Newly renamed Yellow Corp. cuts yearly loss in half to $53.5 million

Newly renamed Yellow Corp., the freight conglomerate formerly known as YRC Worldwide, is undergoing what company executives are calling a “transformation” into a super-regional LTL carrier.

“As we continue our transformation into a super-regional, less-than-truckload (LTL) freight carrier, it is the right time to reintroduce the Yellow Corporation name and modernize the holding company brand,” Yellow CEO Darren Hawkins said in a statement. He said the Yellow brand is “synonymous” with the LTL industry, dating to its founding in 1930 as Yellow Transit.

“Migrating to one Yellow technology platform and creating one Yellow network are the key enablers of our enterprise transformation strategy, which is to provide a superior customer experience under one Yellow brand,” Hawkins added.

Yellow is making progress toward profitability. It still suffered an $18.7 million loss in the 2020 fourth quarter, but cut its annual losses nearly in half to $53.5 million, compared with a $104 million loss in 2019. That latter figure included $11.2 million loss on extinguishment of debt associated with a refinancing of the Company’s term loan agreement.

Flush with a $700 million infusion from the federal government under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for its work as a defense contract hauler, Yellow is in the process of modernizing its fleet and is hoping to crack profitability in 2021.

Its fourth quarter 2020 operating revenue was $1.165 billion and operating income was $13.7 million. That compares with operating revenue in fourth quarter 2019 of $1.160 billion and operating income of $9.8 million, which included a $10.1 million net gain on property disposals.

Full year operating revenue for 2020 was $4.514 billion and operating income was $56.5 million, which included a $45.3 million net gain on property disposals. This compares to full year 2019 operating revenue of $4.871 billion and operating income of $16.2 million, which included a $13.7 million net gain on property disposals and $8.2 million for a non-cash impairment charge related to the write-down of an intangible asset.

“During the fourth quarter volume and pricing continued to improve in a tighter capacity environment,” Hawkins added.

Hawkins noted that as the industrial and retail segments of the economy rebound, a severe shortage of drivers is keeping a lid on LTL capacity. Overall, the industry is stable and well positioned for a strong 2021, he added.

“With a strong liquidity position of $440 million at the end of 2020, along with the next $176 million of CARES Act loan Tranche B funds that we received in January, we are positioned to continue making significant investments into our business,” Hawkins added.

He estimated capital expenditures this year in the range of $450 million to $550 million, with planned investments in tractors, trailers, technology, box trucks, containers, liftgates and other assets. Much of the new equipment is expected to enhance safety and improve fuel efficiency, he added.

“In addition to a robust capital expenditure plan our key priorities in 2021 include meeting our customers’ evolving needs, mitigating increased purchased transportation expenses and remaining focused on hiring and training drivers in a capacity-constrained marketplace,” Hawkins added.

Operationally, Yellow’s operating ratio for fourth quarter 2020 was 98.8, a slight improvement over the 99.2 OR in fourth quarter 2019. Results included all five years—long-haul Yellow Freight, regional carriers Saia, New Penn and Reddaway and logistics arm, HNRY.

Fourth quarter LTL revenue per hundredweight, excluding fuel surcharge, increased 2.2% and LTL revenue per shipment increased 4.8% compared to the same period in 2019. Including fuel surcharge, fourth quarter LTL revenue per hundredweight decreased 0.7% and LTL revenue per shipment increased 1.8%.

Fourth quarter 2020 LTL tonnage per day increased 2.4% when compared to fourth quarter 2019, the company said.

Hawkins called his nearly 30,000 employees “heroes” and said their dedication and commitment under trying conditions was greatly appreciated.  “I have never been prouder of our team,” concluded Hawkins.