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No. of Recommendations: 2
I call the transportation industry the "Front-end of the Economic Food Chain." I have been involved with the transportation industry since 1978 and consistently they are the first industry to get hit in an economic downturn and the first to take off in an economic recovery. For example:
* Manufacturing orders less raw materials and uses more of its inventory which causes less shipments albeit in a Just-In-Time world inventories are less than historically. Right now the supply chains are very low.
* Work in process and finished goods are in less demand on the retail side. Again causing less transportation needs, i.e. less tonnage of freight.
* As demand increases and the economy speeds back particularly if the cost of money is low, companies again ramp back up anticipating demand.
* Raw materials, work in process, and finished goods all increase in that order; thus, transportation is one of the first areas to rebound.

By examining the statement below and their annual report you can see that although the transportation sector as a whole is very down Yellow is holding its own. Although tonnage is down the premium services that Yellow offers are up and they are holding costs down.

First of all, recognize that the year 2000 was the most profitable and highest revenue year in company history. If you subtract out the fuel hedge from 2000Q1, which was a windfall, you see that they have .22 EPS 2001Q1 compared to .24 EPS 2000Q1. For a down economy this is holding your own very well. Service, the continual investment in technology, and good management are paying off. Another important point is that while they did not expect tonnage to fall as drastically as it did only Yellow and 1 other carrier actually increased their LTL Tonnage per 100 weight. Which means they are making more money on the tonnage they are shipping.

The following are some more statistics:

* LTL Tonnage per 100 weight increased 8.6%
* Claims ratio is down 25.2%
* Exact Express revenue is up 25% (Overnight deliver of 75 lb+ shipments)
* Yellow Global is up 40%
* They are opening more Corridor Hubs that have been successful in competing with the regional carriers.

If Yellow is poised this well in a down economy because of their service offerings and leveraging of technology I think they are poised well for growth as the economy comes back.

See what you think.
Van


YELLOW CORPORATION REPORTS FIRST QUARTER FINANCIAL RESULTS

* Operating results on par with last year after excluding 2000 fuel hedge impact;
* All companies partially offset tonnage declines through variable cost management and continued strong pricing environment;
* Regional Carrier Group successfully completes business unit integration at Saia;
* Transportation.com exceeds first quarter expectations.

OVERLAND PARK, Kan., April 20, -- Yellow Corporation (NASDAQ: YELL) today announced that first quarter 2001 earnings per share were $.22, before unusual items, compared with earnings per share of $.41 in the 2000 first quarter. In the first quarter of 2000, a then-active fuel contract hedging program added $6.8 million in operating income, or $.17 per share. When excluding the fuel hedge from first quarter 2000 results, earnings per share were $.24, versus $.22 in the current quarter, before unusual items.

Operating revenue for the first quarter was $832 million, compared with $882 million in the 2000 first quarter. Consolidated operating income, before unusual items, was $18.4 million, compared with $25.1 million in the 2000 first period. Excluding the fuel hedge, operating income was $18.3 million.

“On an apples to apples comparison of actual operating results, we delivered a respectable performance in the first quarter, given the dramatic slowdown in the economy,” said Bill Zollars, Yellow Corporation Chairman, President and CEO. “We aggressively managed our costs in the first quarter. In addition, our focus on flawless service execution and growth of premium services were big contributing factors in the increased pricing yields we have seen. We continue to transform Yellow into a transportation services company that can better manage the cyclical risks inherent in our industry.”

Unusual items for the first quarter included a $5.4 million charge for the previously announced integration of WestEx and Action Express with Saia. Including all unusual items, first quarter 2001 earnings per share were $.07.

Global Transportation Services

Yellow Freight System, the company's largest subsidiary, reported first quarter operating income before unusual items of $14.2 million, down from $21.4 million in the 2000 first quarter. When excluding $5.4 million derived from the fuel hedge program, 2000 first quarter operating income was $16.0 million.

