SCST SCS Transport (MM)

SCS Transportation, Inc. (NASDAQ: SCST), a holding company comprised of Saia Motor Freight Line, Inc. (Saia), a leading multi-regional less-than-truckload (LTL) carrier, today reported second-quarter 2006 results. The Company also announced today that effective immediately its name has changed to Saia, Inc. and effective Monday, July 24, 2006 it will adopt and trade under the new NASDAQ ticker symbol "SAIA". These changes more accurately reflect the Company's focus on its sole operating company, Saia, following the June 30, 2006 completion of the sale of Jevic Transportation, Inc. (Jevic). Second-Quarter 2006 Results from Continuing Operations Compared to Second-Quarter 2005 -- Revenues were $225 million, an increase of 21 percent -- Operating income was $17.0 million, an increase of 51 percent -- Income from continuing operations was $9.0 million, an increase of 70 percent -- Earnings per share from continuing operations were $0.60, an increase of 71 percent Second-Quarter 2006 Operational Highlights From Continuing Operations -- LTL tonnage increased 12 percent versus the prior-year quarter -- LTL yield grew 8 percent (3 percent excluding fuel surcharges) -- Operating ratio, excluding restructuring charges, improved 220 basis points to 91.7 "Saia is a top-tier LTL service provider that delivered yet another strong quarter," said Bert Trucksess, chairman and chief executive officer. "We are confident that Saia is well-positioned for continued profitable growth and value creation and that the continued execution of Saia's strategic initiatives should create outstanding value for our shareholders." Rick O'Dell, president, said, "Revenues benefited from both tonnage growth well above the underlying economy and a favorable pricing environment. Operating income gains resulted from the volume increases as well as effective cost management." Discontinued Operations and Related Charges In connection with the sale of Jevic, the Company recorded a non-cash, after-tax charge in the second quarter of $44.0 million, or $2.96 per share. Jevic is now reflected as a discontinued operation in the Company's financial statements. Also in the second quarter, the Company recorded a pre-tax charge in continuing operations of $1.7 million, or $0.07 per share, of an estimated $2.6 million in costs related to the planned consolidation and relocation of the Company's corporate headquarters to Duluth, Ga. Year-to-Date 2006 Results from Continuing Operations Compared to Year-to-Date 2005 -- Revenues were $429 million, an increase of 22 percent -- Operating income was $25.6 million, an increase of 31 percent -- Income from continuing operations was $12.9 million, an increase of 48 percent -- Earnings per share from continuing operations were $0.87, an increase of 53 percent Financial Position and Capital Expenditures Total debt was $112.4 million at June 30, 2006, and debt to total capital was 36 percent. Net debt to total capital was 25 percent as a result of the Company's $47.6 million cash balance reflecting proceeds from the sale of Jevic. Consolidated net capital expenditures from continuing operations for the first six months of 2006 were $41.7 million. The Company expects 2006 net capital expenditures from continuing operations of approximately $90 million which includes planned investments in strategic real estate. Conference Call The Company will hold a conference call to discuss second-quarter results on Friday, July 21, 2006, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). To participate in the call, please dial 1-800-275-8866 or dial 1-706-634-4936 for international calls. Callers should dial in five to 10 minutes in advance of the conference call. This call will be webcast live via the company web site at www.scstransportation.com and will be archived on the site. A replay of the call will be available two hours after the completion of the call through July 28, 2006. The replay is available by dialing 1-800-642-1687 and using conference code 2686402. