YRC Worldwide Reports First Quarter 2010 Results
--YRC National Reports Year-over-Year Adjusted EBITDA Improvement --YRC Regional Reports Third Straight Quarter of Positive Adjusted EBITDA
OVERLAND PARK, Kan., May 4, 2010 /PRNewswire via COMTEX/ -- YRC Worldwide Inc. (YRCW 0.44, +0.00, +0.16%) today reported its first quarter 2010 results. For the quarter ending March 31, 2010, the company announced a loss per share of $.33 when excluding a previously announced charge of $.20 per share for union employee equity-based awards, and a $.53 loss per share when including that item. By comparison, the company reported a $4.61 loss per share in the first quarter of 2009.
"Despite the headwinds from the note exchange in the latter part of December and the harsh winter weather we experienced during January and February, we are pleased with the sequential operating improvement during the quarter and the traction we achieved in the month of March," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "The Regional companies have a lot of momentum, while YRC has stabilized its customer base and streamlined its sales force, and is poised for growth going forward."
For the first quarter of 2010, the company reported operating cash flow of $18 million, including the receipt of the previously announced $82 million income tax refund in late February. The company issued $50 million of 6% notes on February 23, 2010, and used the net proceeds from these new notes to redeem its remaining 8.5% notes that were due April 15, 2010. In addition, the company repaid $29 million on its asset-backed securitization ("ABS") facility primarily from collections of its fourth quarter revenues. At March 31, 2010, the company reported cash and cash equivalents of $130 million, unused revolver reserves of $107 million and unrestricted availability of $4 million under the company's $950 million revolving credit facility.
"Our operating results improved sequentially throughout the quarter as reflected in our adjusted EBITDA of $(27) million in January, $(21) million in February, and $(5) million in March," added Sheila Taylor, Executive Vice President and CFO of YRC Worldwide. "We continue to remove additional cost from the business and more effectively manage our working capital, which has allowed us to preserve liquidity under our credit facility."
Adjusted EBITDA is a non-GAAP measure that reflects the company's earnings before interest, taxes, depreciation, and amortization expense, and further adjusted for letter of credit fees and other items as defined in the company's Credit Agreement. "Adjusted EBITDA" and "loss per share when excluding the charge for union employee equity-based awards" are used for internal management purposes as financial measures that reflect the company's core operating performance. In addition, adjusted EBITDA is used by management to measure compliance with financial covenants in the company's Credit Agreement. However, these financial measures should not be construed as a better measurement than operating income or earnings per share, as defined by generally accepted accounting principles. See the reconciliation of GAAP measures to non-GAAP financial measures below.
Key Segment Information
First quarter 2010 compared to the first quarter 2009:
YRC National Transportation total shipments per day down 33.6%, total tons per day down 34.6%, with March tons per day down 22.5%, and total revenue per hundredweight, including fuel surcharge, up .4%.
YRC Regional Transportation total shipments per day down 12.9%, total tons per day down 9.1%, with March tons per day down 3.2%, and total revenue per hundredweight, including fuel surcharge, down 2.3%.
Additional statistical information is available on the company's website at yrcw.com under Investors, Earnings Releases & Operating Statistics.
Outlook
During April, YRC National and YRC Regional volumes increased compared to March, as both sequential trends were slightly better than normal seasonal patterns.
"We appreciate the continued confidence our customers have shown by increasing their shipments with us throughout the quarter and into April," stated Mr. Zollars. "With our current operating momentum, we still believe we will generate positive adjusted EBITDA in the second quarter."
In addition to the above, we have the following expectations for 2010:
Gross capital expenditures in the range of $50 to $75 million
Real estate sales in the range of $25 to $50 million
Sale and financing leasebacks of approximately $50 million, primarily in the second half of the year
Interest expense in the range of $40 to $45 million per quarter, with cash interest of $10 million to $12 million per quarter
Effective income tax rate of 2%
Outstanding shares of 1.054 billion, prior to any adjustments for a reverse stock split and the issuance of equity
Amendment to Credit Facilities
On May 3, 2010, the company completed amendments to its $950 million revolving credit facility and $400 million ABS facility. Under the revolving credit facility, the company may retain up to $100 million of net proceeds from the issuance of equity prior to December 31, 2010. Previously, the lenders would have received 50% of the net proceeds from an equity issuance. In addition, the company's financial covenants were reset for the remainder of 2010 to take into account the impact to the company's customer base from the delayed note exchange at the end of 2009. The adjusted EBITDA covenants are $5 million for second quarter of 2010, $50 million cumulative for second and third quarters of 2010, and $100 million cumulative for second, third and fourth quarters of 2010. In addition, the company is required to maintain minimum available cash (as defined in its credit agreement) of $25 million through the remainder of the year.
