Some YRC Units Profitable Says Zollars

Oct. 30, 2009
YRC Worldwide announced a loss per share of $2.67 for the third quarter. In the prior-year quarter, the reported loss was $12.58 (including impairment charges on good will and intangible assets)

YRC Worldwide announced a loss per share of $2.67 for the third quarter. In the prior-year quarter, the reported loss was $12.58 (including impairment charges on good will and intangible assets). That said, the company reported that its logistics unit showed a $6 million profit in the quarter and the regional less-than-truckload (LTL) group had a small profit.

YRC's national LTL saw improvements of $50 million from the first quarter to the second and another $100 million from the second to the third quarter, according to Bill Zollars, chairman and CEO of YRC Worldwide. Pricing remained very competitive, said Zollars, but the national LTL group saw volumes stabilize and yield firming, he noted.

Tim Wicks, COO, pointed out that YRC was focusing on growing market share in segments where it was needed and that has helped improve yield. Zollars reiterated that pricing was very competitive but stabilizing for YRC and the company was focused on pricing discipline and profitable customers.

Steps to improve performance included elimination of the service overlap in the Northeast region between the Holland regional unit and New Penn. Other cost reductions and “right sizing” of networks and support functions also contributed. Zollars reported YRC expects by the end of 2009 it will reach 75% of the cost reduction targeted for January 2011.

The regional group showed a small profit, said Zollars. Results improved by $50 million from the second to third quarter and a total of $75 million since the first quarter, and this, said Zollars, did not reflect the full impact of labor contract concessions that reduced wages.

"We gained significant momentum in the third quarter as we executed on our comprehensive plan to improve operating efficiencies, restore financial strength and position our company for future success," stated Zollars in a prepared release. "We achieved significant sequential improvement from the first half of the year. In fact, YRC Regional Transportation and YRC Logistics were profitable for the quarter, and our operating cash flow trends improved sequentially during the quarter despite the continued economic downturn."

YRC Transportation reported total shipments per day dropped by 39.9% and revenue per hundredweight (including fuel surcharges) was off by 11.5% for the quarter. The group reported revenues for the third quarter of $834.7 million, down 49.8% from the prior-year quarter. Tonnage was 2 million tons for third quarter 2009 vs. 3.5 million tons in the same period of 2008.

YRC Regional Transportation total shipments per day were off by 22.7% and revenue per hundredweight (including fuel surcharges) was down by 12.2%. Revenues for the period were $338.6 million, down 33.5% from 2008's $508,8 million. Tonnage was 1.6 million tons, down 24.2% from 2.1 million tons in the same period of 2008.

YRCW's filing with the Securities Exchange Commission (SEC) stated that on Oct. 26 and Oct. 27, 2009, it entered into amendments to its credit agreement with JPMorgan Chase Bank, National Association and other lenders providing the company with $950 million in a senior revolving credit facility along with other available borrowings and a senior term loan “in aggregate outstanding principal amount of approximately $111.5 million.”

The credit agreement also allows the company to defer revolver and term loan interest, letter of credit fees and commitment fees upon completion of a recapitalization transaction. That transaction means that at least 95% of the aggregate principal amount of each of the company's USF notes and contingent convertible senior notes “shall be exchanged for capital stock of the company.”

“There are exceptions and termination events with respect to the interest and fee deferral described [in the contribution deferral agreement of June 17, 2009],” noted the SEC filing. No further interest and fees wil lbe deferred, and all previously deferred amounts will become payable at the direction of a majority of the lenders . . .,” the filing continued.

SEC 8K filing of Oct 30, 2009.

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