LTL news: YRCW sees mixed fourth quarter results
February 28, 2012
Less-than-truckload transportation services provider YRC Worldwide (YRCW) reported today that for the fourth quarter of 2011 its consolidated operating revenue—at $1.212 billion—was up 11.1 percent annually, with a consolidated operating loss of $38 million.
YRCW officials said that that $38 million operating loss included a $13 million loss on asset disposals, $4 million of restructuring professional fees, and $9 million in letter of credit fees. And its quarterly net income loss of $86 million was down compared to a $15 million net income gain for the fourth quarter of 2010, which included an $87 million income tax benefit primarily due to a favorable IRS settlement.
Full-year 2011 consolidated operating revenue—at $5 billion—was up 9 percent compared to 2010’s $4.6 billion and was also ahead of 2009’s $4.9 billion. And 2011’s operating loss of $138 million represented a 39.9 percent improvement over 2010’s $227.8 million.
“I am pleased with the renewed focus on customer service, but obviously not satisfied with our consolidated operating results,” said James Welch, chief executive officer of YRCW, in a statement. “However, I am encouraged that our performance trends over the fourth quarter are consistent with or exceeding the consolidated operating plan created by our now autonomous operating companies.”
During the fourth quarter YRCW sold a significant portion of its assets of its truckload subsidiary, Glen Moore, to Celadon Trucking Services Inc., a subsidiary of truckload carrier Celadon Inc. Financial terms of the deal were not disclosed. YRCW officials declined to disclose how many Glen Moore assets were involved in the transaction.
In an interview with LM shortly after the transaction was completed, Welch, who took the helm as YRCW CEO in July (Welch began his career in 1978 as a sales rep for Yellow Transportation, now known as YRC Freight, and in 2000, Welch was named Yellow’s president and CEO, a position he held until 2007), said he was intent on getting the company precisely focused on LTL.
“I feel like the company had been really distracted with assets outside of our core LTL expertise,” he said. “One of the things I have worked [towards] is pushing the operating power to the LTL companies—New Penn, Holland, Reddaway, and YRC—and try to eliminate the distractions other things that surround the business and get focused on improving our performance in the LTL segment of our business, which is 96 or 97 percent of our revenue. You will see me continue to remain focused on North American LTL assets. Anything other than that is not what we are focused on.”
And in its company earnings release YRCW made it clear that more transactions may be in the pipeline, as the company will continue to evaluate additional sales of non-strategic assets.
Tons per day at YRC Freight, which was re-named from YRC National Transportation in early February, were up 6.7 percent year-over-year, shipments were up 6.0 percent, revenue per hundredweight was up 4.8 percent, and revenue per shipment was up 5.5 percent. YRC Freight’s operating revenue was up 11 percent to $805 million, with an adjusted operating ratio of 101.5. Compared to the third quarter, daily tonnage was down 2.9 percent and revenue per shipment was up 1.9 percent.
At YRC Regional, tons per day were up 4.7 percent and revenue per hundredweight was up 5.7 percent. Daily shipments were up 2.5 percent, and revenue per shipment was up 7.9 percent. YRC Regional’s operating revenues were up 12.6 percent to $382 million, with an adjusted operating ratio of 97.7. Compared to the third quarter, daily tonnage was down 2.8 percent, and revenue per shipment was up 1.8 percent.
In late January, YRCW issued proposed operations changes for YRC Freight based on a marketing strategy to provide same day, next day, two day, three day, and four day service. YRC said in an operating statement that the design of the present day freight handling structure currently in place within the YRC network is to handle in excess of 70,000 shipments on a daily basis.
“The reality of the economic climate is that the company is handling, on average, 48,000 shipments per day with a linehaul network domiciled at approximately 150 locations,” said YRC. “The vast number of these domicile locations and the excessive number of freight re-handle locations must be restructured to continue the strengthening of the company’s financial position to better provide job security to its employees while at the same time growing the business and increasing employment opportunities. This change of operations request is also intended to return YRC to what it does best—to provide world class service to its customers in to 500 mile to 3,500 mile market.”
YRCW wanted to implement these changes by April. But these proposed changes are contingent on getting Teamsters approval, which is proving to be a sticking point. According to the Teamsters for a Democratic Union (TDU), the YRC Freight change of operations, which it said “aims to eliminate all utility employees and most end of line jobs,” is on hold, with a planned YRC Freight March 1 hearing on the change of operations now postponed.
In a recent interview with LM, YRC Freight President Jeff Rogers said that by focusing on what YRC Freight does really well, which is long haul in the 500 mile to 3,500 mile market, and focusing on two- and three-day transit times and taking handles out and doing more direct loading, will speed up its service and subsequently reduce freight claims and freight handling.
“It is in a way about de-emphasizing or not doing next-day as much, which is not a core focus, and we want to focus on what we do better and put our resources there,” said Rogers.
In September, YRCW completed its long-awaited financial restructuring. Company shareholders unanimously voted to have YRCW common stock diluted.
This news followed a $500 million restructuring announced in July, which included a new $400 million lending agreement.
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