"These amendments are another indication of the support our lenders continue to provide as we manage past the seasonally slowest time of year and rebuild our value in the market place," stated Ms. Taylor. "We are also encouraged with the activity in the equity markets and expect to be opportunistic throughout the year."
Review of Financial Results
YRC Worldwide Inc. will host a conference call for shareholders and the investment community today, Tuesday, May 4, 2010, beginning at 9:30am ET, 8:30am CT. The conference call will be open to listeners via the YRC Worldwide Internet site yrcw.com. An audio playback will be available after the call also via the YRC Worldwide web site.
Reconciliation of GAAP Measures to Non-GAAP Financial
Measures (unaudited)
-----------------------------------------------------
(in millions) January February March
------------- 2010 2010 2010
---- ---- ----
Reconciliation of operating loss
to adjusted EBITDA:
Operating loss $(49) $(42) $(146)
Depreciation and amortization 17 17 18
Equity based compensation expense 1 1 108
Letter of credit expense 3 3 3
Losses on property disposals, net - - 9
Impairment charges - - 5
Other, net 1 - (2)
--- --- ---
Adjusted EBITDA $(27) $(21) $(5)
==== ==== ===
For the Three Months Ended March
31
--------------------------------
(in millions) 2010 2009
------------- ---- ----
Reconciliation of operating loss
to adjusted EBITDA:
Operating loss $(237) $(379)
Depreciation and amortization 52 66
Equity based compensation expense 110 33
Letter of credit expense 9 5
Losses on property disposals, net 9 2
Impairment charges 5 -
Other, net (1) (2)
--- ---
Adjusted EBITDA $(53) $(275)
==== =====
Adjusted EBITDA by segment:
YRC National Transportation $(60) $(239)
YRC Regional Transportation 8 (50)
YRC Logistics (6) (1)
YRC Truckload - -
Corporate and other 5 15
--- ---
Adjusted EBITDA $(53) $(275)
==== =====
Forward-Looking Statements:
This news release and statements made on the conference call for shareholder and the investment community contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe," "expect," "continue," and similar expressions are intended to identify forward-looking statements. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including (among others) our ability to generate sufficient cash flows and liquidity to fund operations, which raises substantial doubt about our ability to continue as a going concern, inflation, inclement weather, price and availability of fuel, sudden changes in the cost of fuel or the index upon which the company bases its fuel surcharge, competitor pricing activity, expense volatility, including (without limitation) expense volatility due to changes in rail service or pricing for rail service, ability to capture cost reductions, changes in equity and debt markets, a downturn in general or regional economic activity, effects of a terrorist attack, labor relations, including (without limitation) the impact of work rules, work stoppages, strikes or other disruptions, any obligations to multi-employer health, welfare and pension plans, wage requirements and employee satisfaction, and the risk factors that are from time to time included in the company's reports filed with the SEC, including the company's Annual Report on Form 10-K for the year ended December 31, 2009.
The company's expectations regarding the timing and degree of market share growth are only its expectations regarding these matters. Actual timing and degree of market share growth could differ based on a number of factors including (among others) the company's ability to persuade existing customers to increase shipments with the company and to attract new customers, and the factors that affect revenue results (including the risk factors that are from time to time included in the company's reports filed with the SEC, including the Company's annual report on Form 10-K for the year ended December 31, 2009).
