YRC turns back clock with return to Yellow brand while cutting Q3 loss
YRC Worldwide, a holding company that collectively controls about 10% of the $46 billion less-than-truckload (LTL) marketplace, is trimming its quarterly losses and going back to its branding roots. It is resurrecting the venerable “Yellow” brand.
Founded as Yellow Cab Transit in 1924 (and later shortened to Yellow Transit in 1926), the company was known for decades as Yellow Freight, or simply “Yellow.” Following its purchase of long-haul LTL rival Roadway Express in 2003, it changed to Yellow Roadway Corp., and later simply YRC since 2009.
“Following an in-depth study, Yellow is the right brand and it’s the right time to modernize our existing holding company brand in conjunction with our enterprise transformation,” CEO Darren Hawkins said in a statement.
He said YRC Worldwide was selected over a decade ago when company strategy under direction of previous CEO Bill Zollars included pursuits outside of North America, including as far away as China. One analyst privately likened the retro name change to “Miller Lite going back to its old can.”
But company officials said that the change more accurately reflects its mission, markets and customer emphasis.
“Today we have one of the largest, most comprehensive LTL and logistics networks focused on serving North America and the Yellow brand, as the original LTL company, reflects a strong and proud history,” Hawkins said.
While the holding company will be known simply as Yellow, the company anticipates its LTL brands Holland, New Penn, Reddaway and long-haul YRC Freight, as well as HNRY Logistics will continue operating under their current names.
Whatever it’s called, Yellow’s finances have improved during the third quarter ended Sept. 30. Operating revenue was $1.183 billion and operating income was $19.4 million. In comparison, operating revenue in the third quarter of 2019 was $1.257 billion and operating income was $23.8 million, which included a $1 million net loss on property disposals.
Yellow’s net loss for third quarter was $2 million compared with a net loss of $16 million in third quarter 2019.
“During the quarter we transitioned to managing our business in a tighter capacity environment and setting the stage for 2021,” Hawkins said in a statement.
Hawkins said improving tonnage trends late in Q3 allowed LTL pricing “to firm up with less volatility expected moving forward.”
The company said it ended the quarter with just over $450 million in liquidity. At the beginning of the quarter the company secured a commitment with the US Treasury and in October it received the first $75 million of the $400 million in Tranche B funds from the CARES act to combat coronavirus-related losses. Hawkins said that money would go to modernizing YRC’s fleet. It took $245 million from Tranche A in mid-summer.
LTL revenue per hundredweight including fuel surcharge decreased 4.0%; however, LTL weight per shipment increased 2.2% resulting in an LTL revenue per shipment decrease of 1.9% when compared to the same period in 2019, the company said. Excluding fuel surcharge, LTL revenue per hundredweight was down 1.4% and LTL revenue per shipment was up 0.8%.
“During the quarter, we transitioned to managing our business and a tighter capacity environment and setting the stage for 2021,” Hawkins said on an analysts conference call. That enabled the company to improve tonnage “late in Q3 and growth and early Q4 has allowed LTL pricing to firm up with less volatility expected,” Hawkins added.
LTL tonnage per day decreased 4.1% when compared to 3Q19. LTL tonnage per day improved 6.2% in September as compared to August. Consolidated operating ratio for the quarter was 98.4 compared to 98.1 in 3Q19, the company said.
In a related development that the company said was not part of any internal disagreement, Jamie Pierson has resigned as the chief financial officer and its board.
“Jamie has been instrumental in several financial transactions at critical times that have helped preserve an essential part of the American supply chain and the livelihoods of 30,000 families,” Hawkins said. Pierson is credited with helping facilitate a $700 million loan from the CARES Act to help YRC cope with financial fallout from the Covid-19 pandemic.
Dan Olivier was named interim CFO. He has 22 years with YRC, including 12 years as the vice president of finance at Holland, its Central States regional LTL unit. Most recently Olivier was vice president, financial planning and analysis at YRC Worldwide.
In other leading LTL earnings reports:
Old Dominion Freight Line, the nation’s second-largest LTL carrier, posted a company-record best 74.5 operating ratio in the third quarter compared with a 79.3 OR in the year-ago quarter.
ODFL posted $201.9 million in net income on $1.058 billion revenue, compared with year-ago earnings of $164.1 million on $1.048 billion revenue.
“The strength of our financial results reflects the remarkable recovery in the domestic economy as well as the continued execution of our long-term strategic plan that focuses on providing superior service at a fair price,” ODFL CEO Greg Gantt said in a statement. “Demand for our industry-leading value proposition continues to improve.”
Gantt added that ODFL’s improvement in OR was primarily because of improved yields and increased efficiency of operations. “Most of our cost categories decreased as a percent of revenue during the quarter, although the majority of the overall improvement in the operating ratio resulted from the change in both salaries, wages and benefits and operating supplies and expenses,” Gantt added.
ArcBest, parent of ABF Freight System, the nation’s seventh-largest LTL carrier, posted $29.4 million net income for the third quarter on $794.9 million revenue, compared with $16.3 million earnings on $787.6 million revenue in the year-ago third quarter.
“Tremendous opportunity exists for us to sustain the momentum of the third quarter and continue to profitably grow our company,” ArcBest Chairman, President and CEO Judy McReynolds said in a statement.
