SCST SCS Transport (MM)

SCS Transportation, Inc. (NASDAQ: SCST) today reported first-quarter 2006 revenue of $287 million, an increase of 13 percent from a year earlier. Consolidated operating income was $6.3 million, compared with $9.2 million in the first quarter of 2005. Operating income for the quarter included costs totaling $3.0 million for equity-based compensation as a result of the Company's increased stock price. Net income for the quarter was $2.4 million and earnings per share were $0.16, compared to $4.0 million and $0.26 a year earlier. The after-tax impact of the equity-based compensation costs was $1.8 million or $0.12 per share. "Saia continues to grow market share across its 30-state territory and achieved a 39 percent increase in operating income compared with the first quarter of 2005. Jevic's performance was challenged by decelerating volume that more than offset cost management gains," said Bert Trucksess, chairman, president and chief executive officer. Saia First-Quarter Operations -- Revenue increased 23 percent to $205 million versus the prior-year quarter. -- Less-than-truckload tonnage increased 15 percent, and LTL yield grew 6 percent. -- Operating income increased 39 percent, and operating ratio improved to 93.9 percent. "Saia delivered robust revenue growth again this quarter, with increases in tonnage and yields. The business is benefiting from value-added services, industry consolidation and a good economy. Revenue trends were strong throughout the quarter and across Saia's entire 30-state network. Saia continues to evaluate opportunities to grow and further increase profitability," Trucksess said. Jevic First-Quarter Operations -- Revenue declined 2 percent to $84 million versus the prior-year quarter. -- Tonnage declined 5 percent while yield grew 3 percent. -- Jevic reported an operating loss of $2.3 million, for an operating ratio of 102.8 percent. "Despite continued service consistency, Jevic volumes were impacted by a combination of increased competitive pressure following recent corporate publicity, an unseasonably warm winter which hurt its freeze protection business, and excess truckload capacity. The volume weakness produced unfavorable operating leverage, which more than offset progress on cost management initiatives," Trucksess said. Jevic's first-quarter LTL tons were flat compared to the fourth quarter of 2005, while truckload tons decreased 10 percent. As a result of the lower business levels, Jevic reduced its workforce by approximately 8 percent during the quarter. Equity-Based Compensation and Corporate Expenses During the quarter the Company's stock price increased 37 percent, resulting in equity-based compensation charges of $3.0 million, compared to a benefit of $0.2 million in the prior-year quarter. These charges pertain to long-term incentive plans and shares held in nonqualified deferred compensation plans. The Company also incurred approximately $0.5 million in expenses during the quarter pertaining to resolution of a proxy matter and fees associated with a strategic evaluation process. Financial Position and Capital Expenditures Total debt was $122.9 million at March 31, 2006, and debt to total capital stood at 34.6 percent. Consolidated net capital expenditures for the first quarter were $21.2 million, consisting of $17.8 million at Saia and $3.4 million at Jevic. Capital expenditures at both companies were primarily for revenue equipment. The Company expects net capital expenditures of approximately $110 million in 2006, including the delay of several originally planned 2005 expenditures. Approximately $95 million of this amount applies to Saia and includes investments in strategic real estate. Evaluation of Strategic Alternatives On January 24, 2006, the Company announced its Board of Directors had retained Morgan Keegan & Company, Inc. to explore a range of strategic alternatives to enhance shareholder value. The Company noted that there can be no assurance that the exploration of strategic alternatives will result in a transaction. In light of this ongoing process, and consistent with the Company's previous