess the last question is, in regards to what your experience has been so far in the regional market, you said revenue hasn't been meaningful, there has been some cost associated. But I'm more curious what your experience is as you go out there and sell the product, where do you see more demand? Traditionally in the long-haul market, you guys have positioned yourself as a service focus, less price sensitive company, so you're trying to garner a premium price for premium services. Is that your approach to the regional market and is that what the regional market is asking for, I guess more importantly? Or are you kind of adjusting your approach as you go at the regional market?

You'll always see us selling value and we've got a lot of value to bring the customers in this market. I've talked a lot about cargo care as something that's very important to customers. The fact that we answer our own phones, rather than forward everything to some centralized facility is honestly important to customers. As I said earlier, and it's important to remember, this initiative is not having a meaningful effect on ABF system revenue yet, but we're opening this up in an environment where for the first time in a long time, the regional business is growing less or contracting more than the long-haul business and never the less, we're starting to see some separation in our tonnage numbers, comparing the lanes where we initiated RPM or those where we did not. So, no meaningful impact, but we're seeing some encouraging signs.

Is there any kind of timetable for when you would expect a meaningful impact?

Don't have an answer for that. But as I said earlier, our investment in this is modest compared to the upside potential and we're going to go the distance with it.

Edward Wolfe of Bear Stearns.

Bob, at a recent analyst meeting, you talked about things being a little bit worse than the way they came out. Specifically, you talked about negative operating leverage to fourth quarter '06 continuing in first quarter, including 300 to 350 from weak tonnage, 50 from weather and 100 or so from RPM. Does that mean March came in better than you thought? How should we look at that versus how you felt at that time?

Well, you know, when I made the comments in New York, what I said was that historically periods of negative operating leverage have cost us 300 to 350 basis points and I was careful not to characterize the current quarter, because we don't give guidance. I also said that RPM was costing us about 1 point. It actually cost us 120 basis points. And I quantified weather at a half a point, which we already knew what that was, so that was the number I gave.

So, any difference between those numbers and what actually happened is the fact that we were perhaps a little more effective in the first quarter in controlling expenses than we historically have been.

You're showing this other line that's up a million in the quarter versus down 550 a year ago. What is in that and how do we think about that going forward?

Are you talking about the operating income, other line?

Yes, exactly.

It's got a few things in there. That's where we would report fleet net and kind of the mix of our other smaller subsidiaries. And when you're doing a comparison to last year, last year also includes some parent company costs. We had some retiring officers so we don't have that recurring. We had a little bit of improvement in FleetNet's results, which is good. And those numbers we never expect to be very large, but they can be slightly negative or slightly positive.

I've never seen it up a million and I'm just trying to figure out, going forward, how should we think about that? Any ideas? Is this kind of an ongoing number?

Well, that's what I just said. I think it should be just slightly negative or slightly positive. But you know, not material numbers.

Okay. So if I remove that from what you reported and add back the million for the underfunded insurance, you had about 6.8 million from LTL, is that how I should think about that? And then a million from all the other businesses, to get to the 7-8?

Yes, I think that's an okay way to think about it.

The ongoing, you said in the next four quarters, Judy, or three quarters, there's going to be more underfunded sup pension expense?

Yes. We're estimating the total of all the quarters that remain, to be somewhere in the neighborhood of $600,000.

And kind of if we spread that out over three, that's a pretty fair way to do it?

Yes. It's pretty even.

Okay. Bob, how do you think about--you said tonnage--did I get you right that April tonnage is similar to the minus 6 that we saw in the first quarter?

We said that March was a little worse than the average 5.8 decline for the quarter and that April was on par with March.

Okay. How do we think about revenue per hundred that was billed at 4.0, as you go out over the next couple of quarters, does 4.0 feel--I know you don't have a crystal ball, but you're starting to do proposals and bids and stuff. Does 4.0 feel like it's going to be a good number to use, a little less, a little more, what's your thought process?

I have no way to predict that. It depends a lot on the mix. If RPM begins to get traction and the average haul goes down materially, you'll see that number go down. On the other hand, we just put in a general rate increase, which only impacted one week of the first quarter and will obviously impact all of the second quarter. So I don't know how those factors will come together, Ed.

Where do you see pricing right now? Is 4% a good number for pricing, you know, if you take out fuel and mix and that kind of stuff?

As I said a few minutes ago, I think maybe the 3-4 number is a number that seems more indicative of what's taking place. I think we have another carrier report this morning that had a number north of that. So, I don't know how to predict it. There's going to be a lot of moving parts in yield and I just couldn't feel comfortable predicting a number for you.

But rather than yield just directionally pricing, when we talk to shippers right now, we're hearing bids coming back flat to negative. Are you sensing for some of the bigger shippers, those same bids or are we talking to the wrong people?

Well Ed, if you recall back over many quarters, I think you and I probably had a different perspective on that issue for a long time. All I can tell you is what our experience has been and you see it in black and white.

But I'm talking about going forward, because as you said, the GRI just went into effect, so going forward from here is when the bids will come in. You must have some sense of that right now, no?

Well, I feel comfortable with where we are, but again, I don't know how to predict that.

