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

November 09, 2009 | About:
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10qk

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YRC Worldwide Inc. (YRCW) filed Quarterly Report for the period ended 2009-09-30.

Worldwide Inc. has a market cap of $72.64 million; its shares were traded at around $1.22 with and P/S ratio of 0.01. Yrc Worldwide Inc. had an annual average earning growth of 3.8% over the past 10 years.

Highlight of Business Operations:

Our consolidated operating revenue decreased 45.1% during the three months ended September 30, 2009 versus the same period in 2008 due to decreased revenue at all of our operating companies. This decline is attributed to both declines in volume over the comparable prior year quarter and declines in yield or price. Our volumes were impacted by multiple factors, most notably the economy and business diversion due to customer concerns surrounding our financial stability. The declines in yield are a factor of excess capacity in the transportation sector resulting in increased competition for lower freight volumes. Additionally, revenue was also negatively impacted by lower fuel surcharge revenue in the three months ended September 30, 2009 as compared to the same period in 2008.

Consolidated operating revenue includes fuel surcharge revenue. Fuel surcharges are common throughout our industry and represent an amount that we charge to customers that adjusts with changing fuel prices. We base our fuel surcharges on a published national index and adjust them weekly. Rapid material changes in the index or our cost of fuel can positively or negatively impact our revenue and operating income versus prior periods as there is a lag in the Company’s adjustment of base rates in response to changes in fuel surcharge. Fuel surcharge is an accepted and important component of the overall pricing of our services to our customers. Without an industry accepted fuel surcharge program, our base pricing for our transportation services would require changes. We believe the distinction between base rates and fuel surcharge has blurred over time, and it is impractical to clearly separate all the different factors that influence the price that our customers are willing to pay. In general, under our present fuel surcharge program, we believe rising fuel costs are beneficial to us and falling fuel costs are detrimental to us, in the short term.

Absent the impairment charge taken in September 2008, consolidated operating loss increased significantly during the nine months ended September 30, 2009 versus the comparable amount for the same period in 2008. Significant volume declines within our National Transportation and Regional Transportation segments resulted in an operating loss of $783.5 million for the nine months ended September 30, 2009, a significantly larger operating loss from the prior year comparable period. Operating expenses for the first nine months of 2009 were down $1,993.2 million as compared to the same period in 2008 and were comprised of a $994.2 million decrease in salaries, wages and benefits, a $597.3 million decrease in operating expenses and supplies, a $336.4 million decrease in purchased transportation, which is attributable to declining volumes and improved carrier pricing due to the depressed economy, and a $61.4 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 nine months ended September 30, 2009.

Nonoperating expenses consisted primarily of interest expense and increased significantly for the nine months ended September 30, 2009 versus the comparable period in 2008. Increased borrowings and increased borrowing costs in 2009 resulted in increased interest expense of $37.9 million versus the comparable period in 2008. Interest expense in the nine months ended September 30, 2009, attributable to items that were not incurred in 2008, included expense related to lease financing obligations of $14.3 million and deferred pension obligations of $2.5 million. Amortization of deferred debt costs increased $15.7 million during the nine months ended September 30, 2009 compared to 2008. Offsetting these 2009 increases was the reduction in interest expense of $14.7 million related to notes redeemed in November 2008. Nonoperating expenses in the nine months ended September 30, 2009 also included an impairment charge of $30.4 million related to our investment in Jiayu. This adjustment was required as the estimated current fair value, using a discounted cash flow model, was less than our investment. This was primarily the result of different assumptions with respect to revenue growth rates from the initial valuation to those assumed in the current economic environment.

Operating loss for National Transportation was $122.0 million in the third quarter of 2009 compared to operating loss of $573.6 million in the prior year period which included a non-cash charge of $635.9 million relating to the impairment of goodwill and tradenames of Roadway and Reimer Express Lines. Absent this charge, operating income for National Transportation was $62.3 million in the third quarter of 2008. Revenue in 2009 was lower by $844.4 million while total costs decreased by $660.1 million in 2009 excluding the impact of the prior period impairment charge. The cost declines consisted primarily of lower salaries, wages and benefits of $367.5 million, lower operating expenses and supplies of $165.4 million, lower purchased transportation costs of $99.4 million, and lower other operating expenses of $27.8 million.

Operating loss for National Transportation increased $155.0 million in the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008. Revenue decreased $2,200.7 million in the first nine months of 2009 compared to the same period in 2008 while operating costs decreased $1,409.8 million, exclusive of the previously noted goodwill impairment charge incurred in 2008. The cost declines in 2009 consisted primarily of lower salaries, wages and benefits of $749.5 million, lower operating expenses and supplies of $354.4 million, lower purchased transportation costs of $238.8 million, and lower other operating expenses of $67.2 million.

Operating income for Regional Transportation was $0.3 million for the third quarter 2009, compared to an $88.0 million operating loss for the third quarter 2008. The operating loss for the third quarter 2008 includes an impairment charge of $89.7 million related to the reduction in fair value of the USF tradename. Absent this charge, the $0.3 million operating income for the third quarter 2009 would have been compared to operating income of $1.7 million for the third quarter 2008, consisting of a $170.7 million decline in revenue and a $169.3 million decrease in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower business volumes. Expense decreases in the third quarter 2009 were in salaries, wages and benefits of $102.2 million, operating expenses and supplies of $54.9 million, purchased transportation of $8.2 million and other operating expenses of $7.8 million.

Operating loss for Regional Transportation was $122.2 million for the first nine months of 2009, an improvement of $1.3 million from the first nine months of 2008, consisting of a $523.7 million decline in revenue and a $525.0 million decrease in operating expenses. The operating loss for the first nine months of 2008 includes an impairment charge of $89.7 million as noted above. Absent this charge, the $122.2 million operating loss for the first nine months of 2009 would have been compared to an operating loss $33.8 million for the first nine months of 2008, consisting of a $523.7 million decline in revenue and a $435.3 million decrease in operating expenses. Regional Transportation has reduced most operating expenses in proportion to lower business volumes. Expense decreases for the nine months ended September 30, 2009 versus the comparable 2008 period were in salaries, wages and benefits of $221.3 million, operating expenses and supplies of $176.7 million, purchased transportation of $27.2 million, other operating expenses of $13.5 million.

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

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Comments

coco0331
Coco0331 - 4 years ago
Hows YRCW doing in China? YRC non union logistics is doing fine in America. New Penn was once considered the best trucking company on the east coast, until YRCW got hold of them. Its beyond me how a national trucking company would watch the country go in debt at a record pace of around 7 trillion dollars in 8 years and consider itself stable enough to buy a company bigger than it self?

And while YRCW equipment seems to be in new condition, Holland, New Penn and Roadway are going to junk. Seems that this has happened about 20 times in the last half century with YRCW, the companies that they leech onto go straight to the gutter and they keep claiming a loss and writting off the cost.

They were annilized shortly after buying Roadway, Holland, and new Penn, the results stated that the new corporation should dump theYellow management and pick up on Roadway and New Penns tecniques. They had no intention of doing that.

Their next move will be to claim they can't pay the union retirerment and that will be the end of the teamster union in tranportation.

There should be a book wrote about this company and the hundreds of thousands of jobs it has stolen and vanished from hard working Americans. They could title it: how to be a leech, a pilfer and a paracite and run a corporation.

When its all over the union wage and trucking companies might be gone, but the new label that will come out of it will end it for YRCW, and any company that any of their board goes too.

They stink!!, just like the American government does

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