ArcBest Corp (ARCB) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Arkansas Best Corporation first quarter 2012 earnings conference call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded Friday, April 27, 2012. I would now like to turn the conference over to Mr. Dave Humphrey, Vice President of Investor Relations. Please go ahead, sir.

Welcome to the Arkansas Best Corporation first quarter 2012 earnings conference call. We will have a short discussion of the first quarter results and then we will open up for a question-and-answer period. A presentation this morning will be done by Miss Judy R. McReynolds, President and Chief Executive Officer of Arkansas Best Corporation; Mr. Michael E. Newcity, Vice President, Chief Financial Officer 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 all 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 Mr. Newcity.

Thank you for joining us this morning. During the first quarter, our Company maintained our traditional service levels in the midst of handling less tonnage throughout the ABF network. The margin effects of this choice, combined with the effects of some large cost items, produced weaker than expected quarterly results.

These cost items are as follows. We had a low corporate tax benefit rate that reduced our results by $0.18 per share. Our first quarter effective tax benefit rate was 19.4% compared to an effective tax rate of 40%, which represents the midpoint of the range of our previously anticipated full year rate. This was below historical levels because of limitations on the amount of deferred tax assets we were able to record during the quarter. Through the remainder of the year, our quarterly tax rates will vary, depending on our financial results. Therefore, 2012 full year tax rate could be substantially lower than past full year tax rates.

High workers' compensation costs at ABF reduced our results by $0.13 per share. During the first quarter, ABF was adversely impacted by additional expense recognition associated with workers' compensation claims. The cost of these claims were substantially above ten year historical averages, due to unfavorable severity on new and existing claims, and unfavorable changes to loss development factors driven by overall claims experience. This additional $5.3 million of expense increased ABF operating ratio by 1.3 percentage points versus last year. This cost increase is very unusual for ABF and occurred despite recent favorable trends in both accidents and injuries.

Investments made in sales, customer service and IT, at all subsidiaries, amounted to $0.12 per share. During the quarter, we made investments in sales and customer service personnel and in development of IT systems throughout all subsidiaries. These investments are designed to address specific growth opportunities and enhance operating efficiencies for our Company and for our customers through technology solutions. Total corporate costs incurred for these investments total $4.8 million. These additional costs continue in the future.

Pension and retirement costs increases equated to $0.04 per share. Our nonunion pension expense increased as a result of a historically low discount rate used to re-measure plan obligations at the end of 2011 and for 2011 returns on pension investments. For full year 2012, we expect nonunion pension costs to total $16.6 million, compared to $12.9 million in 2011. During the first quarter, ABF obtained higher prices across its broad-base of accounts, continuing a year-over-year trend that began in the second quarter of 2011. Shortly, Judy will give her thoughts and perspective on our recent performance and the factors that are affecting it.

But now, I would like to cover the details of our results for the first quarter of 2012. Arkansas Best first quarter 2012 revenue was $441 million, essentially the same on a per day basis compared to last year's first quarter revenue of $435 million. In the first quarter we lost $0.71 per share, compared to a net loss of $0.51 per share last year. We ended the first quarter with unrestricted cash and short-term investments of $184 million, an increase from the end of last year. This change includes a $23 million positive effect associated with the shift of cash-secured letters of credit to a new, uncollateralized surety bond program and lower security requirements under the existing bond program. Full details of our GAAP cash flow are include in our earnings press release.

Moving on to ABF's results for the quarter, ABF reported first quarter revenues of $401 million, compared to $397 million in the first quarter of last year. ABF's tonnage decreased 10.6% per day, compared to last year's first quarter. Total billed revenue per hundredweight increased 11.5%, compared to the first quarter of 2011. ABF's first quarter operating ratio was 105.5%, compared to 105.8% in last year's first quarter.

On a combined basis, our non-asset based business segments grew revenues during the quarter, mostly associated with our truck brokerage and Management segment that experienced nearly 58% revenue growth and a first quarter operating profit. As I previously mentioned, each of these business segments incurred additional sales, customer service and IT cost headwinds; without which, each of these segments would have been profitable during the first quarter. Now, I'll turn it over to Judy for her thoughts about our quarter.