The company's expectations regarding the impact of, and the service and operational improvements and collateral and cost reductions due to, the integration of Yellow Transportation and Roadway, improved safety performance, right-sizing the network, consolidation of support functions, the company's credit ratings and the timing of achieving the improvements and cost reductions could differ materially from actual improvements and cost reductions based on a number of factors, including (among others) the factors identified in the prior paragraphs above, the ability to identify and implement cost reductions in the time frame needed to achieve these expectations, the success of the company's operating plans and programs, the company's ability to successfully reduce collateral requirements for its insurance programs, which in turn is dependent upon the company's safety performance, ability to reduce the cost of claims through claims management, the company's credit ratings and the requirements of state workers' compensation agencies and insurers for collateral for self insured portions of workers' compensation programs, the need to spend additional capital to implement cost reduction opportunities, including (without limitation) to terminate, amend or renegotiate prior contractual commitments, the accuracy of the company's estimates of its spending requirements, changes in the company's strategic direction, the need to replace any unanticipated losses in capital assets, approval of the affected unionized employees of changes needed to complete the integration under the company's union agreements, the readiness of employees to utilize new combined processes, the effectiveness of deploying existing technology necessary to facilitate the combination of processes, the ability of the company to receive expected price for its services from the combined network and customer acceptance of those services.
The company's expectations regarding its ability to raise new capital in the equity markets are only its expectations regarding this matter. Whether the company is able to raise new capital is dependent upon a number of factors including (among others) the trading price and volume of the company's common stock and the company reaching agreement with interested investors and closing such transactions on negotiated terms and conditions, including (without limitation) any closing conditions that investors may require.
The company's expectations regarding future asset dispositions and sale and financing leasebacks of real estate are only its expectations regarding these matters. Actual dispositions and sale and financing leasebacks will be determined by the availability of capital and willing buyers and counterparties in the market and the outcome of discussions to enter into and close any such transactions on negotiated terms and conditions, including (without limitation) usual and ordinary closing conditions such as favorable title reports or opinions and favorable environmental assessments of specific properties.
The company's expectations regarding interest and fees (including any deferred amounts) are only its expectations regarding these matters. Actual interest and fees (including any deferred amounts) could differ based on a number of factors, including (among others) the company's expected borrowings under the company's credit agreement and the ABS facility, which is affected by revenue and profitability results and the factors that affect revenue and profitability results (including the risk factors that are from time to time included in the company's reports filed with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2009), and the company's ability to continue to defer the payment of interest and fees pursuant to the terms of the company's credit agreement, ABS facility and pension fund contribution deferral agreement, as applicable.
The company's expectations regarding its capital expenditures are only its expectations regarding this matter. Actual expenditures could differ materially based on a number of factors, including (among others) the factors identified in the preceding paragraphs.
The company's expectations regarding liquidity are only its expectations regarding this matter. Actual liquidity levels will depend upon (among other things) the company's operating results, the timing of its receipts and disbursements, the company's access to credit facilities or credit markets, the company's ability to continue to defer interest and fees under the company's credit agreement and ABS facility and interest and principal under the company's contribution deferral agreement, the continuation of the existing union wage reductions and temporary cessation of pension contributions, and the factors identified in the preceding paragraphs.
The company's expectations regarding its effective tax rate are only its expectations regarding this rate. The actual rate could differ materially based on a number of factors, including (among others) variances in pre-tax earnings on both a consolidated and business unit basis, variance in pre-tax earnings by jurisdiction, impacts on our business from the factors described above, variances in estimates on non-deductible expenses, tax authority audit adjustments, change in tax rates and availability of tax credits.
YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is one of the largest transportation service providers in the world and the holding company for a portfolio of successful brands including YRC, YRC Reimer, YRC Glen Moore, YRC Logistics, New Penn, Holland and Reddaway. YRC Worldwide has the largest, most comprehensive network in North America, with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. Please visit yrcw.com for more information.
