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YRC Worldwide Inc. Reports Operating Results (10-Q)

August 10, 2009 | About:
10qk

YRC Worldwide Inc. (YRCW) filed Quarterly Report for the period ended 2009-06-30.

YRC Worldwide Inc. is one of the largest transportation service providers in the world is the holding company for a portfolio of successful brands including Yellow Transportation Roadway Express Reimer Express Meridian IQ USF Holland USF Reddaway USF Bestway USF Glen Moore and New Penn Motor Express. The enterprise provides global transportation services transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial commercial and retail goods domestically and internationally. YRC Worldwide Inc. has a market cap of $134.34 million; its shares were traded at around $2.26 with and P/S ratio of 0.02. YRC Worldwide Inc. had an annual average earning growth of 3.8% over the past 10 years.

Highlight of Business Operations:

Consolidated operating loss increased significantly during the three months ended June 30, 2009 as compared to the operating income for the same period in 2008 and is reflective of decreased operating revenue at all of our operating companies. Significant volume declines within our National Transportation and Regional Transportation segments resulted in an operating loss of $299.7 million for the second quarter of 2009, a significantly larger reduction from the prior years comparable quarter operating income. Operating expenses for the 2009 quarter decreased $699.7 million as compared to the same period in 2008 and were comprised of a $319.8 million decrease in salaries, wages and benefits, a $229.3 million decrease in operating expenses and supplies, a $117.9 million decrease in purchased transportation, which is attributable to declining volumes and improved carrier pricing due to the depressed economy, and a $27.3 million decrease in other operating expenses. These expense reductions however did not keep pace with the significant revenue decline resulting in the operating loss for the second quarter of 2009. Additionally, in 2008 the Company recorded reorganization and settlement charges of $2.4 million primarily related to the closure of 27 service centers in our Regional Transportation segment. Similar closure costs occurred in 2009 within both National Transportation (primarily a result of the YRC integration) and Regional Transportation and are classified within the various expense captions as discussed below.

The decrease in salaries, wages and benefits in the six months ended June 30, 2009, is largely due to a 10% wage reduction for most union and non-union employees resulting in approximately a $162.1 million expense reduction in 2009 offset by increased workers compensation expense of $59.9 million due mostly to unfavorable development of prior year claims. Additionally, the decrease in salaries and benefits is a result of lower headcount in the current year due to lower volumes partially offset by increased severance benefits of $31.8 million and pension settlement costs of $5.8 million associated with one of our defined benefit plans. The decrease in operating expenses and supplies is a result of lower fuel costs of 64.8%, due to lower diesel prices and reduced miles driven, lower vehicle maintenance of 25.0% partially offset by an increase in bad debt expense of $15.9 million or 88.8%, an increase in professional services of $30.4 million or 64.1% and costs associated with lease terminations of $21.8 million resulting from integration activities. Finally, the decrease in other operating expenses is due to the decrease in discretionary spend for travel and employee activities.

Operating loss for National Transportation was $239.5 million in the second quarter of 2009 compared to operating income of $74.6 million in the prior year period. Revenue was lower by $819.1 million while total costs decreased by only $505.0 million. The cost declines consisted primarily of lower salaries, wages and benefits of $242.4 million, lower operating expenses and supplies of $147.5 million, lower purchased transportation costs of $83.6 million, and lower other operating expenses of $24.2 million.

Operating income for National Transportation decreased $606.5 million in the six months ended June 30, 2009 as compared to the six months ended June 30, 2008. Revenue decreased $1,356.4 million in the first half of 2009 compared to the same period in 2008 while operating costs only decreased $749.9 million. The cost declines consisted primarily of lower salaries, wages and benefits of $379.9 million, lower operating expenses & supplies of $189.0 million, lower purchased transportation costs of $139.4 million, and lower other operating expenses of $31.1 million.

Operating loss for Regional Transportation was $48.3 million for the second quarter 2009, compared to $2.1 million operating income for the second quarter 2008, consisting of a $195.7 million decline in revenue and a $145.3 million decrease in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower business volumes. Expense decreases in the second quarter 2009 were in salaries, wages and benefits of $63.1 million, operating expenses and supplies of $66.1 million, purchased transportation of $10.8 million, other operating expenses of $5.0 million and reorganizations and settlements of $1.8 million. Expense increases in the second quarter 2009 were in depreciation and amortization of $0.3 million and gains/losses on property disposals of $1.3 million.

Operating loss for Regional Transportation was $122.5 million for the first six months of 2009, an increase of $87.0 million from the first six months of 2008, consisting of a $353.0 million decline in revenue and a $266.0 million decrease in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower business volumes. Expense decreases were in salaries, wages and benefits of $113.0 million, operating expenses and supplies of $115.5 million, purchased transportation of $19.0 million, depreciation and amortization of $0.3 million, other operating expenses of $5.2 million, losses on property disposals of $0.1 million and reorganizations and settlements of $12.9 million.

Read the The complete ReportYRCW is in the portfolios of Arnold Van Den Berg of Century Management.

Rating: 4.3/5 (4 votes)

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