YRC announces third quarter-to-date operating metrics

Less-than-truckload (LTL) transportation services provider YRC Worldwide, which collectively is the sixth-largest trucking concern in the nation, announced third quarter up-to-date operating metrics this week.

For YRC Freight, its largest operating unit, tonnage per day fell roughly 3.8% in July on an annual basis, and tonnage per day in August, was down 3.1%. On a quarter-to-date basis through August, YRC said revenue per hundredweight was up around 7% annually, with revenue per shipment up around 7.8% for the same period annually.

And for YRC Regional, tonnage per day was down around 6.3% in July on an annual basis, and tonnage per day in August, was down around 3.4%. On a quarter-to-date basis through August, YRC said revenue per hundredweight was up around 8.3% annually, with revenue per shipment up around 11.3% for the same period annually.

“Our results are consistent with our strategy to focus on yield improvements and secure the optimal freight mix for our network,” said Darren Hawkins, chief executive officer of YRC Worldwide Inc., in a statement. “While our revenue per hundredweight statistics remain strong at each of our operating companies, they are being offset by the impacts of additional heavier-weight shipments in our network. We believe our ongoing commitment to reinvest in our equipment will position us to effectively deliver quality solutions to our customers and continue to meet the sustaining demand for freight services in this strong economic environment.”

Company officials said that third quarter results will include a non-union pension settlement charge of $7.2 million at YRC Freight, explaining that the non-cash settlement charge stems from the payment of lump sum benefits in 2018, which are paid from plan assets and therefore do not impact the company’s cash balance or liquidity. The non-cash pension settlement charge is excluded from operating income and Adjusted EBITDA, consistent with the Company’s term loan agreement, YRC said.

For the second quarter of 2018, YRC reported a slight dip in second quarter net income of $14.4 million on $1.33 billion revenue, compared with net earnings of $19 million on $1.26 billion revenue in the year-ago quarter.

Consolidated operating income was $50.9 million in the second quarter, compared with $53.2 million that included a $1 million net gain on property sales in the year-ago quarter.

YRC CEO Hawkins said at that time that continued industry pricing discipline, favorable demand trends and limited excess capacity are providing a positive outlook for the trucking industry, adding that the broader U.S. economy appears poised to remain in the current strong and durable cycle.

In a recent research note, Stifel analyst Dave Ross wrote that if YRC can improve operational efficiency, his firm believes it may be able to capitalize on this strong pricing environment.

Related to improving operating efficiency, Ross wrote, are the challenges YRC faces in regards to its old equipment.

“This problem manifests itself in many different ways, a few of which have been increased purchased transportation costs, higher maintenance costs, and driver morale, which all make it much harder to make money needed to refresh the fleet,” he wrote. “YRC spent $38.6mn on new equipment operating leases and $8.4mn on long-term rentals. We still believe the company needs to increase its capital spending significantly but also likely needs additional capital to do so.”