Thank you, Michael; and good morning, everyone. Despite first quarter bottom-line results that do not meet our expectations, we believe we have better positioned our Company for success and enhanced our opportunities for additional growth. ABF's price increases remained at healthy levels. However, our improvements in pricing carry with them the risk of losing some accounts. We continue to experience the impact of our decisions and our customers' decisions in the first quarter of this year. Our current base of accounts is priced better and is poised to grow more profitably as shipment levels improve.

The business environment we experienced in the first quarter was sluggish and inconsistent. Compared to business levels from last year's first quarter, ABF's daily average tonnage declined about 10.5%. Severe winter weather during the first three months of 2011 impeded that quarter's tonnage gains by about 2%. As a result, this year's business levels are effectively below the previous period by over 12.5%. Last year, the effects of adverse weather were offset by the operational efficiencies achieved from handling 20% more business during the first quarter of last year, compared to the first quarter of 2010.

In this year's first quarter, the costs associated with weather were minimal, but the resulting positive impact on operating income was negated by the operational inefficiencies associated with a double-digit decline in ABF tonnage. On a positive note, we are very encouraged by the tonnage trends we have experienced so far in April. Compared to the same period in March, the improvement in total tonnage is the highest we've seen in over 20 years. ABF has earned additional business from existing customers, new customers, and some customers who have returned to our Company after leaving in prior periods. We are hopeful that the positive freight trends we are experiencing in April are an indication of improving economic conditions.

So far in April, total revenue per hundredweight has increased by approximately 7.5% versus last year, though this percentage increase is lower as a result of comparisons to strong pricing increases that began about this time last year. This is an indication of ABF's pricing strength as we move into the second quarter. We are also pleased about recent operational changes to ABF's labor contract that were implemented in a phased approach from late March to the latter portion of April. These changes, which are allowed by our existing contract, should result in improved efficiencies, more flexible utilization of employees, and enhancements in ABF's on-time delivery service.

ABF is viewed as delivering reliability and dependability in the marketplace. We are known by our customers as problem solvers and solution providers. Our consistency of service is an important element of the relationships we have with our customers. That consistency was just as important in the first quarter of this year as it is in any other quarter of the year. The safe handling of customer cargo is of utmost importance at ABF.

ABF's cargo claims ratio is one of the lowest in the industry; and for the last 15 years, ABF has either improved or equaled its prior year's superior customer service metric. Again this year, ABF has another great start at improving its cargo claims ratio, measuring as a percent of revenue, the first quarter 0.46% cargo claim ratio is below the full year 2011 figure, which was the best in over 25 years.

In the area of safe driving and workplace injuries, ABF excelled in the first quarter. The road miles per accident safety measure was the best for our first quarter in the last five years, and it represents an improvement of over 40% compared to the same period last year. City driver hours per accident also improved versus last year and was one of the best first quarters in the last five year period. Hours per injury was the best for our first quarter in five years and over 20% better than last year. This reduction in injury frequency positively contrasts the very unusual workers' compensation increases ABF incurred in this year's first quarter.

ABF's cost structure is above market levels, primarily because of excessive pension payments made on behalf of union employees. ABF's Union pension expense totaled $33 million in the first quarter of 2012, based on information provided by a large multi-employer pension plan to which ABF contributes, about half of the payments ABF makes to union multi-employer pension plans go toward the benefits of employees who have never worked for our Company. ABF continues to be an active participant in a broad coalition of stakeholders committed to developing a permanent solution to correct this cost inequity.

In addition, the Company is seeking solutions to ABF's higher cost structure through other initiatives. Our lawsuit against the Teamsters and various other parties related to three-modification of ABF's union labor agreement, granted exclusively to the YRC companies and not to ABF, is ongoing. Following a favorable July 2011 ruling in the appeals court, ABF is currently waiting on a lower court's ruling regarding the defendant's motions to dismiss ABF's lawsuit. Also, ABF is preparing for negotiation of a new labor agreement prior to the conclusion of its current contract on March 31, 2013. We face the challenges of our industry and our Company every day with a mindset toward improving our results and our shareholder returns. I think we are ready for some questions.