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site. Saia, Inc., formerly known as SCS Transportation, Inc., is the parent of Saia Motor Freight Line, Inc., a multi-region LTL carrier based in Duluth, Ga. Saia focuses on regional and interregional less-than-truckload (LTL), and selected truckload (TL) and time-definite services. It operates 128 terminals throughout 30 states and employs approximately 7,100 people. For more information, please visit the Company's website at www.saia.com. 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; adjustments to consideration received for the sale of Jevic; indemnification obligations associated with the sale of Jevic; 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 Saia, Inc. and Subsidiaries (formerly SCS Transportation, Inc. and Subsidiaries) Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited) June 30, December 31, 2006 2005 --------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $47,602 $ 16,865 Accounts receivable 95,959 85,074 Prepaid expenses and other 30,441 22,233 Current assets of discontinued operations - 50,073 --------- ------------ Total current assets 174,002 174,245 PROPERTY AND EQUIPMENT: Cost 457,510 427,019 Less: Accumulated depreciation 191,689 180,385 --------- ------------ Net property and equipment 265,821 246,634 GOODWILL AND OTHER ASSETS 32,765 33,419 Long-term assets of discontinued operations, net - 100,443 --------- ------------ Total assets $472,588 $554,741 ========= ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and checks outstanding $ 43,166 $ 43,487 Wages and employees' benefits 39,105 37,915 Other current liabilities 27,101 26,797 Current portion of long-term debt 8,856 5,000 Current liabilities of discontinued operations - 23,388 --------- ------------ Total current liabilities 118,228 136,587 OTHER LIABILITIES: Long-term debt 103,593 109,913 Deferred income taxes 40,949 40,949 Claims, insurance and other 12,199 14,041 Long-term liabilities of discontinued operations - 24,859 --------- ------------ Total other liabilities 156,741 189,762 SHAREHOLDERS' EQUITY: Common stock 15 14 Additional paid-in capital 197,498 194,398 Deferred compensation trust (1,630) (1,322) Retained earnings 1,736 35,302 --------- ------------ Total shareholders' equity 197,619 228,392 --------- ------------ Total liabilities and shareholders' equity $472,588 $554,741 ========= ============ Saia, Inc. and Subsidiaries (formerly SCS Transportation, Inc. and Subsidiaries) Consolidated Statements of Operations For the Quarter and Six Months Ended June 30, 2006 and 2005 (Amounts in thousands, except per share data) (Unaudited) Second Quarter Six Months ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- OPERATING REVENUE $224,814 $185,824 $429,460 $352,789 OPERATING EXPENSES: Salaries, wages and employees' benefits 117,502 101,761 230,568 195,551 Purchased transportation 18,101 14,149 35,109 26,734 Operating expenses and supplies 48,758 37,308 93,664 70,379 Operating taxes and licenses 7,303 6,513 14,651 12,732 Claims and insurance 6,793 7,662 13,099 14,234 Depreciation and amortization 7,845 7,313 15,429 14,055 Operating (gains) and losses (191) (162) (324) (436) Restructuring charges 1,680 - 1,680 - --------- --------- --------- --------- Total operating expenses 207,791 174,544 403,876 333,249 --------- --------- --------- --------- OPERATING INCOME 17,023 11,280 25,584 19,540 NONOPERATING EXPENSES: Interest expense 2,427 2,429 4,901 4,850 Other, net (28) (74) (213) 53 --------- --------- --------- --------- Nonoperating expenses, net 2,399 2,355 4,688 4,903 INCOME BEFORE INCOME TAXES 14,624 8,925 20,896 14,637 Income tax provision 5,658 3,650 8,013 5,911 --------- --------- --------- --------- INCOME FROM CONTINUING OPERATIONS 