YRC Worldwide officially Yellow again; Q4 misses mark

The company’s restructuring has included the streamlining of leadership, sales and technology onto the same network with one point of contact. The turnaround received a boost from a $700 million Treasury loan in July, which allowed the company to catch up on health care and pension benefits payments as well as providing capital to begin replacing its rolling fleet.

“Migrating to one Yellow technology platform and creating one Yellow network are the key enablers of our enterprise transformation strategy, which is to provide a superior customer experience under one Yellow brand,” Hawkins continued.

Fleet replacement accelerates

On a Thursday evening call with analysts, management said it had spent the bulk of the $75 million October draw it received from the $400 million second tranche of the loan. That tranche was allocated for equipment capital expenditures.

Yellow received $176 million in January, which should be exhausted on new equipment purchases — 1,100 tractors, 1,900 trailers and 250 containers — in the next couple of months. The remaining $149 million will be used in 2021 and will include buying out existing leases on equipment. Management guided to $450 million to $550 million in capital expenditures during 2021.

$274 million of tranche A, $300 million in total for the repayment of deferred benefits payments, has been used, with the remainder to be distributed in the first quarter.

Fourth-quarter miss

A full-year net loss of $53.5 million was roughly half of 2019’s $104 million loss, which included $11.2 million in costs associated with its term loan refinancing. 

Tonnage per day improved 2.4% year-over-year and revenue per hundredweight, or yield, was up 2.2% excluding fuel surcharges. Revenue was flat as there were 1.5 fewer work days in the quarter and yield was down 0.7% including fuel. Contractual renewals came in 5.6% higher during the quarter.

In January, contract prices increased 6% and tonnage per day was up between 2% and 3% year-over-year. The company implemented a 5.9% general rate increase on Monday.

The fourth-quarter operating ratio improved 40 basis points to 98.8%. Increased purchased transportation, 430 basis points higher as a percentage of revenue, was cited as a significant headwind in the quarter.

A lack of available drivers continues to be a challenge. Yellow will add to its driver school network and plans to have 12 academies operating by March.

Adjusted earnings before interest, taxes, depreciation and amortization increased 22% year-over-year and full-year adjusted EBITDA was $191.9 million, well ahead of the upcoming $100 million covenant, which goes into effect in the fourth quarter.

YRC ended the year with liquidity of $440 million and total debt of $1.28 billion.

“During the fourth quarter, volume and pricing continued to improve in a tighter capacity environment. As the industrial and retail segments of the economy rebound, a shortage of drivers is keeping a lid on LTL capacity. Overall, the industry is stable and well positioned for a strong 2021,” Hawkins added.

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