Shalyn, I think we are ready for questions.

(Operator Instructions) Justin Yagerman.

When you look at the business right now, it's pretty evident you are losing market share. When I look at what's going on from a yield standpoint, the sequential decline here, while seasonal, is one of the worst that I've got in my model. So, I'm trying to figure out exactly, when you guys analyze what's going wrong with the business right now, what is it?

Are you being picked off at lower prices by your competitors, and then you tried to make up for that later in the quarter by lowering some yield to defend? Or, are you seeing different service products, so that is part of the IT investment that you are putting into place? I want to get a better idea of what's driving these tonnage declines in what otherwise, would sound like a decent manufacturing and economic backdrop.

Well, yes, a certainly fair question. When we look at our business, we are working through basically a multi-year recovery process from the recession that occurred and affected us most in 2009. We had, last year, a pretty dramatic improvement in business. The environment improved in a way that allowed for the market to improve prices to what they -- to a better place, not really to what they should be because I think now we are probably about at 2008 pricing levels, with 2012 costs. So, we are in a process of working through that.

When you are working through some of the issues that we are, there is risk associated with that. It's risk that you have to be willing to take to get to the right place at the end of the day. So, we feel like we are in that process, we feel like the decisions that we made and the levels of increase that we made those decisions at, were the right things to do for our Company. And, it's a process. You have to work through it, you have to live with the results of that, and then move on to better revenue opportunities, which I'm pleased to say in April that we are seeing.

We are also seeing some of the customers who made decisions to move away from us, move back because of the quality of our services. I think that speaks to what we are trying to accomplish here, is we want to be sure that we are providing a high level service, but in the end, we are able to get that value from our customers. So we -- I think with respect to your question on the quarter, the fourth quarter to first quarter yield decline, that is more of a business mix issue. We don't see LTL yields deteriorating. We see that, that's fairly flat, and there is not much to read into that there, other than there is a bit of a business mix issue whenever you are looking fourth to first.

Okay. Can you talk a little bit to these IT investments that you guys are making? How you think they are going to --?

Sure, yes.

I would be curious to hear where you guys are putting capital to work.

With respect to ABF, what we are doing is working through IT investments that will help us in operating efficiencies. Obviously, we need to get more efficient with our base model. We have some interesting efforts there that are going to help us, not only in our 2012 results, but also help us to know some of the options that we have as we are going through the labor negotiations as well. So --

Is this labor optimization, or is it actual --?

Yes. (multiple speakers) It is asset and labor optimization, is what I would suggest to you. It is linehaul optimization, mostly. Then, on the non-asset based subsidiaries, there are some interesting things that we are doing there. On our brokerage business, we see that we need to make sure that we put that Company in the best position to grow, and that is working. You can see the revenue growth there. We are also investing in sales people, to grow that business. We are putting customer service people in place to allow our sales people to be more effective across the organization.

With respect to FleetNet's business, which is in the emergency services segment, it is a known fact at this point, that we are going to have tremendous customer additions in that segment, as a result of some of the investments we have made in people and IT there. They are all very purposeful, and I have wanted to be sure and point them out because it is something that's unusual whenever you are experiencing a down period in tonnage for ABF.

Chris Wetherbee.

I was wondering if -- I may have missed it, but did you give the tonnage decline for the month of April so far?

It's declining about 9% per day, at this point. But, when you look sequentially, it is up in the 4% range. And that's, as I mentioned, that's the encouraging part. When you look sequentially at that figure, that is the best in over 20 years.

Okay. Your comps do get easier a little bit in the next couple of months of the quarter, I'm guessing?

Yes, we do have easier comps. If you looked at it month-to-month-to-month, April year-over-year was up 16.3% last year, May was up 7.9% and June was up about -- was 5.2%.

Okay. Then, I guess just back onto the IT investments for a second. I think in the prepared comments it was mentioned there might be some continuation of the expenses, or the investments, as you go forward?

Yes.

Can you give us a sense of the order of magnitude as you think about that over the course of the rest of the year?

From a comparative standpoint, that will decline as we move through the year because some those we actually began in the later part of 2011. But, what we wanted to do was point out that, that's something that we are investing in that we think will bring us more top-line opportunities. Michael, do you have something to add to that?

