YRC Worldwide Q4 and 2013 earnings mostly show gains
February 27, 2014
In a year that was replete with labor-related and financing issues, less-than-truckload (LTL) transportation services provider YRC Worldwide reported relatively solid earnings for the fourth quarter and 2013 year-end.
YRC’s consolidated operating revenue for 2013—at $4.865 billion—was up 0.3 percent compared to 2012, and its consolidated operating income increased $4.3 million to $28.4 million, including a $2.2 million gain on asset disposals, coming one year after its first positive annual consolidated operating income in six years. 2013 consolidated operating revenue came in at $4.851 billion and a consolidated operating income of $24.1 million, including a $9.7 million gain on asset disposals. EBITDA for 2013 at $257.7 million represented a $16.5 million improvement over 2012. And various reports stated that in 2013, the company lost $83.6 million after losing $140.4 million in 2012.
For the fourth quarter, YRC’s consolidated operating revenue––at $1.208 billion––was up 3.3 percent annually, but consolidated operating income dropped $31.6 million to an operating loss of $1.6 million, including a $0.3 million gain on asset disposals. And fourth quarter EBITDA––at $59.9 million––was down $17.1 million annually.
YRC CEO James Welch said that the company saw some challenges in 2012, due to various things, including the YRC Freight network optimization in the second and third quarters, driver shortages in the summer, and difficult winter weather in the fourth quarter. And he added that for this year, the company will have a sharp focus on implementing the changes in its Memorandum of Understanding (MoU) it reached with the Teamsters, coupled with the fact that this is the first time in five years YRC is not faced with what Welch described as the overhang of any near-term debt maturities, as YRC said earlier this month it refinanced approximately $1.1 billion in debt under much more favorable terms.
These terms include closing on the financing of a new $700 million term loan and a $450 million asset-based loan (ABL) facility. The new ABL facility is $50 million larger than the company’s current ABL facility and will support approximately $365 million letters of credit at closing. These new facilities will extend maturities to 2019 and will provide annual interest savings to YRC of approximately $40 to $50 million.
“The MoU extension process, while important to our company and employees, was no doubt a major workplace distraction, as we had literally hundreds of meetings with our employees to explain the urgency to [address and fix] or debt and the positive opportunity a successful outcome would bring,” Welch said on an earnings call. “The distractions felt by our field workers were also felt by our management team, which has now turned its attention, time and resources to the freight business and financing.”
Welch also took time to commend the fourth quarter performance of YRC’s regional companies––Holland, New Penn, and Reddaway––whom he said delivered financial results that were more than competitive in the fourth quarter despite severe winter weather conditions in December.
2013 operating revenue at YRC Freight—at $3.136 billion—was down 2.2 percent annually, with total tonnage per day and total shipments per day down 1.6 percent and 3.1 percent, respectively. Revenue per hundredweight and revenue per shipment were down 0.4 percent and up 1.1 percent, respectively. Fourth quarter revenue for YRC Freight—at $776.7 million—was down 0.1 percent, and total daily tonnage was up 3.2 percent. Total shipments per day were up 1.0 percent, and revenue per hundredweight and revenue per shipment were down 3.3 percent and 1.1 percent, respectively.
These quarterly results for YRC Freight, said Welch, were not acceptable, although it did see some notable performance improvements and made changes to its service cycle in the first half of the fourth quarter. But starting with the December 4 ice storm in Texas, he said YRC Freight struggled with winter weather on a daily basis from December into January and February.
“In December 2013, we had eight major network load pattern adjustments at Freight…accounting for approximately 2 million pounds per day, with no such diversions in December 2012,” explained Welch. “Even though the weather was volatile, freight volumes were stable…reversing trends from earlier in the year. Our team is confident that the short-term self-inflicted pain in 2013 will result in long-term improvements in 2014 and beyond.”
2013 operating revenue at YRC Regional—at $1.728 billion—was up 5.4 percent annually, with total tonnage per day and total shipments per day up 4.4 percent and 4.7 percent, respectively. Revenue per hundredweight and revenue per shipment were up 1.2 percent and 0.9 percent, respectively. Fourth quarter revenue for YRC Regional—at $431.0 million—was up 10.1 percent, and total daily tonnage was up 8.9 percent. Total shipments per day were up 7.5 percent, and revenue per hundredweight and revenue per shipment were down 0.4 percent and up 0.9 percent, respectively.
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