The document proposes selling shares of UPS, which have increased 19% since purchase, and using the proceeds to buy shares of YRCW. UPS is being sold to realize gains and pursue the opportunity in YRCW, a transportation company that services many large manufacturers. YRCW has struggled in recent years but is showing signs of a turnaround under new management, with goals of cutting costs, improving customer service, and increasing profitability. The investment thesis is that YRCW presents high risk but also high reward potential as the company restructures and the economy recovers.

1. NASDAQ: YRCW
3/21/2013
Turner Novak
Eric Graverson
NYSE: UPS

2. Proposal
• Sell 47.359 shares of UPS @ 83.00
• Originally bought for $71.52 per share
• 8.527% of portfolio
• Buy 300 shares of YRCW @ $8.62
• $2,586
• 5.60% of portfolio

3. Overview of UPS
• Global transportation company
• Involved in the LTL business with YRC
• Main competitor is FedEx and the US Postal
Service

4. IPO’s Ownership TimeframeIPO’S
Entry Point

5. Reasons to Sell UPS
• Realize our 19% gain
• US Postal Service will keep Saturday deliveries
– Lost an opportunity for UPS to steal market share
• Opportunity cost
– YRCW is a better opportunity in the same industry
SELL! SELL! SELL!

6. YRC Overview
• Founded in 1924
• Overland Park, KS
• 32,000 Employees
• 4th largest LTL Carrier by Revenue
• Customers include Wal-
Mart, Perrigo, and large
manufacturers
• Ships freight for companies that
lead the U.S. economic recovery

7. YRC Over the Past 18 Months

8. Less-Than-Truckload (LTL)
• Ships product from
Point A, to Point B, to
Point C, to Point D
• Product is transferred
at each terminal
Truckload (TL)
• Ships product from
Point A to Point B
Trucking Industry
YRC is an LTL Carrier

9. TURNER’S
HOMELAND!

10. Industry Comparison
• Undervalued compared to the industry
• Financial liquidity is near industry average
• Institutions are selling, insiders are buying

11. Industry Comparison
• Why are the total NET Assets (Assets – Debt)
worth 10 times more than the total value of
the company?
• Cash and earnings from operations worth over
2 times more than the value of the company?

12. YRC in the Past
• Revenues dropped from $9.6B to $4.8B
• Net Income dropped from $275M to - $140M
• Known for poor customer service

13. Revenue USD (Billions) Last 6 Years
• Industry leader in 2007
• Revenue decreased during recession
• 3rd in 2012

14. Net Income USD (Million) Last 7 Years
• Industry leader in 2007
• Last in 2012
• Room to improve in cutting costs

15. • The market thinks YRC will fail
• We don’t blame them
• But here is why they are wrong

16. YRC in the Future
• Cutting costs
– Consolidating terminals
– Reducing workforce
• Restructuring executive
management team
• Improving customer service
– Intensive training

17. Net Income USD (Million)
• Is YRC finally turning the corner?
• How will they get there?

18. YRC in the Future
• Hired consulting firm MAVEA to help turn
around the company
• CEO of MAVEA, Larry Wilson, bought shares
of YRC a few weeks before the contract was
signed
• Larry Wilson is also on the
Board of Directors of another
company that has seen a
50%+ increase in share price
during its turnaround, Yahoo

19. Earnings Call Takeaways
• Beat analysts estimates for the first time in
4 years
• Positive operating income for the first time
in 6 years

20. Earnings Call Takeaways
• Verbal offers to lease almost 100% of
revenue equipment purchases in 2013
– Operating leases
– Decrease in CapEx, increase in FCF
• New company culture to reduce workers
compensation claims (injuries on the job)
– Injury frequency improved by 20%
• Reducing work force to improve efficiency

21. Total Assets
Operating Income

22. EBITDA Margin
Gross Margin
Revenue

23. Earnings Call Takeaways
• New management team
– Marketing and sales focused
– Sales and operations driven
• Decreased cargo claims
ratios by focusing on
better freight handling

24. Balance Sheet
• Convertible Bonds when stock price hits $14
and $36
• Will lower Interest Expense if
converted, which will raise EBITDA, but also
dilute shares
• Neutral effect on EPS

25. News
• WalMart named YRC the LTL carrier of the year
• Announced job cuts of almost 500 employees
on Monday
– Price jumped 15% that day
• Trading volume trending upwards
• Will analysts raise price targets?

30. As the Risk goes down
the Price will go up

33. Risks
• Earnings don’t increase like we are projecting
• Share dilution
• US economy does not recover, which is driving
growth in the trucking industry

34. • Backbone of the U.S. economy
• Very undervalued with 0.08 P/B
– Failure is priced into the stock
• IPO needs to take on more risk
than just UPS, Home Depot, etc.
• High risk, high reward
Investment Thesis
BUY! BUY! BUY!

35. Proposal
• Sell 47.359 shares of UPS @ 83.00
• Originally bought for $71.52 per share
• 8.527% of portfolio
• Buy 300 shares of YRCW @ $8.62
• $2,586
• 5.60% of portfolio