Investor Paul Media Suzanne
Contact: Liljegren Contact: Dawson
YRC Linden
Worldwide Alschuler
Inc. & Kaplan
913.696.6108 212.329.1420
Paul.Liljegren@yrcw.com sdawson@lakpr.com
CONSOLIDATED BALANCE SHEETS
YRC Worldwide Inc. and Subsidiaries
(Amounts in thousands except per share data)
March 31, December 31,
2010 2009
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $130,263 $97,788
Accounts receivable, net 517,093 515,807
Prepaid expenses and other 178,322 245,225
------- -------
Total current assets 825,678 858,820
------- -------
PROPERTY AND EQUIPMENT:
Cost 3,520,447 3,588,474
Less - accumulated depreciation 1,745,423 1,748,996
--------- ---------
Net property and equipment 1,775,024 1,839,478
--------- ---------
OTHER ASSETS:
Intangibles, net 153,389 163,544
Other assets 165,115 170,232
------- -------
Total assets $2,919,206 $3,032,074
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable $214,525 $198,725
Wages, vacations, and employees'
benefits 209,349 216,074
Other current and accrued liabilities 567,417 397,902
Current maturities of long-term debt 211,603 197,127
------- -------
Total current liabilities 1,202,894 1,009,828
--------- ---------
OTHER LIABILITIES:
Long-term debt, less current portion 948,864 935,782
Deferred income taxes, net 145,751 146,576
Pension and post retirement 353,398 351,861
Claims and other liabilities 373,243 420,837
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, $1 par value per share - 4,346
Common stock, $0.01 par value per share 10,566 991
Capital surplus 1,571,413 1,576,349
Accumulated deficit (1,451,418) (1,177,280)
Accumulated other comprehensive loss (142,768) (144,479)
Treasury stock, at cost (3,079 shares) (92,737) (92,737)
------- -------
Total shareholders' equity (deficit) (104,944) 167,190
-------- -------
Total liabilities and shareholders'
equity (deficit) $2,919,206 $3,032,074
========== ==========
STATEMENTS OF CONSOLIDATED OPERATIONS
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31
(Amounts in thousands except per share data)
(Unaudited)
2010 2009
---- ----
OPERATING REVENUE $1,063,235 $1,502,795
---------- ----------
OPERATING EXPENSES:
Salaries, wages, and employees'
benefits 670,826 1,133,974
Equity based compensation
expense 109,871 33,025
Operating expenses and supplies 253,349 367,292
Purchased transportation 132,456 175,184
Depreciation and amortization 52,261 66,269
Other operating expenses 67,013 104,705
Losses on property disposals,
net 8,998 1,593
Impairment charges 5,281 -
----- ---
Total operating expenses 1,300,055 1,882,042
--------- ---------
OPERATING INCOME (LOSS) (236,820) (379,247)
-------- --------
NONOPERATING (INCOME) EXPENSES:
Interest expense 41,074 32,219
Other 2,178 3,701
----- -----
Nonoperating expenses, net 43,252 35,920
------ ------
INCOME (LOSS) BEFORE INCOME
TAXES (280,072) (415,167)
INCOME TAX PROVISION (BENEFIT) (5,934) (141,385)
NET INCOME (LOSS) $(274,138) $(273,782)
========= =========
AVERAGE SHARES OUTSTANDING-
BASIC 521,216 59,373
AVERAGE SHARES OUTSTANDING-
DILUTED 521,216 59,373
BASIC EARNINGS (LOSS) PER SHARE $(0.53) $(4.61)
DILUTED EARNINGS (LOSS) PER
SHARE $(0.53) $(4.61)
STATEMENTS OF CONSOLIDATED CASH FLOWS
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31
(Amounts in thousands)
(Unaudited)
2010 2009
---- ----
OPERATING ACTIVITIES:
Net income (loss) $(274,138) $(273,782)
Noncash items included in net income
(loss):
Depreciation and amortization 52,261 66,269
Equity based compensation expense 109,871 33,025
Impairment charges 5,281 -
Pension settlement charge - 5,003
Losses on property disposals, net 8,998 1,593
Deferred income tax benefit, net (5,841) (141,741)
Amortization of deferred debt costs 10,516 4,488
Other noncash items 1,964 2,836
Changes in assets and liabilities, net:
Accounts receivable (1,317) 118,740
Accounts payable 15,811 (49,863)
Other operating assets 71,213 52,307
Other operating liabilities 23,671 87,119
------ ------
Net cash provided by (used in) operating
activities 18,290 (94,006)
------ -------
INVESTING ACTIVITIES:
Acquisition of property and equipment (3,731) (15,424)
Proceeds from disposal of property and
equipment 7,637 18,707
