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Yellow Roadway Posts Higher Profits, Sales in the Third Quarter

Posted on: Thursday, 27 October 2005, 21:00 CDT

By Randolph Heaster, The Kansas City Star, Mo.

Oct. 28--KANSAS CITY, Mo. -- Hurricanes and merger problems at Yellow Roadway Corp. did not prevent the nation's biggest trucking company from posting sharply higher profits and sales in the third quarter.

Yellow Roadway, based in Overland Park, Kan., reported earnings of $85.29 million, or $1.42 a share, on $2.49 billion in revenues for the quarter ended Sept. 30. During the same time last year, the company earned $55.91 million, or $1.15 a share, on $1.77 billion in revenues.

Yellow Roadway's results this year include its May acquisition of USF Corp., a big regional carrier.

In early September, Yellow Roadway reduced its third-quarter forecast by 20 cents a share, projecting revised earnings of $1.40 to $1.45 a share. Yellow Roadway said the hurricanes that devastated the Gulf Coast would reduce earnings by 5 cents a share. In addition, the company said new processes introduced at Roadway Express were negatively affecting productivity.

Yellow Roadway at the time also appointed a new president at Roadway Express.

Roadway Express picked up momentum late in the quarter, the company said, posting a nearly 6 percent rise in revenues from the same quarter last year.

Yellow Transportation, the company's biggest trucking unit, saw its quarterly revenues rise by 7.7 percent. The unit's operating ratio, which measures operating expenses as a percentage of gross revenue, was 91.8 percent, the lowest since 1988.

"We delivered another solid quarter of financial results," Bill Zollars, Yellow Roadway's chairman and chief executive, said in a statement. "Synergies from the Roadway acquisition remain on track while synergy initiatives from the USF acquisition are well under way."

Continued strong demand for shipping services allowed Yellow Transportation to charge higher rates, including a fuel surcharge. Also contributing to the company's bottom line was YRC Regional Transportation, comprised mostly of USF carriers. That unit reported operating income of $27.77 million in the third quarter.

Jason Seidl, transportation analyst at Credit Suisse First Boston , said that overall, the financials came in better than he expected.

"They're a little bit better at Yellow Transportation, and they're a lot better at Roadway, more on the margins than anything else."

The company is forecasting earnings between $1.30 and $1.35 a share in the fourth quarter and full-year earnings between $5.18 and $5.23 a share. Total revenue for 2005 is forecast at $8.7 billion.

Yellow Roadway released its results after the close of regular trading Thursday. The stock fell $1.21 a share Thursday to $42.25 on the Nasdaq. It was down an additional 30 cents a share in after-hours trading.

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Copyright (c) 2005, The Kansas City Star, Mo.

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YELL, NDAQ,

Source: The Kansas City Star (Kansas City, Missouri)

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