GASEL TRANSPORTATION LINES, INC., (OTCBB: GSEL)

Dear Reader:

Nearly every one of the hundreds, maybe thousands, of products or its components we use throughout our daily lives was moved by truck at some point before we touched it.  It's hard to imagine a service more integral and basic to our lives than trucking.  With today's pervasive investment trend leaning decidedly toward a return to fundamentals, we think today's featured company is quite compelling.  Gasel Transportation Lines is a survivor in a necessary industry; one that is well positioned to take advantage of its longevity, momentum and industry expertise.
 

Gasel Transportation Lines, Inc., founded in 1988 has grown 575% over the past seven years and is now the largest regional trucker in its area.

Gasel is a truckload contract carrier of both temperature controlled and non-refrigerated freight.  The Company is licensed with the Department of Transportation as a common and contract motor freight carrier in the 48 continuous United States and Canada. 

The trucking industry is in a consolidation period and Gasel's management is executing its strategic plan to aggressively grow the company over the next three to five years, targeting carriers with no exit strategy or access to capital that would have a complementary effect on a combined operating bottom line.

In a highly fragmented industry comprised of many small players that have been hard hit by economic pressure and driver shortages, Gasel has a number of strengths to support its growth plans, including:

• 14 year old company with access to capital to fuel profitable growth.
• Audited financial statements
• State-of-the-art management information systems
• Over 300 customers with many Fortune 100 and 500 companies in its Top 20 shipper list
• Outstanding safety function with a consistently better-than-average DOT Safety Rating
• Late model revenue equipment with satellite communication and tracking systems
• ISO Quality Certification
• Low insurance rates and driver turnover
• Main location is on 12.5 acres of company-owned land
• An industry-experienced management team

Gasel's revenues have grown 575% over the last seven years from $3.2 million to $18.4 million in 2001, and Gasel’s safety record is above the national average, which helps to keep its insurance rates down substantially - an outstanding distinction in today's industry.
 

THE DAWN OF OPPORTUNITY

 

Gasel's marketing objective is to build its regional presence in and around Columbus, Ohio, a major metro area that has many large-based, high-margin shippers.  The acquisition of Eagle Transportation, located in greater Columbus is helping to achieve this objective. Since, the Company has secured many Fortune 100 and 500 customers such as Ross Laboratories, PetSmart, Kroger, Auto Zone and General Motors to name a few.

Gasel has established facilities in the Columbus, Ohio metro area that houses 30% of its fleet.  The leased property includes an equipment maintenance facility and allows for a 2X increase in the Company’s current fleet size.  In the mid-Ohio valley, a five county area in Southeast Ohio and the western half of West Virginia, Gasel is the largest truckload company. This area is heavily industrialized near the Ohio River where the states of Kentucky, West Virginia and Ohio all meet. 
 

ACQUISITIONS & GROWTH STRATEGY

The current consolidation in the trucking industry presents an excellent opportunity for Gasel to exploit its acquisition strategy through the purchase of comparable trucking firms. 

In 1996 Gasel continued to expand by acquiring the assets of Central Florida-based Kersey Trucking, Inc.

In 2000, Gasel purchased the assets of Ohio-based Eagle Transport, Inc. expanding Gasel’s trucking operation to the more lucrative economic metropolis of the greater Columbus, Ohio area and adding a more geographically dispersed customer base. 

Currently, Gasel has entered into a Letter of Intent to acquire the assets of a Midwest-based Carrier that would add $ 16 million to Gasel's annual revenues. This acquisition would approximately double Gasel's current sales.

THE TRANSPORTATION INDUSTRY

After de-regulation, the trucking industry has been oversupplied with small, less sophisticated operators which have experienced labor shortages and increased fuel and insurance costs. Gasel, by contrast, has increased its market share and grown rapidly during this same period due to the following advantages:

• Gasel’s target market is major shippers. 
• The major trend for large shippers is to outsource all freight and shipping costs. 
• Major shippers have no desire to spend their precious capital on trucks and equipment.
• In recent years many companies such as Alcoa, Kaiser Steel, Borden, and GE have abandoned their own fleets. 
• As more and more shippers look to outsource their freight, Gasel offers a complete turnkey program. 
• While 7,000 trucking firms have gone out of business in the last few years, Gasel has continued to grow.

Gasel is one of only 54 U.S. trucking companies that is ISO certified.  In many cases, the certification gives Gasel a competitive edge allowing it to transport a number of the larger shippers' products.  More importantly, the distinction demonstrates the Company's dedication to quality service.
 

ADDITIONAL COMPETITIVE ADVANTAGES

DRIVER TRAINING SCHOOLS

Gasel has the competitive advantage of owning three driver training schools, which supply top graduates that help meet the Company’s driver needs. As the schools also produce a handsome profit, Gasel intends to add two schools annually. 