comments that it will not provide interim updates on the status of the process, the Company will not conduct a conference call to discuss its first quarter 2006 results. SCS Transportation, Inc. provides trucking transportation and supply chain solutions to a broad base of customers across the United States. With annual revenue of $1.1 billion, the Company focuses on regional and interregional less-than-truckload (LTL), and selected truckload (TL) and time-definite services. Operating subsidiaries are Saia, a multi-region LTL carrier based in Duluth, Ga., and Jevic, a hybrid LTL and truckload carrier based in Delanco, N.J. Headquartered in Kansas City, Mo., SCST has approximately 9,400 employees nationwide. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This news release contains these types of statements, which are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "project," "intend," "may," "plan," "predict," "believe" and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements reflect the present expectation of future events of our management and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors and risks include, but are not limited to, general economic conditions; the effects and outcomes of strategic evaluations; cost and availability of qualified drivers, fuel, purchased transportation, property, revenue equipment and other operating assets; governmental regulations, including but not limited to Hours of Service, engine emissions, compliance with recent legislation requiring companies to evaluate their internal control over financial reporting and Homeland Security; dependence on key employees; inclement weather; labor relations; integration risks; effectiveness of company-specific performance improvement initiatives; competitive initiatives and pricing pressures; terrorism risks; self-insurance claims, equity-based compensation and other expense volatility; the Company's determination from time to time whether to purchase any shares under the repurchase program; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company's SEC filings. -0- *T SCS Transportation, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) ASSETS March 31, December 31, 2006 2005 CURRENT ASSETS: Cash and cash equivalents $ 5,219 $ 16,865 Accounts receivable 130,531 126,823 Prepaid expenses and other 36,271 30,557 Total current assets 172,021 174,245 PROPERTY AND EQUIPMENT: Cost 631,729 620,899 Less: Accumulated depreciation 283,447 275,366 Net property and equipment 348,282 345,533 GOODWILL AND OTHER ASSETS 34,549 34,963 Total assets $554,852 $ 554,741 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and checks outstanding $ 45,152 $ 54,941 Wages and employees' benefits 39,120 43,490 Other current liabilities 38,357 33,156 Current portion of long-term debt 5,000 5,000 Total current liabilities 127,629 136,587 OTHER LIABILITIES: Long-term debt 117,931 109,913 Deferred income taxes 58,062 58,062 Claims, insurance and other 18,386 21,787 Total other liabilities 194,379 189,762 SHAREHOLDERS' EQUITY: Common stock 15 14 Additional paid-in capital 196,772 194,398 Deferred compensation trust (1,616) (1,322) Retained earnings 37,673 35,302 Total shareholders' equity 232,844 228,392 Total liabilities and shareholders' equity $554,852 $ 554,741 SCS Transportation, Inc. and Subsidiaries Consolidated Income Statements For the Quarter Ended March 31, 2006 and 2005 (Amounts in thousands, except per share data) (Unaudited) First Quarter 2006 2005 OPERATING REVENUE $ 287,330 $253,288 OPERATING EXPENSES: Salaries, wages and employees' benefits 158,733 140,687 Purchased transportation 25,344 21,016 Operating expenses and supplies 64,841 52,134 Operating taxes and licenses 11,291 10,427 Claims and insurance 8,904 8,450 Depreciation and amortization 12,313 11,669 Operating (gains) and losses (384) (334) Total operating expenses 281,042 244,049 OPERATING INCOME 6,288 9,239 NONOPERATING EXPENSES: Interest expense 2,474 2,421 Other, net (191) 112 Nonoperating expenses, net 2,283 2,533 INCOME BEFORE INCOME TAXES 4,005 6,706 Income tax provision 1,634 2,734 NET INCOME $ 2,371 $ 3,972 Average