8,966 5,275 12,883 8,726 Income (loss) from discontinued operations, net (including loss on disposal of $44,015 in 2006, net of tax benefit) (44,903) 515 (46,449) 1,036 --------- --------- --------- --------- NET INCOME (LOSS) $(35,937) $ 5,790 $(33,566) $ 9,762 ========= ========= ========= ========= Average common shares outstanding - basic 14,557 14,892 14,529 14,975 ========= ========= ========= ========= Average common shares outstanding - diluted 14,873 15,217 14,859 15,318 ========= ========= ========= ========= Basic earnings per share- continuing operations $ 0.61 $ 0.35 $ 0.89 $ 0.58 Basic earnings (loss) per share-discontinued operations (3.08) 0.04 (3.20) 0.07 --------- --------- --------- --------- Basic earnings (loss) per share $ (2.47) $ 0.39 $ (2.31) $ 0.65 ========= ========= ========= ========= Diluted earnings per share- continuing operations $ 0.60 $ 0.35 $ 0.87 $ 0.57 Diluted earnings (loss) per share-discontinued operations (3.02) 0.03 (3.13) 0.07 --------- --------- --------- --------- Diluted earnings (loss) per share $ (2.42) $ 0.38 $ (2.26) $ 0.64 ========= ========= ========= ========= Saia, Inc. and Subsidiaries (formerly SCS Transportation, Inc. and Subsidiaries) Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2006 and 2005 (Amounts in thousands) (Unaudited) 2006 2005 --------- --------- OPERATING ACTIVITIES: Net cash from operating activities-continuing operations $ 27,609 $ 26,531 Net cash from operating activities-discontinued operations 9,158 10,283 --------- --------- Net cash from operating activities 36,767 36,814 INVESTING ACTIVITIES: Acquisition of property and equipment (42,328) (14,349) Proceeds from disposal of property and equipment 667 897 Proceeds from sale of subsidiary 41,200 - Net investment in discontinued operations (5,359) (11,203) --------- --------- Net cash used in investing activities (5,820) (24,655) FINANCING ACTIVITIES: Repayment of long-term debt (2,500) (8,002) Borrowing of long-term debt - 4,000 Repurchase of common stock - (9,177) Proceeds from stock option exercises 2,290 514 --------- --------- Net cash used in financing activities (210) (12,665) --------- --------- NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 30,737 (506) CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 16,865 6,949 --------- --------- CASH & CASH EQUIVALENTS, END OF PERIOD $ 47,602 $ 6,443 ========= ========= Saia Motor Freight Line, Inc. Financial Information For the Quarter and Six Months Ended June 30, 2006 and 2005 (Amounts in thousands) Second Quarter Six Months ---------------- % ---------------- % 2006 2005 Change 2006 2005 Change ---------------- ------ ---------------- ------ Operating revenue 224,814 185,824 21.0 429,460 352,789 21.7 Operating income 19,117 12,507 31,577 21,470 Operating ratio 91.5 93.3 92.6 93.9 Second Quarter ---------------- Second Quarter Amount/Workday ---------------- % ---------------- % 2006 2005 Change 2006 2005 Change ---------------- ------ ---------------- ------ Workdays 64 64 F/S Revenue LTL 208,519 172,432 20.9 3,258.1 2,694.3 20.9 TL 16,295 13,392 21.7 254.6 209.3 21.7 Total 224,814 185,824 21.0 3,512.7 2,903.6 21.0 Revenue excluding revenue LTL 208,867 172,720 20.9 3,263.5 2,698.8 20.9 recognition TL 16,322 13,414 21.7 255.0 209.6 21.7 adjustment Total 225,189 186,134 21.0 3,518.5 2,908.4 21.0 Tonnage LTL 882 787 12.1 13.78 12.29 12.1 TL 179 162 10.5 2.80 2.54 10.5 Total 1,061 949 11.9 16.58 14.83 11.9 Shipments LTL 1,564 1,416 10.5 24.44 22.12 10.5 TL 25 22 14.2 0.39 0.34 14.2 Total 1,589 1,438 10.5 24.83 22.46 10.5 Revenue/cwt. LTL 11.84 10.98 7.8 TL 4.55 4.13 10.1 Total 10.61 9.81 8.2 Revenue/cwt. LTL 10.26 9.95 3.1 (excluding fuel TL 4.46 4.07 9.8 surcharge) Total 9.28 8.95 3.8 Revenue/shipment LTL 133.53 121.99 9.5 TL 653.32 612.93 6.6 Total 141.70 129.47 9.4 Pounds/shipment LTL 1,128 1,111 1.5 TL 14,357 14,831 (3.2) Total 1,336 1,320 1.2 *T