Yellow Reports Solid Fourth Quarter Results -- Exceeding Street Estimates
Yield and cost management result in profitable quarter;
-- Meridian IQ, a new non-asset based transportation management business launched;
-- Yellow Freight System renamed Yellow Transportation;
-- SCS Transportation, Inc. created as holding company for the regional group
OVERLAND PARK, Kan., Jan. 24 /PRNewswire-FirstCall/ -- Yellow Corporation (Nasdaq: YELL - news) today reported fourth-quarter 2001 net income, before unusual items, of $4.4 million, or $.18 per share, exceeding consensus analyst expectations of $.16. On a comparable basis, last year net income was $17.7 million, or $.74 per share. Net income from continuing operations for the quarter was $1.4 million, or $.06 per share, compared to $15.8 million, or $.66 per share.
Consolidated operating revenue for the quarter was $785 million, down 11.1 percent from $883 million in 2000. Consolidated operating income, before unusual items, was $12.9 million, down from $41.1 million in the prior year. Operating income including unusual items was $8.0 million versus $37.9 million in the prior year.
"We knew going into the fourth quarter that the economy would continue to have an adverse effect on business levels," said Bill Zollars, Yellow Corporation Chairman, President and CEO. "In response, we accelerated our cost and yield management efforts, resulting in solid profitability. This performance during a very difficult period was delivered through great teamwork and attention to detail."
Consolidated operating revenue for the full year was $3.3 billion, down 8.7 percent from $3.6 billion a year earlier. Operating income for the year, excluding unusual items, was $69.4 million, down from $140.4 million a year earlier. Net income, excluding unusual items, was $22.7 million, or $.92 per share, compared with $61.8 million, or $2.49 per share, in the prior year. Including unusual items, operating income was $57.4 million versus $152.5 million in the prior year and net income from continuing operations was $15.3 million, or $.62 per share, in 2001 versus $69.3 million, or $2.79 per share in 2000.
"Even though the economy softened more each successive quarter as we moved through 2001, many of our services experienced year-over-year growth," said Zollars. "Exact Express®, our expedited and time-definite service, grew revenue 6 percent in a year which saw most expeditors lose volume. Yellow Global®, our international forwarding business, grew 23 percent; and Saia grew revenue in a depressed market."
As 2002 begins, we have three significant announcements about our portfolio of businesses. First, Yellow Freight System, the company's largest subsidiary, is being renamed Yellow Transportation, to more appropriately describe the full range of asset-based services it offers. Second, a new business, Meridian IQ, is being launched as a non-asset-based global transportation services and technology management provider. Third, SCS Transportation was formed as a holding company for regional carriers Saia and Jevic.
"We are excited about the opportunities these changes create," said Zollars. "This is another step in the ongoing transformation of our company to create additional shareholder value."
Yellow Transportation
Yellow Transportation reported fourth-quarter revenue of $592 million, down 13.6 percent from $686 million in the 2000 fourth quarter. Total tonnage was down 11.7 percent from the year earlier period, with LTL tonnage down 11.8 percent. LTL revenue per hundred weight, excluding fuel surcharge, was up .5 percent from the fourth quarter of 2000 and up 1.2 percent sequentially from the third quarter of 2001. For the full year, the same measure was up 4 percent.
Operating income for the quarter, before unusual items, was $12.4 million, down from $37.6 million in the 2000 fourth quarter. The fourth-quarter operating ratio at Yellow Transportation was 97.9, compared with 94.5 a year earlier. Operating income after unusual items was $10.6 million versus $37.4 million for the prior year.
"Yellow Transportation is the earnings driver for our company, and in a tough economic environment they delivered, not only in earnings, but in service and safety as well. Our on-time delivered service improved year over year, and our miles between linehaul accidents increased by 26.5 percent to 1.5 million miles," said Zollars. "The new Yellow Transportation name will strengthen customer awareness of the Yellow brand and the breadth of its portfolio of services."
Meridian IQ
Yellow has consolidated all its non-asset-based services under Meridian IQ. These capabilities include international and domestic forwarding services, multi-modal brokerage services, and transportation solutions management developed at Transportation.com and Yellow Transportation.
