[Stay on top of transportation news: Get TTNews in your inbox.]
Officials with YRC Worldwide say the impact of the United Auto Workers strike against General Motors Co., lower auto sales and weakening freight traffic in the Midwest added up to a disappointing third quarter when the company reported its financial results Oct. 31.
The Overland Park, Kan.-based for-hire carrier reported a net loss of $16 million or negative 48 cents per share, compared with a $2.9 million profit, or 2.9 cents per share in the same period a year ago. Revenue was $1.25 billion compared with $1.30 billion in 2018.
Darren Hawkins, CEO of YRC Worldwide, shares positive developments within the company that provide “a unique opportunity to make strategic investments in our operating companies.” Read more: https://t.co/quB2OObbEF— YRC Freight (@YRCFreightLTL) October 10, 2019
Company officials told analysts and reporters on a conference call they believe a turnaround plan is in place.
“2019 has been a challenging trade environment all year long, but also a productive year for YRCW. As we look beyond Q3, our path forward is defined and currently well underway with our multiyear strategy,” CEO Darren Hawkins said. “We have cleared the hurdles of the ratification of a new five-year labor agreement, providing us more stability and flexibility and an improved capital structure with our refinance term loan.”
In September, YRC announced it was refinancing a $600 million loan and that $11.2 million of its $16 million quarterly loss was a result of costs associated with that refinancing.
The refinancing agreement extends the loan’s maturity date from July 2022 to June 2024, and the company says it will save $18 million annually under the new terms.
YRC’s three regional carriers — New Penn, Holland and Reddaway — had disappointing quarters.
Revenue dropped by 2.3%, to $803.2 million from $822.1 million in the year-ago period.
Income for the regional carriers recorded a $4.1 million loss, compared with an $18.4 million profit last year. The division’s operating ratio also spiked to 101 from 96.2 in 2018. Operating ratio, or operating expenses as a percentage of revenue, is used to measure efficiency. The lower the ratio, the greater the company’s ability to generate profit.
In addition, daily shipments dropped by 3.9% and daily tonnage slipped 3.6%.
Longhaul unit YRC Freight saw revenue slump by 5.8%, to $453.6 million from $481.5 million last year.
The division’s operating ratio improved to 96.1 from 97 in 2018.
However, daily shipments fell by 3.5%, and daily tonnage posted a decline of 4%.
YRC said it has started a restructuring plan for its regional service centers to reduce costs.
“With the focus on greater efficiencies, we have completed 12 consolidations of service centers, and we are on track to hit our goal of approximately 25 service centers to be consolidated by the end of the year,” Hawkins said. “As I’ve mentioned, this just scratches the surface of the effort, and we will continue to enhance our network through terminal consolidations for the next several quarters.”
In addition, Hawkins said the regional carriers have not yet managed to leverage the operational efficiencies that are part of the new five-year contract negotiated earlier this year with the Teamsters union, but the LTL division is doing a better job of implementing the contract.
YRC Worldwide ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Want more news? Listen to today's daily briefing: