Summary
YRC Worldwide, the nation's largest trucking company by volume, reported a $158.7 million loss in the third quarter on sharply declining revenue of $1.3 billion, compared with a net loss of $720 million on $2.38 billion revenue in the year-ago quarter. Despite the huge losses, YRC Chairman and CEO Bill Zollars says the company "gained significant momentum" in the third quarter and some progress in new credit agreements with its consortium of lenders.
Analysis
Despite Bill Zollars' rosy scenarios, this latest quarterly loss from YRC Worldwide is troubling, and exceeded most analysts' expectations.
The worst news first:
- YRC National's total shipments per day were off 39.9 percent, an indication that some big shippers are bolting the nation's largest trucking company in favor of UPS Freight, FedEx Freight and, to a lesser degree, Arkansas Best's ABF Freight unit.
- Revenue per hundredweight--a sure sign of discounting--is off 11.5 percent, net of fuel surcharges, at YRC National.
- YRC Regional's total shipments per day were off 22.7 percent, a sign that regional competitors Con-way, Old Dominion, Estes Express, Vitran and others are gaining market share.
- Revenue per hundredweight at YRC Regional was off 12.2 percent, net of fuel surcharges.
-YRC has lost $741.5 million in the first nine months of this year and more than $2 billion in the past 10 quarters.
_ Its sudden drop in quarterly revenue of more than $1 billion is another sign YRC companies are losing market share. At this run rate, YRC will be about a $5 billion company, if it can survive this downturn.
_ Operating ratios--which are net of debt--are all above 100 for the first nine months, although some dipped slightly below 100 for the most recent quarter. Here are YRC's OR's by quarter for its units:
* YRC National, 114.4, compared with year-ago 133.9.
* YRC Regional, 99.9, compared with year-ago 117.3.
* YRC Logistics, 93.9, compared with year-ago 154.8.
* YRC Truckload, 104.7, compared with year-ago 104.3.
* Consolidated, 109.0, compared with year-ago 131.8.
Naturally, YRC Chairman and CEO Bill Zollars managed to put a positive spin on these numbers, citing the "significant momentum" in the most recent quarter.
:"We achieved significant sequential improvement from the first half of the year," Zollars said, citing the improvements of its regional and logistics units getting into the black during the quarter.
YRC reported having $163 million in cash and cash equivalents on hand, as well as amendments to its asset-backed securitization loans of $400 million through next October. They had been scheduled to expire next February.
"We have been in active dialogue with our noteholders and feel good about the progress being made," Zollars said.
YRC still is struggling under its debt load, which occurred mainly because of its $1.1 billion purchase of Roadway Express in 2003 and another $1.2 billion purchase of USF regional trucking companies in 2005. YRC is reporting $1.64 billion in total debt, a stunning amount for a company generating a bit more than $5 billion currently.