"By concentrating all non-asset services under one management team we have more focus on this fast-growing, high-margin business," said Zollars. "Meridian IQ and Yellow Transportation have complementary service offerings, with the ability to not only create value for the customer but also generate revenue for each other. We are the only non-asset based transportation services business with direct access and support from a nationwide network. It is an exciting business model addressing the changing needs of the market by leveraging the technology and operational expertise of the Yellow companies.
During the fourth quarter, the company reorganized Transportation.com, exiting some business lines and transferring the remaining to Meridian IQ. For the fourth quarter, Transportation.com recorded revenue of $8.8 million, and an operating loss before unusual items of $2.8 million. After unusual items the operating loss was $4.9 million.
SCS Transportation
The creation of SCS Transportation as a holding company for Saia and Jevic is the next step in the strategy to separate the regional companies from Yellow Corporation. The initials SCS stand for "Supply Chain Solutions." Saia and Jevic will continue to operate under their well- recognized subsidiary brands.
At Saia, fourth-quarter 2001 revenue was $118 million and operating income was $4.8 million. In the fourth quarter 2000, revenue was $120 million, and operating income was $1.0 million. The fourth-quarter operating ratio was 95.9, compared with 99.2 in the year-earlier quarter. Saia's LTL tonnage per day declined only 4.4 percent year over year, while LTL yield, excluding fuel surcharge, was up 4.3 percent.
"Overall, Saia made good progress in 2001 and we expect momentum to continue to build in 2002," Zollars said. "Excellent service and cost controls have Saia heading in the right direction."
Jevic reported fourth-quarter revenue of $67 million and operating income of $1.1 million, compared with 2000 fourth-quarter revenue of $77 million and operating income of $4.5 million. The fourth-quarter operating ratio for Jevic was 98.4, compared with 94.2 in the 2000 fourth quarter.
"Jevic results were hurt by top-line revenue weakness that included both tonnage and pricing declines," said Zollars. "Jevic has a proven business formula and, like Saia, they have demonstrated strong variable expense controls and excellent service performance."
Unusual Charges
During the quarter, the company incurred unusual charges of $4.8 million, primarily associated with the reorganization of Yellow Transportation ($2.8 million) and Transportation.com ($2.1 million). The charges included employee separation costs, lease termination and rent costs, and loss on disposition of assets. During last year's fourth quarter, the company incurred $3.2 million of unusual items, primarily for the integration of the regional western subsidiaries into Saia.
Outlook
Consistent with the views of most economists, the company expects it will be the second half of 2002 before meaningful economic improvement materializes. Business volumes to date in January have not shown much, if any, improvement, so volumes are down about the same percentage as experienced in the fourth quarter. The pricing environment is expected to continue to be reasonable over the course of the quarter. The first quarter is seasonally the weakest quarter in this business and the company expects historical patterns to hold true this year. In such an environment, the company expects to be modestly profitable. Given the experience with successful yield and cost management initiatives, all Yellow operating companies are well positioned for strong improvement as the economy rebounds.
A teleconference review of Yellow Corporation fourth-quarter 2001 financial results has been scheduled for Friday, January 25, 2002, beginning at 9:30 a.m. (EDT), 8:30 a.m. (CDT). Hosts for the teleconference will be Bill Zollars, Chairman, President and CEO, Yellow Corporation; Don Barger, Chief Financial Officer, Yellow Corporation; James Welch, President - Yellow Transportation; Jim Ritchie, President - Meridian IQ; and Bert Trucksess, President - SCS Transportation.
To participate, please dial 1-888-857-6929 and then the access code, 559420. Callers should dial in 5 to 10 minutes prior to the start of the call. The conference call will be webcast live via StreetEvents at www.streetevents.com and via the Yellow Corporation Internet site www.yellowcorp.com . An audio playback will be available for seven days after January 25 by calling 1-888-203-1112 and then dialing the access code, 559420. An audio playback also will be available for 30 days after the call via the StreetEvents, and Yellow Corporation web sites.
Statements contained in this release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including but not limited to inflation, labor relations, inclement weather, price and availability of fuel, competitor pricing activity, expense volatility, changes in and customer acceptance of new technology and a downturn in general or regional economic activity.
Yellow Corporation is a holding company with wholly owned operating subsidiaries specializing in the national, regional and international markets providing for transportation of industrial, commercial and retail goods and transportation management services. Its largest subsidiary, Yellow Transportation, is a national carrier offering a range of services for transportation and related movement of goods and materials. Meridian IQ is a non-asset based transportation solutions management company. SCS Transportation, a holding company, includes: Saia, providing overnight and second-day trucking service; and Jevic Transportation, providing multi- regional less-than-truckload and truckload services. Headquartered in Overland Park, Kansas, Yellow employs approximately 30,000 people.