Okay. The timing of RPM, when should we start to see some real revenue here?

I don't know. As I indicated to Justin, we're comfortable with the investment. We're starting to see some movement. Results aren't material, but we're spending $20 million a year on this and it looks like a great investment. We're prepared to go forward.

Is there an official marketing day or kickoff or something though?

We kicked off the eastern 2/3 of the United States in January.

And how about the rest of the country, any date for that?

There's no announcement.

Okay. And there's no goal 12 months from now, goal to achieve, either internally or externally?

Well, if there were a goal internally, I wouldn't share it, but again, this is going to be good for us and all this freight has a home. We're going to take it away on the basis of value, rather than price, which means it will be slower coming in, but it will stay with us. It will be more predictable and more stable. So it's a good long-term investment.

I'm sorry if I missed this, did you give RPM cost in the quarter versus what they are going forward?

Well, we said that RPM impacted our results in the first quarter by 120 basis points and we don't have a prediction going forward.

[OPERATOR INSTRUCTIONS] Jordan Alliger of Deutsche Bank.

You mentioned and obviously saw the effects of cost reductions and productivity, is that primarily centered on the labor flexing or are there other things?

It's primarily labor.

Okay. And then, obviously, who knows what April and May is going to bring from a volume standpoint, but just from a big picture standpoint, assuming volumes stay negative for the second quarter in some order of magnitude, are you able to generate the productivity to see the normal ramp in profitability or margin from first quarter to second quarter? Because normally you see that just on the magnitude of things. But, if volumes were to stay down 3-4-5% over the full quarter, do you get the normal sequential snap in profitability?

Jordan, that's a reasonable question. As I indicated earlier, in the second quarter we've got even tougher comps than we had in the first quarter. But also, you've got the fact that you've got a certain amount of cost and when your business goes up seasonally, regardless of what percentage increase that was over previous year, it starts to help your business, because you're covering the fixed nature of the business. So I think as tonnage improves, whether it improves through overall macroeconomic factors or whether it's just the seasonal increase, I think it will be helpful to our results.

Ken Hoexter of Merrill Lynch.

Can you roll us out? I understand that you said March was worse than the average. Can you give us what volumes were by month?

Sure. January and March were between 6 and 6.5 down. February was about 4.5 down.

Including the weather, February just wasn't as bad?

Yes.

Okay. I just want to understand. Was there kind of some catch-up? Maybe not in March, because it doesn't appear on the volume side. Was there some pricing catch-up maybe in March or anything irregular on the rollout through the quarter?

I don't know what you're referring to, Ken.

Was there kind of a pricing crunch, maybe a catch-up at the end of the quarter? I'm just trying to decipher, because as far as I understood, when you were talking about the performance for the quarter being down 300-350 basis points in kind of a slower period, you had already seen volumes being down on average 5 to 6%. So I'm wondering if there was kind of maybe a pricing that allowed you to make up maybe some of that potential lost margin at the end of the quarter?

Well, we had the general rate increase, which affected about half of our business for one week of the quarter, but other than that, I don't know what you might be talking about.

Maybe any kind of pricing benefit from catch-up on volume, not maybe catch-up on volumes because of tightness out in the marketplace that maybe helped pricing a bit. I just want to understand. Has pricing held in firm, which you've been saying pretty much throughout the quarter? I just wanted to see if it maybe added a little bit, even beyond what you thought?

We did not see any real change during the quarter in the pricing activity or the pricing environment.

Okay. And just now I want to move over to the rollout of the RPM. As you've rolled out now and you've launched in the East, you said it's still de minimis. Are you talking about adding impact to the--obviously the 120 basis point impact. Are you talking about diminutives on the revenues at this point?

Yes. It's not having an impact on our system revenue.

You said you kicked off on the Eastern half. Have you kicked off sole sales people for this effort yet?

We have our sales force actively marketing this and they began in January. We do not have a separate sales force for this. This is an integrated product with our LTL. We're now selling nationwide LTL, rather than long-haul LTL through a unified sales force. Did that answer your question?

Yes. Do you start to build up in order to get additional focus on revenue growth there? Do you start to build up an independent sales force?

No. Because we're just essentially selling the same product, we think we'll be very effective with our existing sales force. We already have about 600 people on the ground, which is a pretty good number of salespeople, particularly considering our current revenue ton is low.

Is there some retraining of those sales that you're anticipating or are we going to see this kind of 120 basis point impact continue until the customer's take-rate increases?

We're explaining, obviously, the service we're providing the customers. But keep in mind, this isn't a new market. This is a removal of obstacles to an existing market, that being nationwide LTL. So, we expect a lot of the business to come from existing customers and existing relationships, so training is not a big issue for this market.

David Ross of Stifel Nicolaus.

First, can you talk a little bit about rail uses in the quarter? You talked about moving some freight from rail to road. How much of that did you do? Was that more of a service issue with the railroads or was it an asset utilization issue with your trucks, given the soft freight market?

