Yellow Corp. narrows loss in first quarter to $27.5 million from $63.3 million in Q1 of 2021
Slowly but surely, Yellow Corp. is clawing its way toward profitability in the second year of what is arguably the best trucking market in a generation.
Yellow, which controls 10% of the $46 billion less-than-truckload (LTL) marketplace, narrowed its loss in first quarter to $27.5 million from $63.3 million in the year-ago first quarter. That came on operating revenue of $1.26 billion, compared with $1.198 billion in the year-ago first quarter.
Operating income was $9.2 million, which included a $5.5 million net gain on property disposals. In comparison, Yellow had an operating loss of $27.6 million, which included a $1 million net loss on property disposals, in the 2021 first quarter.
“We finished the quarter on a strong note, despite challenges in January and February, and reported our best first quarter adjusted EBITDA (earnings before interest, taxes and amortization), operating income, excluding property disposals, in six years,” Darren Hawkins, Yellow chief executive officer, said in a statement. “Our focus remains on meeting the needs of our customers and maximizing the value of the capacity that Yellow brings to the market.”
Hawkins is completing a years-long change within Yellow Corp., which used to consist of long-haul Yellow Freight and regional LTL carriers New Penn in the East, Holland in the Midwest and Reddaway in the West. At times, the long-haul carrier competed with its own subsidiaries in fighting for LTL freight.
Under the auspices of “One Yellow,” Hawkins is driving change that will result in one system nationally as the company attempts to compete in the both the long-haul and regional LTL markets with one operation, with one outward-facing invoice and contact point for shippers.
Arguably, Yellow has picked the best possible time for such radical changes. That’s because the LTL sector is in the midst of a two-year boom driven mostly by the need for next- and second-day freight and the e-commerce boom.
Driven by strong demand, Yellow’s first quarter year-over-year LTL revenue per hundredweight increased 30.5%. The percentage decline in year-over-year monthly tonnage peaked in February, following a strategic decision to limit terminal operations in select markets that lasted a few days, Hawkins said.
“We continue to see strong demand for LTL capacity and our goal remains to deliver a steady staircase of financial improvement,” Hawkins said. “The integration of our four operating company networks into a single LTL network with national coverage, servicing regional and long-haul lanes is the next step in our One Yellow transformation.”
Planning and analysis of the initial phase to integrate linehaul and city pickup and delivery in the western U.S is complete. Yellow expects the integration of phase one this summer with the transformation of the entire network to be finished around the end of the year.
“When this transformation is completed, our customers will benefit by interacting with North America’s second largest super-regional LTL network for both regional and long-haul shipments,” Hawkins said. “We expect the network transformation to also lead to improved asset utilization, enhanced network efficiencies, cost savings and create capacity without the need to add new terminals.”
In first quarter 2022, Yellow invested $36.4 million in capital expenditures. This compares to $202.4 million in capital expenditures in the first quarter of 2021. Full-year 2022 capital expenditures are expected to be in the range of $325 million to $400 million, the company said.
The operating ratio for first quarter 2022 was 99.3 compared to 102.3 in first quarter 2021. Including fuel surcharges, first quarter 2022 LTL revenue per hundredweight increased 30.5% and LTL revenue per shipment increased 24.8% compared to the same period in 2021. Excluding fuel surcharge, first quarter LTL revenue per hundredweight increased 22.0% and LTL revenue per shipment increased 16.7%.
This increased pricing and yield came as Yellow’s first quarter 2022 LTL tonnage per workday decreased 20.1% when compared to first quarter 2021.