Restricted cash - (17,617)
Other - (198)
--- ----
Net cash provided by (used in) investing
activities 3,906 (14,532)
----- -------
FINANCING ACTIVITIES:
ABS borrowings (payments), net (28,618) 41,211
Issuance of long-term debt 119,748 157,617
Repayment of long-term debt (59,363) (129,149)
Debt issuance costs (7,030) (37,971)
Equity issuance costs (14,458) -
------- ---
Net cash provided by financing activities 10,279 31,708
------ ------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 32,475 (76,830)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 97,788 325,349
CASH AND CASH EQUIVALENTS, END OF PERIOD $130,263 $248,519
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Income tax refund, net $81,272 $37,266
Pension contribution deferral transfer to
debt $3,488 $-
SUPPLEMENTAL FINANCIAL INFORMATION
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended March 31
(Amounts in thousands)
(Unaudited)
2010 2009 %
---- ---- ---
Operating revenue:
YRC National Transportation $663,063 $1,022,610 (35.2)
YRC Regional Transportation 309,154 355,168 (13.0)
YRC Logistics 76,092 112,120 (32.1)
YRC Truckload 26,885 25,976 3.5
Eliminations (11,959) (13,079)
------- -------
Consolidated 1,063,235 1,502,795 (29.2)
Operating income (loss):
YRC National Transportation (185,060) (299,771)
YRC Regional Transportation (39,631) (74,125)
YRC Logistics (7,448) (3,444)
YRC Truckload (3,061) (2,246)
Corporate and other (1,620) 339
------ ---
Consolidated $(236,820) $(379,247)
Operating ratio:
YRC National Transportation 127.9% 129.3%
YRC Regional Transportation 112.8% 120.9%
YRC Logistics 109.8% 103.1%
YRC Truckload 111.4% 108.6%
Consolidated 122.3% 125.2%
(Gains) losses on property
disposals, net:
YRC National Transportation $4,949 $1,312
YRC Regional Transportation 3,669 211
YRC Logistics 200 (6)
YRC Truckload 42 76
Corporate and other 138 -
--- ---
Consolidated $8,998 $1,593
SUPPLEMENTAL INFORMATION
March 31, December 31,
2010 2009
---- ----
Current debt:
Asset backed securitization
borrowings $117,667 $146,285
Lease financing obligations 2,265 2,671
Pension contribution deferral
obligation 70,000 20,500
Contingent convertible senior
notes 21,671 21,671
Industrial development bonds - 6,000
--- -----
Total current debt 211,603 197,127
Long-term debt, less current
portion:
Lease financing obligations 317,353 316,221
Pension contribution deferral
obligation 84,895 132,541
USF senior notes - 45,289
Term loan 112,507 112,612
Revolving credit facility 387,650 329,119
6% convertible senior notes 46,459 -
------ ---
Total long-term debt, less
current portion 948,864 935,782
Total debt $1,160,467 $1,132,909
========== ==========
Letters of credit
Credit facility 451,494 461,032
Asset backed securitization 72,180 77,180
Total letters of credit $523,674 $538,212
======== ========
SUPPLEMENTAL FINANCIAL INFORMATION
YRC Worldwide Inc. and Subsidiaries
(Amounts in thousands)
(Unaudited)
January 2010 February 2010 March 2010
------------ ------------- ----------
Reconciliation of operating
loss to adjusted EBITDA:
Operating loss $(48,839) $(41,878) $(146,103)
Depreciation and
amortization 17,271 16,987 18,003
Equity based compensation
expense 627 597 108,647
Letter of credit expense 2,850 2,714 2,790
Losses on property
disposals, net 35 (249) 9,212
Impairment charges - - 5,281
Other, net 484 901 (2,499)
Adjusted EBITDA $(27,572) $(20,928) $(4,669)
======== ======== =======
For the Three Months Ended March 31
2010 2009
---- ----
Reconciliation of operating loss to
adjusted EBITDA:
Operating loss $(236,820) $(379,247)
Depreciation and amortization 52,261 66,269
Equity based compensation expense 109,871 33,025
Letter of credit expense 8,354 5,473
Losses on property disposals, net 8,998 1,593
Impairment charges 5,281 -
Other, net (1,114) (1,888)
Adjusted EBITDA $(53,169) $(274,775)
======== =========
Adjusted EBITDA by segment:
YRC National Transportation $(60,313) $(238,506)
YRC Regional Transportation 8,356 (49,908)
YRC Logistics (5,943) (854)
YRC Truckload (211) 205
Corporate and other 4,942 14,288
----- ------
Adjusted EBITDA $(53,169) $(274,775)
======== =========
Adjusted EBITDA $(53,169) $(274,775)
======== =========