DRIVER TURNOVER

While the industry has a 100%+ turnover rate, Gasel's driver loss averages substantially less than the industry norm at approximately 80%.  Gasel pays top scale for its drivers of whom 50% have been with the company for over 5 years. 

FREIGHT BROKERAGE 

To expand its business, Gasel formed a subsidiary, GTL Logistics, Inc., to operate as a freight broker. Gasel is now in a position to use freight brokerage as a way to gain market share and operate more efficiently. 

Gasel is at near 100% capacity now and as a freight broker, the Company can immediately take on more shipping orders by using outside trucks to move its excess freight while earning a profit margin and giving the company-owned equipment the advantage of freight selectivity. 

This new freight brokerage operation is expected to generate additional gross revenue with margins of 10% to 20% that will drop straight to the bottom line. 

MANAGEMENT INFORMATION SYSTEMS

Gasel also has sophisticated management information systems in place to effectively handle additional trucking while maintaining its reputation for quality of service. 

GROWTH

Additional revenues are to be generated from increased volume and rates with existing and new customers, and through the acquisition of other trucking companies that have complementary traffic lanes. 
 

TECHNOLOGY

 

Gasel has been very successful at increasing the number of loads while increasing the quality of customer service.  Gasel has developed and implemented a control system using its new communication technology to assist in keeping its fuel costs in line by creating a state-of-the-art fueling system that tells its drivers exactly where and when to get the best fuel prices.  Gasel uses a satellite tracking system to manage the exact location of every truck and trailer 24/7.  This technology covers 99% of the 500 most populated U.S. cities and assists in meeting the need for 'just-in-time' pickup and delivery.

Gasel's High Tech Communications System Creates Many Efficiencies Saving Time and Money:

• Using its proactive scheduling system Gasel can deliver more loads
• On time delivery rate is 98% without damage or loss
• Gasel's premium-to-loss ratio has vastly improved over the last 5 years; making Gasel a 'desirable' client for insurers
• A reduction of “on-hold” time for incoming calls for service
• Automatic pick-up and delivery status reported in real time
• Improved overall communications not only with drivers and dispatchers but also with all operations personnel

Gasel is committed to another time saving and operational efficiency program called EDI or Electronic Data Information, which uses electronic instead of paper documents for load tenders, shipment status updates and electronic freight billing. 

With the use of the Internet, EDI has brought faster bill collections.  EDI is especially effective with some of Gasel’s larger customers such as Ross Labs, Campbell’s Soup, and PetSmart. There is a big payoff in productivity and cost savings through EDI to invoice and collect quickly.
 

GASEL CUSTOMERS

 

Gasel has a strong, long-standing balanced customer base of over 300 shippers that are diversified among different industries.

The customer base is diversified into many different industries including chemical, metallurgical, plastics, foodstuffs, pharmaceutical, produce, and general commodities. The top 20 customers represent approximately 70% of the Company’s revenues.  Selected customers from the top 20 shippers are: 

• Mills Pride (Home Depot)
• Ross Labs
• Abbott Labs
• General Motors
• Chevron Phillips Chemical
• Hercules Tire and Rubber
• Kraton (Shell) Chemical
• PetSmart

GASEL'S TANGIBLE ASSETS & CREDIT

Gasel’s fleet is state-of-the-art with 104 tractors (estimated value $6.2 million), 123 dry van trailers, and 100 temperature-controlled trailers (estimated value $3.8 million) with a ratio of better than 2:1 trailers to power units.

All engines and major components, tires and most parts are interchangeable. This makes for easy maintenance and improves purchasing power. 

Gasel has a $70,000 line of credit with EFS, a Memphis, Tennessee-based fuel-card company. Gasel has consistently averaged for the past two years a $0.05- $0.08 per gallon better price than the national average through a highly selective fuel stop network concentrated around one major national price leader for volume purchase discount advantages.
 

SELECTED FINANCIAL HIGHLIGHTS

GASEL MANAGEMENT

Gasel's management group is leanly staffed throughout the organization, with each position utilizing a "working manager" concept. Many positions have multiple areas of responsibility.

A 4-person top management staff oversees and hands-on manages Sales & Marketing, Operations, Safety, and Administration. Combined, the top management group has over 100 years of truckload industry experience, and are proven professionals in strong growth transportation scenarios.

Mike Post founded the Company in 1988 after an outstanding career in the Southeast Ohio banking community and serving in a top management capacity for a number of years for a well known regional carrier.

Mr. Post  has been the Company's President and CEO since its inception.
 

TO CONTACT GASEL OR FOR INFORMATION

(1) Marietta, Ohio Tel: (740) 373-6479 Fax: (740) 373-9634

(2) Columbus, Ohio Tel: (800) 835-7747 Fax: (614) 889-4354

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