CONSOLIDATED BALANCE SHEETS
Yellow Corporation and Subsidiaries
(Amounts in thousands except per share data)
(Unaudited)
December 31, December 31,
2001 2000
ASSETS
CURRENT ASSETS:
Cash $20,694 $25,799
Accounts receivable 208,267 222,926
Prepaid expenses and other 83,449 64,680
Total current assets 312,410 313,405
PROPERTY AND EQUIPMENT:
Cost 2,133,406 2,128,937
Less - Accumulated depreciation 1,267,834 1,240,359
Net property and equipment 865,572 888,578
GOODWILL AND OTHER ASSETS 107,795 106,494
$1,285,777 $1,308,477
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and checks outstanding $128,343 $140,882
Wages and employees' benefits 130,806 173,332
Other current liabilities 103,778 119,194
Current maturities of long-term debt 6,281 68,792
Total current liabilities 369,208 502,200
OTHER LIABILITIES:
Long-term debt 213,745 136,645
Deferred income taxes 92,817 92,413
Claims, insurance and other 119,018 117,443
Total other liabilities 425,580 346,501
SHAREHOLDERS' EQUITY:
Common stock, $1 par value 31,028 29,959
Capital surplus 41,689 23,304
Retained earnings 537,496 522,195
Accumulated other comprehensive income (6,252) (2,710)
Treasury stock (112,972) (112,972)
Total shareholders' equity 490,989 459,776
$1,285,777 $1,308,477
STATEMENTS OF CONSOLIDATED OPERATIONS
Yellow Corporation and Subsidiaries
For the Quarter and Twelve Months Ended December 31, 2001 and 2000
(Amounts in thousands except per share data)
(Unaudited)
Fourth Quarter Twelve Months
2001 2000 2001 2000
OPERATING REVENUE $785,290 $882,990 $3,276,651 $3,588,140
OPERATING EXPENSES:
Salaries, wages and
benefits 499,672 535,723 2,074,458 2,210,505
Operating expenses and
supplies 119,326 147,497 535,762 583,594
Operating taxes and
licenses 25,935 28,365 107,156 112,329
Claims and insurance 20,024 19,691 77,250 80,619
Depreciation and
amortization 31,613 31,704 126,143 126,883
Purchased transportation 75,849 78,906 286,436 333,846
Unusual items (A) 4,833 3,226 12,093 (12,165)
Total operating expenses 777,252 845,112 3,219,298 3,435,611
INCOME FROM OPERATIONS 8,038 37,878 57,353 152,529
NONOPERATING (INCOME) EXPENSES:
Interest expense 3,970 4,420 16,431 19,491
Loss on Transportation.com - 1,769 5,741 3,329
Other, net 1,057 2,954 6,656 8,021
Nonoperating expenses, net 5,027 9,143 28,828 30,841
INCOME BEFORE INCOME TAXES 3,011 28,735 28,525 121,688
INCOME TAX PROVISION 1,590 12,974 13,224 52,386
INCOME FROM CONTINUING
OPERATIONS 1,421 15,761 15,301 69,302
LOSS FROM DISCONTINUED
OPERATIONS - 1,284 - 1,284
NET INCOME $1,421 $14,477 $15,301 $68,018
AVERAGE SHARES
OUTSTANDING-BASIC 24,801 23,746 24,376 24,649
AVERAGE SHARES
OUTSTANDING-DILUTED 25,115 23,919 24,679 24,787
BASIC EARNINGS (LOSS) PER SHARE
Income from continuing
operations $0.06 $0.66 $0.63 $2.81
Loss from discontinued
operations $ - $(0.05) $ - $(0.05)
Net income $0.06 $0.61 $0.63 $2.76
DILUTED EARNINGS (LOSS)PER SHARE
Income from continuing
operations $0.06 $0.66 $0.62 $2.79
Loss from discontinued
operations $ - $(0.05) $ - $(0.05)
Net income $0.06 $0.61 $0.62 $2.74
Note:
(A) Unusual items include integration and business reorganization costs
and property gains and losses.
