SCS sells Jevic to investors

SCS sells Jevic to investors    SCS Transportation said late Friday it has sold its hybrid less-than-truckload and truckload carrier Jevic Transportation to an affiliate of private equity firm Sun Capital Partners for about $40 million in cash.
   Bert Trucksess, chairman and chief executive officer of SCS, said Jevic had not achieved acceptable levels of profitability for several years, and that it’s best chance for a turnaround is as a private company. SCS is publicly traded on the NASDAQ exchange.
   The sale highlights the increasing role in the past two years of private investment firms in the trucking and logistics industries.
   The Kansas City, Mo.-based holding company will now focus on growing its Saia multi-region less-than-truckload subsidiary and consolidate its headquarters in Duluth, Ga., where Saia is based. The company eventually plans to drop the SCS Transportation name to reflect that Saia is its sole operation. SCS expects to record a pre-tax charge of $2.8 million for the move and to achieve annual cost savings of about $2 million per year beginning in 2007.
   SCS said it expects to realize another $12 million in tax benefits by structuring the transaction as an asset sale.
   Saia operates in 30 states across the South, Midwest and West Coast. In 2005, the company had sales of $754 million and operating income of $48 million. During the last five years operating income has increased at a 30 percent annual clip.
   As part of the reorganization, Saia President Rick O’Dell was appointed president of SCS and will succeed Trucksess as CEO following a transition period expected to be completed by the end of the year. Trucksess will remain chairman of the company. O’Dell was also appointed to the board of directors.
   Jim Darby, Saia’s vice president of finance and administration, will succeed Jim Bellinghausen as chief financial officer, effective Sept. 1.
   In 2005, Jevic had operating revenue, excluding fuel surcharges, of $310 million, down 2.2 percent from 2004. Operating revenue with fuel surcharges included was up 2.5 percent to $345 million. The company’s operating income took a big dive in 2005 to $3.1 million from $8.8 million the previous year. With an operating ratio of 99 percent, the company is barely breaking even on its operating costs.
   SCS Transportation was formed four years ago when it was spun off from Yellow Corp., the holding company for the largest less-than-truckload carrier in the country and now known as YRC Worldwide Inc.