YRC Shrinks Quarterly Net Loss, Led By Regional Units’ Results
This story appears in the Aug. 13 print edition of Transport Topics.
Less-than-truckload carrier YRC Worldwide Inc. pared its quarterly net loss by 46.5% from a year earlier and turned a profit on operations — before interest payments — for the first time since 2008.
The Overland Park, Kan., company also said Aug. 3 that its regional unit did better than the longhaul division.
YRC posted a net loss of $22.1 million, or $3.21 a share, on second-quarter revenue of $1.25 billion. During the same period in 2011, it lost $41.3 million on revenue of $1.26 billion. The per-share loss in the 2011 second quarter was $267.33 because of a sharp swing in the number of shares outstanding.
“We are producing results slightly ahead of our forecast, despite the recently softening economy,” CEO James Welch said in the earnings announcement.
The company’s operating profit was $15.5 million for the quarter, compared with a loss of $5.6 million a year ago. A one-time gain of $6.5 million from asset sales means the quarterly profit from actual operations was $9 million, but the YRC statement said the company had not earned such a profit since the third quarter of 2008.
Overall, the company wound up with a net loss because of $41.6 million in quarterly interest expense. YRC did have an operating profit for one quarter in 2010, but that was entirely the result of a one-time, noncash adjustment.
YRC ranks No. 4 on the Transport Topics Top 100 list of U.S. and Canadian for-hire carriers and is the second-largest LTL on the list, behind the Freight division of FedEx Corp.
A number of major LTL carriers have reported improved profitability for the second quarter (8-6, p. 5).
YRC Freight, the longhaul successor to Yellow Transportation and Roadway Express, lost $5.1 million on quarterly revenue of $821.1 million. A year ago, the division generated a profit of $6.6 million, but operating ratio — expenses as a percentage of revenue — deteriorated to 100.6 from 99.2.
“YRC Freight is actively managing its customer mix with improved pricing discipline, which is resulting in both sequential and year-over-year yield improvement despite the slight decrease in operating revenues,” Welch said of his largest division.
The difficulty of such a challenge should not be underestimated, analyst Christopher Ceraso wrote to clients of Credit Suisse after the earnings report was issued.
“Improving customer mix and adding density in the right lanes is a difficult task. Management is confident that it can optimize the Freight network, though acknowledged that it will take time,” Ceraso said.
The regional unit has three operating companies — Holland, New Penn and Reddaway — and its quarterly OR improved to 94.7 from 96.3. The division earned $22.9 million on revenue of $429.8 million. In last year’s quarter, it earned $14.7 million on revenue of $401.7 million.
YRC has struggled significantly to survive in recent years, but the chief financial officer said the company now has more available cash. “The approximate $250 million of total liquidity that we reported this quarter is our best second-quarter liquidity in four years and speaks to our continued operational improvement and effective working capital management,” said YRC’s Jamie Pierson.
The longhaul division had a 3% improvement in revenue per hundredweight, or yield, but lower levels of tonnage hauled and shipments moved. In contrast, the regional unit enjoyed gains in tonnage, shipments and yield.