The first quarter operating ratio at Yellow Freight was 97.9, compared with 97.7 a year earlier when excluding the first quarter 2000 fuel hedge program. Revenue for the first quarter was $635.6 million, versus $680.4 million in the 2000 first quarter. On a per-day basis, first quarter revenue was down 5.1 percent over the prior year period. LTL tonnage per day for the quarter was down 12.6 percent, while shipments per day were down 12.3 percent. Pricing yields remained strong. LTL revenue per hundred-weight was up 8.6 percent from the 2000 first quarter.

“The tonnage decline was due to the economy and was substantially offset with proactive cost management and good improvement in pricing yields,” Zollars said. “We continue to focus on delivering the service performance and service value that customers demand. Performance and value are becoming more significant in the pricing equation.”

Regional Carrier Group

At Saia Motor Freight Line, first quarter revenue was $119.1 million and operating income was $3.1 million, excluding one-time integration costs of $5.4 million. In the 2000 first quarter, revenue was $118 million, and operating income was $2.1 million, excluding $1.4 million in fuel hedge benefits. Revenue per day in the current quarter was up 2.5 percent over the 2000 first quarter. The first quarter operating ratio was 97.4, compared with 97.0 in the year-earlier quarter. Excluding pre-integration January and February results from the western operations, Saia reported an operating ratio of 95.9.

“Saia has done a commendable job of growing revenue during a period in which tonnage declined and in which it was also managing the integration of WestEx and Action Express,” Zollars said. “Thanks to intensive preparation, Saia pulled off a very complex task with no disruptions in service to customers. Saia is now well positioned to offer highly reliable overnight and second-day service in its 21-state coverage area and should see sustained profitable growth.”

Jevic reported first quarter revenue of $76.9 million and operating income of $2.3 million, compared with 2000 first quarter revenue of $78.4 million and operating income of $4.0 million. Revenue per day in the current quarter was even with revenue in the 2000 first quarter. The first quarter operating ratio for Jevic was 97.0, compared with 94.9 in the 2000 first quarter.

“Like most everyone else in the industry, Jevic battled the problems of a weakening economy in the first quarter,” Zollars said. “Both Jevic and Saia had effective cost controls in place to mitigate the weakness in the economy and both maintained strong levels of customer service.”

Transportation.com
In the first quarter, Transportation.com concluded its first nine months of operation with positive momentum on a number of fronts. Revenue for the first quarter was $6.7 million, including international freight forwarding, and Transportation.com experienced a 42 percent increase in total transactions over the first six months of operation. Registered customers now total more than 8,400 companies.

Transportation.com currently has 21 signed long-term contracts for a variety of services and an additional significant volume of contractual business in its sales pipeline. Most of the contracts call for logistics services and are expected to contribute annualized gross revenue in excess of $70 million once they are fully implemented.

“As Transportation.com continues to execute its business plan, it is quickly proving that there is a real market opportunity for a non-asset-based global logistics company that delivers services through best-in-class Internet technology,” said Zollars. “We remain confident that Transportation.com will be in the profit column by the end of 2001.”
Corporate and Other

The first quarter results reflect an after-tax loss of $1.6 million or $.06 per share pertaining to ongoing business development expenses for Transportation.com.

Yellow Corporation shareholders voted in the company's Annual Shareholders Meeting on April 19 to approve the re-election of eight directors and to approve the appointment of Arthur Andersen LLP as the Yellow Corporation independent accountant.

Directors re-elected or elected for the first time to one-year terms are:
Cassandra C. Carr (director since 1997); Howard M. Dean (director since 1987); Dennis E. Foster (director since 2000); Richard C. Green, Jr. (director joining the board in 2001); John C. McKelvey (director since 1977); William L. Trubeck (director since 1994); Carl W. Vogt (director since 1996); and William D. Zollars (director since April 1999 and Chairman since November 1999).

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 transportation of industrial, commercial and retail goods.

Transportation.com www.transportation.com is a non-asset-based global network logistics company utilizing the world wide web to provide broad-based products, services and information to small- to medium-sized shippers and carriers. Transportation.com is funded by Yellow Corporation and several venture capital firms. Headquartered in Overland Park, Kansas, Yellow employs approximately 32,000 people.

SOURCE: Yellow Corporation
Approved by Roger Dick
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