I mentioned in the first quarter that was -- I mentioned the $4.8 million in the comments.

Yes. But, we do see that, that will give us more top-line opportunities, and that's why that investment's being made.

Scott Group.

Judy, can you talk about -- were you guys profitable or unprofitable in March? Can you give us some color? Do you expect to be profitable in April and the second quarter?

Our March results were slightly unprofitable. But if you had -- if you consider the unusual nature of the workers' comp cost that we had to record in that month, we would have been profitable. In April, we haven't closed out that month yet. I wouldn't say that we are going to have results that would be greatly positive or negative. It is probably going to be pretty close to zero. Certainly, we are hoping that, that will be the case. Our trends on the revenue and pricing side look good.

How about your expectations for the full second quarter?

Well, again, we don't give guidance, but April would be the weakest month of that quarter, probably. June is always stronger than either April or May.

Okay, that's helpful. I was wondering, can you talk, give a little bit of color on what you have done with the Teamster contract? How you talked about some improved things in March and into early April. Talk about that a little bit?

Yes.

With that, though, when I look at the labor costs, they were up a lot sequentially, they were up year-over-year and tonnage was down 10%. So, what can you do in the near term, before the contract's due next year, to furlough employees or do something?

Well, a couple of things there, real quick, and then I'll talk about the change of operation. If you consider the high workers' comp cost in that salaries, wages line, the numbers moved. Maybe not as much as you would have thought they would because some our costs become fixed in nature at lower tonnage levels, but they did move in the right direction there if you exclude the workers' comp effect that is in that line.

You asked what we can do? We have people on layoff, particularly, dock workers on layoff. We've also had to reduce our driver force. We do that to keep our assets and people that are deployed in line with the business that we have. What happens to you in the first quarter, and this is every year, is that a portion of those costs become more fixed in nature if you are going to make a commitment to your customers to give more service, which we did.

The benefit of that, is in later quarters, being able to get the value for what that customer service you are bringing to that customer is and have a better opportunity for greater profits as you go through the year. Customers are not really willing to give up service in the first quarter versus any other quarter of the year, so we have to be mindful of that.

With respect to the change of operation, the premise of this is to really deal with the movement of freight to and from end-of-line terminals. Our distribution centers utilizing our utility employees to either run turns to the actual DC, or to run a meet-and-turn with a line driver at an intermediate location. It can improve our on-time service, our linehaul efficiency and allows us to use those same utility employees to supplement the local operation. We feel like that it has the potential to help us in a number of areas. It's what we have to have, going forward, is more flexible employees to be able to meet our customer service requirements.

Todd Fowler.

Thanks for taking my question. I just wanted to follow-up on the workers' comp. In the release it said that there is some development as well as the frequency of claims. I wanted to get an idea of the expense here in the quarter. How much of that you think is going to continue into the second quarter and for the rest of the year?

Michael -- I'll let Michael deal with the magnitude of it, and then I might have some comments after he has given you that.

Actually, what I was going to say about the remainder of the year, if you look at the workers' comp from 2011 and 2010, those were both in line with 5-year averages, below 10-year averages. The fourth quarter was on the total basis and workers' comp was below both 5- and 10-year averages. What we experienced in the first quarter is not what we would expect for the remainder of the year. Unfortunately, these end up being lumpy-type costs when you look at them, and they tend to smooth out when you look at them on a rolling average basis.

Todd, I think the important thing for you to come away with, I gave some statistics about improving accidents and injury statistics. Those are the things that we can do to better control the costs, and those are moving in the right direction. When you look at the first quarter, what we experienced are some increases related to either settling the claims, or to medical costs on individual claims, that were -- it was really the accumulation of them that was unusual in nature. Not so much on any individual one something unusual happened, but we had a number of them have adjustments.

The other thing that we had, to couple that with, was we go through a process of updating our development factors in the first quarter of every year. The last two years, that's been more of a flattish or a positive thing. This time it cost us about $2 million of the $5.3 million. And, that can happen. It is just meant to adjust the claims reserves to what they are ultimately going to cost the Company. That's not a routine, or a process, we go through in any other quarter of the year; we just do that in the first quarter. I hope that gives you some color on that.