common shares outstanding - basic 14,499 15,059 Average common shares outstanding - diluted 14,842 15,419 Basic earnings per share $ 0.16 $ 0.26 Diluted earnings per share $ 0.16 $ 0.26 SCS Transportation, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2006 and 2005 (Amounts in thousands) (Unaudited) 2006 2005 OPERATING ACTIVITIES: Net cash from (used in) operating activities $ (721) $ 20,559 INVESTING ACTIVITIES: Acquisition of property and equipment (22,194) (16,803) Proceeds from disposal of property and equipment 979 1,364 Net cash used in investing activities (21,215) (15,439) FINANCING ACTIVITIES: Borrowing of long-term debt 8,000 - Repayment of long-term debt - (2,735) Stock option exercises 2,290 925 Net cash from (used in) financing activities 10,290 (1,810) NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS (11,646) 3,310 CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 16,865 7,499 CASH & CASH EQUIVALENTS, END OF PERIOD $ 5,219 $ 10,809 Saia Motor Freight Line, Inc. Financial Information For the Quarter Ended March 31, 2006 and 2005 (Amounts in thousands) First Quarter 2006 2005 % Change ---------------------------------------------------------------------- Operating revenue (excluding fuel surcharge) 182,994 153,940 18.9 Operating revenue 204,645 166,965 22.6 Operating income 12,460 8,963 Operating ratio 93.9 94.6 First Quarter 2006 2005 % Change Workdays F/S Revenue LTL 189,491 154,717 22.5 TL 15,154 12,248 23.7 Total 204,645 166,965 22.6 Revenue excluding LTL 189,838 155,143 22.4 revenue recognition TL 15,182 12,282 23.6 adjustment Total 205,020 167,425 22.5 Tonnage LTL 840 729 15.2 TL 173 151 14.4 Total 1,013 880 15.1 Shipments LTL 1,494 1,309 14.1 TL 24 21 15.8 Total 1,518 1,330 14.2 Revenue/cwt. LTL 11.30 10.64 6.2 TL 4.38 4.06 8.0 Total 10.12 9.51 6.4 Revenue/cwt. LTL 10.03 9.75 2.8 (excluding fuel TL 4.30 4.01 7.2 surcharge) Total 9.05 8.77 3.2 Revenue/shipment LTL 127.07 118.53 7.2 TL 636.88 596.45 6.8 Total 135.08 125.94 7.3 Pounds/shipment LTL 1,124 1,114 0.9 TL 14,535 14,703 (1.1) Total 1,335 1,325 0.8 First Quarter Amount/Workday 2006 2005 % Change ---------------------------------------------------------------------- Workdays 64 64 F/S Revenue 2,960.8 2,417.5 22.5 236.8 191.4 23.7 3,197.6 2,608.9 22.6 Revenue excluding 2,966.2 2,424.1 22.4 revenue recognition 237.2 191.9 23.6 adjustment 3,203.4 2,616.0 22.5 Tonnage 13.12 11.39 15.2 2.71 2.37 14.4 15.83 13.76 15.1 Shipments 23.34 20.45 14.1 0.37 0.32 15.8 23.71 20.77 14.2 Jevic Transportation, Inc. Financial Information For the Quarter Ended March 31, 2006 and 2005 (Amounts in thousands) First Quarter % 2006 2005 Change Operating revenue (excluding fuel surcharge) 74,722 79,570 (6.1) Operating revenue 84,208 86,323 (2.5) Operating income (loss) (2,341) 518 Operating ratio 102.8 99.4 First Quarter 2006 2005 % Change ---------------------------------------------------------------------- F/S Revenue LTL 54,437 56,032 (2.8) TL 27,590 27,586 - Other 2,181 2,705 (19.4) Total 84,208 86,323 (2.5) Revenue excluding LTL 54,635 56,118 (2.6) revenue recognition TL 27,690 27,628 0.2 adjustment Other 2,181 2,705 (19.4) Total 84,506 86,451 (2.2) Tonnage LTL 252 261 (3.3) TL 286 303 (5.8) Total 538 564 (4.7) Shipments LTL 206 223 (7.6) TL 34 35 (2.9) Total 240 258 (7.0) Revenue/cwt. LTL 10.84 10.77 0.7 TL 4.84 4.55 6.4 Total 7.65 7.42 3.1 Revenue/cwt. LTL 9.59 9.90 (3.1) (excl. fuel TL 4.28 4.19 2.4 surcharge) Total 6.77 6.83 (0.8) Revenue/shipment LTL 264.69 251.10 5.4 TL 804.94 779.97 3.2 Total 341.86 323.45 5.7 Pounds/shipment LTL 2,441 2,332 4.7 TL 16,622 17,133 (3.0) Total 4,483 4,372 2.5 Amount/Workday 2006 2005 % Change ---------------------------------------------------------------------- Workdays 64 63 F/S Revenue LTL 850.6 889.4 (4.4) TL 431.1 437.9 (1.5) Other 34.1 42.9 (20.6) Total 1,315.8 1,370.2 (4.0) Revenue excluding LTL 853.7 890.8 (4.2) revenue recognition TL 432.7 438.5 (1.3) adjustment Other 34.1 42.9 (20.6) Total 1,320.5 1,372.2 (3.8) Tonnage LTL 3.94 4.14 (4.8) TL 4.47 4.82 (7.3) Total 8.41 8.96 (6.1) Shipments LTL 3.23 3.55 (9.1) TL 0.54 0.56 (4.4) Total 3.77 4.11 (8.4) *T