STATEMENTS OF CONSOLIDATED CASH FLOWS
Yellow Corporation and Subsidiaries
For the Twelve Months Ended December 31, 2001 and 2000
(Amounts in thousands)
(Unaudited)
2001 2000
OPERATING ACTIVITIES:
Net cash from operating activities $84,853 $227,113
INVESTING ACTIVITIES:
Acquisition of property and equipment (113,186) (164,804)
Proceeds from disposal of property and
equipment 12,132 35,081
Other (20,130) (5,114)
Net cash used in investing activities (121,184) (134,837)
FINANCING ACTIVITIES:
Treasury stock purchases - (24,997)
Proceeds from stock options and other, net 16,638 6,984
Increase (decrease) in long-term debt 14,588 (71,045)
Net cash provided by (used in)
financing activities 31,226 (89,058)
NET (DECREASE) INCREASE IN CASH (5,105) 3,218
CASH, BEGINNING OF PERIOD 25,799 22,581
CASH, END OF PERIOD $20,694 $25,799
Yellow Corporation
Supplemental Consolidated Financial Information
For the Quarter and Twelve Months Ended December 31
(Amounts in thousands except per share data)
(Unaudited)
Fourth Quarter Twelve Months
2001 2000 % 2001 2000 %
OPERATING INCOME:
Operating income
- as reported $8,038 $37,878 (78.8%) $57,353 $152,529 (62.4%)
Unusual (gains)/
losses 4,833 3,226 12,093 (12,165)
Operating income
- as adjusted $12,871 $41,104 (68.7%) $69,446 $140,364 (50.5%)
OPERATING RATIO:
Operating ratio
- as reported 99.0% 95.7% 98.2% 95.7%
Operating ratio
- as adjusted 98.4% 95.3% 97.9% 96.1%
NET INCOME:
Net income from
continuing
operations $1,421 $15,761 (91.0%) $15,301 $69,302 (77.9%)
Unusual (gains)/
losses 2,967 1,981 7,425 (7,469)
Net income
- as adjusted $4,388 $17,742 (75.3%) $22,726 $61,833 (63.2%)
EARNINGS PER SHARE:
Earnings per share
- as reported $0.06 $0.66 (91.3%) $0.62 $2.79 (77.7%)
Unusual (gains)/
losses 0.12 0.08 0.30 (0.30)
Earnings per share
- as adjusted $0.18 $0.74 (76.3%) $0.92 $2.49 (63.0%)
Yellow Transportation
Financial Information
For the Quarter and Twelve Months Ended December 31
(Amounts in thousands)
Fourth Quarter Twelve Months
2001 2000 % 2001 2000 %
Operating
revenue 592,033 685,608 (13.6) 2,492,332 2,777,772 (10.3)
Operating
income 10,566 37,395 55,884 141,829
Operating
ratio 98.2 94.5 97.8 94.9
Total assets at
December 31 757,484 722,808
Fourth Quarter
Fourth Quarter Amount/Workday
2001 2000 % 2001 2000 %
Workdays 62 62
Financial
statement LTL 541,876 625,703 (13.4) 8,739.9 10,092.0 (13.4)
revenue TL 44,868 53,443 (16.0) 723.7 862.0 (16.0)
Other 5,289 6,462 (18.2) 85.3 104.2 (18.2)
Total 592,033 685,608 (13.6) 9,548.9 11,058.2 (13.6)
Revenue
excluding LTL 541,876 625,703 (13.4) 8,739.9 10,092.0 (13.4)
revenue TL 44,868 53,443 (16.0) 723.7 862.0 (16.0)
recognition Other 1,473 3 NM 23.8 0.0 NM
adjustment Total 588,217 679,149 (13.4) 9,487.4 10,954.0 (13.4)
Tonnage LTL 1,429 1,619 (11.8) 23.05 26.12 (11.8)
TL 288 324 (11.2) 4.65 5.23 (11.2)
Total 1,717 1,943 (11.7) 27.70 31.35 (11.7)
Shipments LTL 2,847 3,238 (12.1) 45.92 52.23 (12.1)
TL 39 44 (10.9) 0.63 0.71 (10.9)
Total 2,886 3,282 (12.1) 46.55 52.94 (12.1)
Revenue/cwt. LTL 18.97 19.32 (1.8)
TL 7.79 8.24 (5.5)
Total 17.09 17.47 (2.2)
Revenue/
shipment LTL 190.33 193.21 (1.5)
TL 1,141.22 1,210.82 (5.7)
Total 203.28 206.90 (1.8)
Saia Motor Freight Line, Inc.
