OVERLAND PARK, Kan., Oct. 31, 2019 (GLOBE NEWSWIRE) — YRC Worldwide Inc. (NASDAQ: YRCW) reported consolidated operating revenue for third quarter 2019 of $1.257 billion and consolidated operating income of $23.8 million, which included a $1.0 million net loss on property disposals. As a comparison, for the third quarter 2018, the Company’s results included operating revenue of $1.304 billion and consolidated operating income of $41.2 million, which included a $1.9 million net loss on property disposals.Net loss for third quarter 2019 was $16.0 million, or $0.48 per share, compared to net income of $2.9 million, or $0.09 per share, in third quarter 2018. This was impacted by an $11.2 million loss on extinguishment of debt associated with a refinancing of the term loan agreement, which resulted in a negative impact of $0.34 cents per share for the third quarter 2019.“In September, we announced the completion of the refinancing of our term loan, a critical next step in our multi-year strategy. We continue to increase our efforts with two of our five key strategic initiatives now complete,” said Darren Hawkins, Chief Executive Officer of YRC Worldwide Inc.The key components of our multi-year strategic roadmap are:Labor contract ratification, along with implementation of operational efficiencies to achieve service excellenceCapital structure improvementNetwork optimizationCustomer growth/engagement initiativesCapital investment in equipment and technologyDuring the quarter and up through this earnings announcement, the Company has commenced implementation of key initiatives that support our strategic plan:Completed the consolidation of our New Penn corporate office to scale processesCompleted a refinancing of our term loanNetwork optimization plans to consolidate service centers, with 12 completed so far and a total of approximately 25 service centers expected to be completed by end of 2019“We are prioritizing our network optimization initiatives to bolster our longer-term profitability for the Company,” said Hawkins. “With the focus on greater efficiencies, we completed the consolidation of the New Penn corporate offices, as well as the consolidation of 12 service center facilities. The cost savings from lease terminations, sale of properties as well as more efficient asset utilization also contribute to our increased profitability of our best-in-class brands.”“We have recently deployed a new operations field structure to ensure better customer service and increase operational efficiencies. Our team remains focused on building density in the areas we service, while enhancing the customer experience and value proposition, and ensuring greater efficiency with our equipment, our facilities and our resources.”“I’m proud of our YRC Freight team for posting the best third quarter operating income in over 10 years. By utilizing some of the operational efficiencies we now have in place from our labor agreement through the addition of box trucks, reduction of local purchase transportation as well as other cost control initiatives, we were able to expand operating margin despite sluggish volumes,” concluded Hawkins.Financial HighlightsIn third quarter 2019, net loss was $16.0 million compared to net income of $2.9 million in third quarter 2018.
On a non-GAAP basis, the Company generated consolidated Adjusted EBITDA of $65.9 million in third quarter 2019, a decrease of $18.3 million compared to $84.2 million for the same period in 2018 (as detailed in the reconciliation below). Last twelve month (LTM) consolidated Adjusted EBITDA was $240.8 million compared to $288.8 million a year ago.
Investment in the business continued with $40.9 million in capital expenditures and new operating leases for revenue equipment with a capital value equivalent of $35.3 million, for a total of $76.2 million, which is equal to 6.1% of operating revenue for third quarter 2019. The majority of the investment was in tractors, trailers and technology.Operational HighlightsThe consolidated operating ratio for the third quarter 2019 was 98.1 compared to 96.8 in third quarter 2018. The operating ratio at YRC Freight was 96.1 compared to 97.0 for the same period in 2018. The Regional segment’s third quarter 2019 operating ratio was 100.9 compared to 96.2 a year ago.
At YRC Freight, third quarter 2019 less-than-truckload (LTL) revenue per hundredweight, including fuel surcharge, increased 1.7% and LTL revenue per shipment increased 1.2% when compared to the same period in 2018. Excluding fuel surcharge, LTL revenue per hundredweight increased 2.8% and LTL revenue per shipment increased 2.3%.
At the Regional segment, third quarter 2019 LTL revenue per hundredweight, including fuel surcharge, decreased 0.8% and LTL revenue per shipment decreased 0.4% when compared to the same period in 2018. Excluding fuel surcharge, LTL revenue per hundredweight was flat and LTL revenue per shipment increased 0.3%.
Third quarter 2019 LTL tonnage per day decreased 4.0% at YRC Freight and decreased 3.6% at the Regional segment compared to third quarter 2018.
Total shipments per day for the third quarter 2019 declined 3.5% at YRC Freight and 3.9% at the Regional segment.Liquidity UpdateAt September 30, 2019, the Company’s outstanding debt was $906.3 million, an increase of $41.3 million compared to $865.0 million as of June 30, 2019.
The Company completed a refinancing of its term loan in September, which provides for additional liquidity, less restrictive financial covenants, a lower interest rate, and extends the maturity of the facility to June 2024. The new term loan agreement eliminates annual principal amortization, and permits reinvestment of the first $40.0 million in net cash proceeds earned from the sale of certain owned properties.
The Company’s available liquidity, which is comprised of cash and cash equivalents and Managed Accessibility (as detailed in the supplemental information provided below) under its ABL facility totaled $150.1 million compared to $225.2 million as of September 30, 2018, a decrease of $75.1 million.