Yes, right. All of that makes sense, and that is what I was looking for. Judy, I know that you don't give specific OR guidance, but generally, you are pretty good about talking about keeping in mind the sequential pattern with what can happen with the OR. I think Michael made the comment that the workers' comp was about 130 basis points negative in the OR. Would it be fair to think about the true run rate for the first quarter from an OR standpoint being in the 104-type range, and then to expect the normal sequential build? Or, is there something else that we should think about from the first quarter into the second quarter?

Well, there is really -- the things that we have outlined, the tax rate issue and the workers' comp costs, those are -- if you are looking at the full-blown 105.5% OR, those are going to help us. Hopefully, in the second quarter, if we have more results that are closer to quote, normal. In the case of workers' comp, that would be below our 5- and 10-year averages. On the tax side, if there is positive earnings there, then we can expect to have a low tax rate on those. So, those are things to think about.

If you were to exclude those unusual items and think about the normal sequential relationship, second quarter to first, there is usually about a 5 point to 6 point improvement, based on history when you look at second to first. Again, that is just because you are in a higher seasonal place as far as business levels, and the issues that we had in the first quarter with some of our costs being more fixed, really rights itself, so to speak, in second and third quarters.

Ken Hoexter.

Two questions I'd throw at you. One is, can you talk about -- I know you threw out a brief on the status of the lawsuit, what the process is there? Again, just thinking if there is any timing, or are we just going to run this contract to the end and hope through the negotiation process? I'll just throw you my second question up front, which is just stepping back, why is tonnage down in a rebuilding economy?

What is going on? I understand the whole, the pricing dynamic and you are raising pricing. I just want to understand is the LTL market different than all of the other markets that are seeing volume growth right now, when you think about the rail carloadings or trucking loads, truckloads on the truckload side, why do we continue to see this level of declines? Thanks Judy.

Well, with respect to the lawsuit, Ken, we are really in a waiting process, just like you are. We have done what we need to do there. There is motions to dismiss that have been filed by the defendants, now that we are back at the District Court level. So, we are waiting for the judge to rule, and we can't control that timing, nor do we know really anything about that, that we haven't made public, or told the public. So, we are in a waiting process there.

We don't wait for that. We go through the processes that we need to, to address the issues that the Company has, in a number of ways. One of those would be, in this year, it is normal to go through a preparation process for the labor contract negotiations. We are working through our part of that, at this point. Later this year, that process will begin, jointly, with the Teamsters, we believe, and we will go through a normal process there. If there is some activity that is occurring on the lawsuit, that may or may not enter in to the process. We just don't know, and we can't really predict that in terms of timing.

The tonnage, with respect to tonnage in business, we have been looking at that, obviously, been looking at that ourselves and trying to sort through what's happening there. Something I'd suggest to you, from a market share standpoint, is that we do know that we gave up some market share as we raised prices. Most of that effect occurred for us in the third and fourth quarters of 2011. We don't see that continuing into the first quarter. We have seen more normal, or typical, type results there, so it is not something that is a worsening statistic or pattern.

What I am encouraged by is what we are seeing in April because, again, I mentioned earlier, when you go through what we've gone through on pricing business appropriately, there are times whenever you take the risk of losing an account, and that, in fact, happened. What we are encouraged by, in April, is the customer wins that we have attained. Some of the customers that have left us, in prior periods, are coming back to us because of the value that we bring to them. So, you have to be willing to work through that process to get to the right place. And, that's the discipline that we have always talked about with our Company all these years.

Jack Waldo.

Let me -- I just wanted to ask, the -- once again, if I look at your non-asset base, you lost -- your asset light businesses, you lost $1 million.

Yes.

If I look at your LTL businesses, you lost $22 million.

Yes.

Then, if I read the press release, I hear about a lot of the investments that seem to be directed at the asset base that continues to lose money. I'm just wondering, is there some point in which you are going to be forced to switch your focus from, what looks like a substantially less attractive ROIC profile in the asset based investment side, and go more to the non-asset based side?