Good point. We just got the statistic here. In the first quarter, 12% of our miles were over the rail. That was almost 15 in the first quarter of 2006. And while we're always looking at the rails, lane-by-lane on a cost and service basis, there was obviously a movement to keep some of our own equipment and more importantly, some of our own drivers employed. So, when the cost and service issues are even close, we have a bias toward using our own drivers and we did so.

Okay. And speaking of drivers, have you all started at all to engage in talks with the Teamsters regarding the NMFA contract that expires next March?

We've not had any conversation with the IBT over the contract. We're talking with other carriers at this time, however.

Are you still trying to figure out whether you're going to go it alone or kind of go in with other carriers?

We're at this point meeting with other carriers and we find that we've got pretty much the same agenda items in common with other carriers. There are a few differences, but we see eye-to-eye on what the agenda items would be. And as long as we have common interests, we'll be negotiating with other carriers.

Okay. And then, just to go back to the regional performance model. You talk about value being the sell with the customers. You know, Arkansas Best is known for kind of going above and beyond, doing some of the things the other guys won't do. How do rates compare? Because you said you're not competing on price on that. And then, is there really more to the sell than just, you use us for long-haul, you know we do a good job, please use us for regional, if that's too simplistic?

We have realigned our rates to be competitive with players in the regional market. We do not expect to gain business in the regional market by offering a cheaper price, but we expect to be and we are competitive with the players in the regional market, in both the services that we offer and the prices that we charge. We just don't expect to offer a lower price to gain business quicker.

So, transit times are similar to the other competitors and you are going in basically at the market rate, not above the market?

When you offer next-day service and nobody beats you.

That is true. Thank you very much.

[OPERATOR INSTRUCTIONS] Neal Deaton of Stephens Incorporated.

I just have a couple of quick questions to ask you. First of all, going back to the insurance and claims line item, when you were referring to worker's comp and third party casualty, did you just have a better experience this quarter or should we expect that going forward?

You remember in the first quarter of '06, we had a change in the way that our worker's comp liability was calculated that caused that expense to be abnormally high? What you see this quarter, if you take worker's comp and BIPD and roll them together, you see an experience that is comparable to our five-year average. So we had an unfavorable blip last year. You've got normalcy this year. And while those numbers are going to move around, up and down and we don't make any attempt, obviously, to manage them, what you see is what you get. But, the current numbers are normal and we certainly have no reason to believe that we wouldn't maintain this level going forward.

Okay. And then kind of in line with what I believe David was asking you on rents and purchased transportation, is that line item primarily--that was down obviously, as a percentage of revenues, about 60 basis points or so. Was that due to all of the rails, like less outsourcing to the rails or what else?

That's primarily rail. We also returned a lot of rental equipment, which we obviously didn't need when tonnage was down 5.8%. But it's primarily rail.

So the return rental equipment, that was down 5.8?

No. Tonnage is down 5.8 and you normally rent equipment to cover your peaks and obviously we're not having a peak right now.

Okay, so it's just lower rental expense. And my final question, just guessing, I mean, fuel was up about 2% in the quarter, but it obviously finished up 6 in the last eight weeks, I believe, and I know that there's a lag effect with fuel surcharges. How much do you think surcharges could have benefited you in the quarter?

We're not breaking that number out. But it wasn't material.

Follow-up from Justin Yagerman of Wachovia Capital Markets.

I just wanted to get a sense, in Q2 what kind of comps you're going up against? Judy, I don't know if you have the numbers offhand, but in April, May and June of last year, what did tonnage growth look like by month?

I do. April '06 versus April '05 is 3.1%; May was up 5.7%; and June increased by 9.8%. So it was increasing throughout the quarter. The overall increase was 6.4%.

Okay. And in what month last year did you guys start to see negative tides? So I mean, when are you starting to lap the significantly easier comparisons in '07?

We saw the decline starting in October. I said September was flattish and I think you saw a lot of carriers that saw a decline that hit them, perhaps in September. Numbers were flattish for us in September. But beginning October the 1st we saw a significant decline, which has continued forward. So, I think you could say we probably lap it in October.

Okay. And I guess just conceptually, thinking about this quarter and the OR deterioration that was posted, is this a little lower than you would typically expect in terms of margin deterioration? Because if you come from a lackluster environment in the fourth quarter and move to a seasonally weak first quarter off of that, you'll have already right-sized your labor force and so we shouldn't expect--maybe even expect a little bit if tonnage doesn't improve here and you're going up against more difficult comps we should expect OR deterioration to be greater in second quarter than in first?

I don't know how to characterize that, Justin. I did say that we weren't happy with the 240 basis point deterioration in OR. I thought we did a good job of controlling cost relative to our environment, particularly considering what we've seen in similar periods in the past. I've tried to outline in the quarter, the moving parts. The weather, presumably, is not recurring. RPM will recur. We saw 70 basis points improvement over the first quarter of '06 from worker's comp and BIPD. But even when you rack all of that out, I think, considering the environment, cost control was pretty good.

Now, how it is going forward, I don't know how to characterize it.

Ladies and gentlemen, we have reached the end of the allotted time for questions and answers. Mr. Humphrey, are there any closing remarks?

We just thank you for joining us this morning. We appreciate your interest in Arkansas Best Corporation. This concludes our call.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.