YRC dips into red ink in Q3, posting $16 million loss in quarter
YRC Worldwide, the holding company that represents the fourth-largest less-than-truckload (LTL) carrier and three smaller regional concerns, is back in the red.
After earning $2.9 million in the 2018 third quarter, YRC sustained a $16 million net loss in the most recent quarter. The quarterly loss was exacerbated 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.YRC reported consolidated operating revenue for third quarter 2019 of $1.257 billion and consolidated operating income of $23.8 million, which included a $1 million net loss on property disposals. By comparison in the third quarter 2018, YRC posted 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.
“In September, we announced the completion of the refinancing of our term loan, a critical next step in our multi-year strategy,” Darren Hawkins, CEO of YRC Worldwide, said in a statement. “We continue to increase our efforts with two of our five key strategic initiatives now complete.”
Key components of what YRC is calling its “multi-year strategic roadmap” are:
- Labor contract ratification, along with implementation of operational efficiencies to achieve service excellence
- Capital structure improvement;
- Network optimization;
- Customer growth/engagement initiatives; and
- Capital investment in equipment and technology
In the third quarter, YRC completed consolidation of its New Penn corporate office, formerly in Lebanon, Pa., to what the company called “scale processes.” It also completed a refinancing of a term loan. YRC has network 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 the year.
“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.”
Hawkins said YRC 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,” Hawkins added.
YRC Freight posted it best third quarter operating income in over 10 years. That was helped by utilizing some of the operational efficiencies earned from its new contract with the Teamsters union, addition of box trucks, reduction of local purchase transportation as well as other cost control initiatives, Hawkins said.
Still, Hawkins called third quarter freight volumes “sluggish,” as the manufacturing economy in the nation continues to contract slightly.
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 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%.
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, the company said.