Your premise is that you have to do one or the other. One thing that I'll -- you know the process we go through, as a Company, to think through strategically where we need to be, and I sure wouldn't want to have one answer. So, what we work from is a number of answers. There is a number of paths to our future success. One thing I know is, if we stop investing in the ABF Company, that things will be worse, not better. We have some opportunity there to improve efficiencies, to improve the things that we control, and to give our sales people a better opportunity to succeed. Those things are worth doing.

On the non-asset based side, I have been very aggressive in growing those businesses, giving them the things that they need. Probably the biggest reason for the miss on the non-asset based side, maybe to your model, is FleetNet's business. We had the warmest winter since the early 1930s, and their business is based on emergency roadside service.

So, it is highly unusual for them to have that a miss, but that didn't keep us from investing in the things that we know we need to do to grow that business. We have had a number of good customer wins there that you will see in later quarters this year. The answer is, you don't have to do one thing or the other. It's more, you have got several different paths to work on and making the right decisions on each one of those.

(Operator instructions) John Godyn.

Thanks for taking my question. In some of the comments on the unusual factors in the release, you mention that you got impacted by some decisions to maintain customer service levels, despite lower tonnage. Of course, we think of you guys as a service-oriented Company, so I'm just trying to understand if you actually did anything different this quarter on service that's not going to repeat? Or, if maintaining high service levels, in the face of tonnage declines, is something you are going to keep doing, which would keep amplifying the operating leverage whenever tonnage falls?

Well, when -- the only different thing, but it is really along the same lines as what we normally do, is that we did have the full effect of our fourth phase of our regional service out in the west. Last year, that was implemented sometime in March, so in the quarter last year, we didn't have the full effect of that second-day and next-day service. We do have that in this year's first quarter. I would say that in, on the material side of things, what we did was what we normally do. It was just exacerbated by the tonnage declines that we experienced.

Jeff Kauffman.

I guess what I struggle with here, is I hear all the initiatives, and I see the growth, but at the end of the day, and this gets back to Jack's question. I'm not saying you don't invest because I understand what Judy is saying. But, at what point do we say we need to make money before we get into new businesses, do new things, and the Union is not cooperating. Therefore, we should reduce our Union jobs, we should reduce our Union overhang, pension expense, et cetera, before we begin to grow. Is that something on the table? Or, do we just say we are going to keep doing what we are doing until we get to the next contract, and then we have got a tally of everything the Union cost us, and that is what we need to get back?

Well I think, Jeff, if you stopped and waited and didn't take advantage of good opportunities, you'd miss them. You know? That's something that we are not willing to do. If we can see the opportunities, with the balance sheet and the resources that we have, we are willing to continue forward, particularly in this non-asset based area. One reason that is so important is because our customers, particularly ABF customers, do a lot of business in other transportation areas that you are familiar with, I'm familiar with.

What we are doing by elevating the importance of those businesses, and at the same time, making sure that we are doing the right things as far as ABF goes. In total, we give ourselves a better market opportunity to grow in that close to $700 billion transportation market, rather than just in the slice of $30 billion in the LTL market. But, if you don't do the right things on the LTL side, but at the same time you are saying use us for all of these other things that we do well, you are just not making any sense to a customer. We are trying to make sense to a customer and bring them things that they don't have. And, be that one source for them that handles their solutions and their needs.

I understand that, but does it make sense to do that for practice? I mean at the end of the day --

It is not for practice. It is not for practice. If I thought that it was, that's not what we'd do.

All right. One last question. As we enter these negotiations with the Union, and we understand what happened there, is the starting point where the contract is with Yellow's currently; and we say, now do we do from this Yellow deal? Or, is the starting point where you are where you are trying to get through the Yellow deal? How do you think about the starting point in these negotiations?

Jeff, I'm not going to get into too deep into this because there is no benefit to us from doing that. But I'll say this, we are doing -- we are approaching our thoughts on that as with respect to ABF's needs. It's what ABF has to accomplish, what we have to have from a market-based cost approach, and that's where we start. That's what is important to us. That is really all I'll say.

David Ross.