For the nine months ended September 30, 2019, cash provided by operating activities was $13.4 million compared to $157.9 million for the nine months ended September 30, 2018.Key Segment Information – Third quarter 2019 compared to third quarter 2018 (a) Percent change based on unrounded figures and not the rounded figures presented
Review of Financial ResultsYRC Worldwide Inc. will host a conference call with the investment community today, Thursday October 31, 2019, beginning at 8:30 a.m. ET. A live audio webcast of the conference call and presentation slides will be available on YRC Worldwide Inc.’s website www.yrcw.com. A replay of the webcast will also be available at www.yrcw.com.Non-GAAP Financial MeasuresEBITDA is a non-GAAP measure that reflects the company’s earnings before interest, taxes, depreciation, and amortization expense. Adjusted EBITDA is: a non-GAAP measure that reflects EBITDA, and further adjusts for letter of credit fees, equity-based compensation expense, net gains or losses on property disposals, restructuring charges, transaction costs related to issuances of debt, non-recurring consulting fees, non-cash impairment charges and the gains or losses from permitted dispositions, discontinued operations, and certain non-cash expenses, charges and losses (provided that if any of such non-cash expenses, charges or losses represents an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period will be subtracted from Consolidated EBITDA in such future period to the extent paid). EBITDA and Adjusted EBITDA are used for internal management purposes as a financial measure that reflects the company’s core operating performance. In addition, management uses Adjusted EBITDA to measure compliance with financial covenants in our credit facilities and to determine certain management and employee bonus compensation. We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors and other users as these measures represent key supplemental information our management uses to compare and evaluate our core underlying business results both on a consolidated basis and across our business segments, particularly in light of our leverage position and the capital-intensive nature of our business. Further, EBITDA is a measure that is commonly used by other companies in our industry and provides a comparison for investors to evaluate the performance of the companies in the industry. Additionally, Adjusted EBITDA helps investors to understand how the company is tracking against our financial covenant in our term loan credit agreement. However, these financial measures should not be construed as better measurements than net income, as defined by generally accepted accounting principles (GAAP).EBITDA and Adjusted EBITDA have the following limitations:EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt;Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt, letter of credit expenses, restructuring charges, transaction costs related to debt, certain non-cash charges, losses and expenses, or nonrecurring consulting fees, among other items;Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;Equity-based compensation is an element of our long-term incentive compensation program, although Adjusted EBITDA excludes employee equity-based compensation expense when presenting our ongoing operating performance for a particular period;Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.Because of these limitations, our non-GAAP measures should not be considered a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP measures as secondary measures. The company has provided reconciliations of its non-GAAP measures to GAAP net income (loss) and operating income (loss) within the supplemental financial information in this release.Forward-Looking StatementsThis news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as “will,” “expect,” “intend,” “anticipate,” “believe,” “could,” “would,” “should,” “may,” “project,” “forecast,” “propose,” “plan,” “designed,” “enable,” and similar expressions which speak only as of the date the statement was made are intended to identify forward-looking statements. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Our future financial condition and results could differ materially from those predicted in such forward-looking statements because of a number of factors, including (without limitation) general economic factors; customer demand in the retail and manufacturing sectors; business risks and increasing costs associated with the transportation industry, including increasing equipment, operational and technology costs and disruption from natural disasters; competition and competitive pressure on pricing; the risk of labor disruptions or stoppages, if our relationship with our employees and unions were to deteriorate; increasing pension expense and funding obligations, subject to interest rate volatility; increasing costs relating to our self-insurance claims expenses; our ability to finance the maintenance, acquisition and replacement of revenue equipment and other necessary capital expenditures; our ability to comply and the cost of compliance with, or liability resulting from violation of, federal, state, local and foreign laws and regulations, including (without limitation) labor laws and laws and regulations regarding the environment; impediments to our operations and business resulting from anti-terrorism measures; the impact of claims and litigation expense to which we are or may become exposed; failure to realize the expected benefits and costs savings from our performance and operational improvement initiatives; our ability to attract and retain qualified drivers and increasing costs of driver compensation; a significant privacy breach or IT system disruption; risks of operating in foreign countries; our dependence on key employees; seasonality; shortages of fuel and changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility; our ability to generate sufficient liquidity to satisfy our cash needs and future cash commitments, including (without limitation) our obligations related to our indebtedness and lease and pension funding requirements, and our ability to achieve increased cash flows through improvement in operations; limitations on our operations, our financing opportunities, potential strategic transactions, acquisitions or dispositions resulting from restrictive covenants in the documents governing our existing and future indebtedness; our failure to comply with the covenants in the documents governing our existing and future indebtedness; fluctuations in the price of our common stock; dilution from future issuances of our common stock; our intention not to pay dividends on our common stock; that we have the ability to issue preferred stock that may adversely affect the rights of holders of our common stock; and other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the SEC, including those described under “Risk Factors” in our annual report on Form 10-K and quarterly reports on Form 10-Q.About YRC WorldwideYRC Worldwide Inc., headquartered in Overland Park, Kan., is the holding company for a portfolio of less-than-truckload (LTL) companies including Holland, New Penn, Reddaway, and YRC Freight, as well as the logistics company HNRY Logistics. Collectively, YRC Worldwide companies have one of the largest, most comprehensive logistics and LTL networks in North America with local, regional, national and international capabilities. Through their teams of experienced service professionals, YRC Worldwide companies offer industry-leading expertise in flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.Please visit our website at www.yrcw.com for more information.SOURCE: YRC Worldwide
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