Financial Information
For the Quarter and Twelve Months Ended December 31
(Amounts in thousands)
Fourth Quarter Twelve Months
2001 2000 % 2001 2000 %
Operating revenue 118,200 119,885 (1.4) 485,379 481,986 0.7
Operating income** 4,848 1,004 18,130 11,847 *
Operating ratio 95.9 99.2 96.3 97.5
Total assets at
December 31 275,852 295,086
Fourth Quarter
Fourth Quarter Amount/Workday
2001 2000 % 2001 2000 %
Workdays 62 61
Financial
statement LTL 108,493 109,064 (0.5) 1,749.9 1,787.9 (2.1)
revenue TL 9,707 10,821 (10.3) 156.6 177.4 (11.7)
Total 118,200 119,885 (1.4) 1,906.5 1,965.3 (3.0)
Revenue
excluding LTL 108,096 108,775 (0.6) 1,743.5 1,783.2 (2.2)
revenue TL 9,671 10,792 (10.4) 156.0 176.9 (11.8)
recognition Total 117,767 119,567 (1.5) 1,899.5 1,960.1 (3.1)
adjustment
Tonnage LTL 538 554 (2.9) 8.68 9.08 (4.4)
TL 129 160 (19.7) 2.07 2.62 (21.0)
Total 667 714 (6.6) 10.75 11.70 (8.1)
Shipments LTL 1,012 1,006 0.6 16.33 16.50 (1.0)
TL 15 18 (16.5) 0.24 0.30 (17.8)
Total 1,027 1,024 0.3 16.57 16.80 (1.3)
Revenue/cwt. LTL 10.04 9.81 2.3
TL 3.76 3.37 11.5
Total 8.83 8.37 5.5
Revenue/
shipment LTL 106.77 108.08 (1.2)
TL 637.17 593.78 7.3
Total 114.60 116.70 (1.8)
* YTD - 2001 Operating income is before $6,705,000 and 4th Qtr 2000 and
YTD 2000 is before $2,712,000 in one-time integration costs due to the
merger with Westex and Action.
** Restated for merger and reflects current and prior period amounts as if
the merger of WestEx and Action into Saia was effective at the earliest
period presented.
Jevic Transportation, Inc.
Financial Information
For the Quarter and Twelve Months Ended December 31
(Amounts in thousands)
Fourth Quarter Twelve Months
2001 2000 % 2001 2000 %
Operating revenue 66,618 77,011 (13.5) 286,203 307,019 (6.8)
Operating income 1,093 4,489 6,012 14,308
Operating ratio 98.4 94.2 97.9 95.3
Total assets at
December 31 231,520 253,310
Fourth Quarter
Fourth Quarter Amount/Workday
2001 2000 % 2001 2000 %
Workdays 62 62
Financial
statement LTL 43,281 49,108 (11.9) 698.1 792.1 (11.9)
revenue TL 23,337 27,903 (16.4) 376.4 450.0 (16.4)
Total 66,618 77,011 (13.5) 1,074.5 1,242.1 (13.5)
Revenue
excluding LTL 42,958 48,846 (12.1) 692.9 787.8 (12.1)
revenue TL 23,163 27,753 (16.5) 373.6 447.6 (16.5)
recognition Total 66,121 76,599 (13.7) 1,066.5 1,235.4 (13.7)
adjustment
Tonnage LTL 232 252 (7.9) 3.74 4.06 (7.9)
TL 296 342 (13.2) 4.78 5.51 (13.2)
Total 528 594 (11.0) 8.52 9.57 (11.0)
Shipments LTL 192 209 (8.1) 3.09 3.36 (8.1)
TL 33 37 (11.5) 0.53 0.60 (11.5)
Total 225 246 (8.6) 3.62 3.96 (8.6)
Revenue/cwt. LTL 9.27 9.71 (4.5)
TL 3.91 4.06 (3.8)
Total 6.26 6.46 (3.0)
Revenue/
shipment LTL 224.15 234.18 (4.3)
TL 701.76 743.97 (5.7)
Total 294.32 311.52 (5.5)