It is actually Bruce Chan on for Dave Ross. Happy Friday to you Judy, Michael, and David. Most of my questions have been answered with respect to tonnage and pricing. Obviously, you guys have done a lot to bring pricing back to sustainability levels and have certainly done so more than a lot of your competitors. I'm wondering if there are any geographic pockets out there that you are seeing more competitive pricing?

Not from a pricing standpoint, no. We have seen from a -- I guess from a growth standpoint, we have seen some more exciting things in the Southeast and up in the Northern California up to Canada, those are some growthier areas for our Company. But from a pricing standpoint we're not -- I haven't had anything report to me from a regional standpoint that's any different from any other regions.

Okay. Then just one quick question to get a feel for true impact on yield. Do you guys have your length of haul figures for this quarter?

Yes, we do have that. Here, David's got them in his hand. I'll let him give you that.

Length of haul in this first quarter was 1,044, and that compares to 1,036 first quarter last year, really not much of a change, a slight increase --

Okay, perfect.

Pretty much flat.

All right. Well thanks a lot guys, I appreciate the call.

Scott Group.

Hey, thanks for taking a couple of follow-ups. I want to make sure I'm understanding the workers' comp thing.

Okay.

I see in there you talk about $5.3 million. Is that the absolute number? Is that the year-over-year number? And, what is a normal number? What should that be? And, what do you actually expect for the remaining quarters of the year?

Well, that is, Scott, the amount that is unusual. When you compare to 5- and 10-year averages, that is the amount that is unusual. I'm going to let Michael give you what those 5- and 10-year averages are as a percent of revenue.

When you are looking at the percent of revenue, it is on a total basis, for workers' comp and third party casualty, it is 2.38% 5-year and 2.51% for 10-year. Then for --

And tell him what this year is.

This year, it's 3.7%.

Yes, that is the magnitude that is out of line with our 5- and 10-year averages.

And just to be clear, you would expect it to go back down to 2.3% starting in second quarter?

Well, it is very unusual for us to be above our 5- and 10-year averages. What we do on our financial statements is, as incidents happen and as adjustments are made to reserves, we record them in the period that, that happens, in the month that, that happens. So, we can't predict the future on this, all we can do is tell you what's historically happened to us. And the other good news, I mentioned in my opening comments, that our injury rates are some of the best that we have had in a very long time. So, that helps, to never have a claim set up, to increase. That's the direction that you want to be going.

Scott, just to give you some color on history, the fourth quarter was 2.4%, and 2011 was 2.44%, and 2010 was 2.44%. So, it can be lumpy through the quarters, but it can work out on the year.

Hey Scott, I think we are going to move along because I have got some folks that haven't gotten to get a question that are in the queue. I want to let them have a chance.

That is fair. Thanks, David.

(Operator Instructions)

I showed some other people in the queue. Are there others that you have?

We do have a follow-up question from the line of Scott Group.

Nobody else is in the queue other than Scott? I show some other people. I guess maybe they dropped off?

Correct, sir.

Okay.

All right. Well, thanks, and obviously, if someone gets back in, you can take it away.

Okay, Scott.

So, just a couple other just quick things. Judy, do you have the monthly tonnage and yield numbers for first quarter? I know you gave April, but do you have the months for first quarter?

We have the -- yes, for the month. Monthly for the first quarter of '11 over '10, is that what you mean?

No, of '12 versus '11?

Oh, '12 versus '11, okay. Let's see, we were down 7.8% in January, 8.6% in February, and March down 14.3%. Then, what we gave you for April, month-to-date through the 25th, is down 9.1%.

You have the same thing on the yields?

Actually, I don't. We don't like to give yield at that granular level because we have to go through some routines to make sure that what we are giving you is a good indication, based on pure price. May not have mentioned this, but we had an 11.5%, or so, increase in yield, including fuel surcharge. If you exclude fuel surcharge, it was up in the high single-digits for the first quarter. And, for April, that is --it's up about 7.5%.

Thom Albrecht.

I think my questions have been answered. Appreciate it, thank you.

There seems to be no further questions at this time. I will now turn the call back to you.

Okay. We appreciate you joining the call this morning, and this concludes our call. Thank you very much.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.