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YRC Worldwide Reports First Quarter 2016 Results

Apr 28, 2016 (GLOBE NEWSWIRE via COMTEX) --

Operating Income increased to $13.4 million compared to $3.7 million for First Quarter 2015

Adjusted EBITDA increased to $62.9 million, a 7% improvement compared to First Quarter 2015

OVERLAND PARK, Kan., April 28, 2016 (GLOBE NEWSWIRE) -- YRC Worldwide Inc. YRCW, -9.56% reported consolidated operating revenue for first quarter 2016 of $1.120 billion and consolidated operating income of $13.4 million, which included a $0.3 million gain on property disposals. As a comparison, the company reported consolidated operating revenue of $1.186 billion for the first quarter 2015 and consolidated operating income of $3.7 million, which included a $1.3 million loss on property disposals.

Financial Highlights

  • On a non-GAAP basis, the company generated Adjusted EBITDA of $62.9 million in first quarter 2016 for a consolidated Adjusted EBITDA margin of 5.6%, and a $4.1 million increase compared to the $58.8 million of Adjusted EBITDA reported in the prior year comparable quarter (as detailed in the reconciliation below).
  • Last twelve month (LTM) Adjusted EBITDA increased to $337.4 million for a consolidated Adjusted EBITDA margin of 7.1%, and an improvement of $57.0 million from the $280.4 million of LTM Adjusted EBITDA in the first quarter of 2015.
  • The total debt-to-Adjusted EBITDA ratio improved from 3.90 times in the first quarter 2015 to 3.20 times in first quarter 2016.
  • Reinvestment in the business continued during first quarter 2016 with $19.8 million in capital expenditures and new operating leases for revenue equipment with a capital value equivalent of $33.4 million, for a total of $53.2 million which is equal to 4.75% of operating revenue for the quarter. This total is in line with the $56.4 million of reinvestment in first quarter 2015. The vast majority of the investment was in tractors, trailers and technology.
  • Cash, cash equivalents and Managed Accessibility (as defined in the company's most recently filed periodic reports on Forms 10-K and 10-Q) under the company's ABL facility increased by $46.5 million at the end of the first quarter 2016, compared to a year ago.

Operational Highlights

  • YRC Freight recently added its new Accelerated service which allows customers' non-guaranteed shipments to reach their destinations one to two days faster than standard transit times.
  • Improved yield from continued pricing discipline contributed to an operating ratio of 98.8 on a consolidated basis, which was a year-over-year improvement of 90 basis points. This included a 60 basis points improvement at YRC Freight with a reported operating ratio of 99.4 and a 190 basis points improvement at the Regional segment to 97.1.
  • First quarter 2016 tonnage per day decreased 6.7% at YRC Freight and 3.8% at the Regional segment compared to the first quarter 2015.
  • At YRC Freight, excluding fuel surcharge, first quarter 2016 revenue per shipment increased 1.8% and revenue per hundredweight increased by 3.7% when compared to the same period in 2015. Including fuel surcharge, revenue per shipment decreased 2.3% and revenue per hundredweight decreased 0.5%.
  • At the Regional segment, excluding fuel surcharge, first quarter 2016 revenue per shipment increased 0.8% and revenue per hundredweight increased by 2.4% compared to the first quarter 2015. Including fuel surcharge, revenue per shipment decreased 3.1% and revenue per hundredweight decreased 1.6%.

Liquidity Update

  • At March 31, 2016, the company had cash, cash equivalents and Managed Accessibility under its ABL facility totaling $222.1 million. For comparison, as of March 31, 2015, cash and cash equivalents and Managed Accessibility totaled $175.6 million.
  • For the three months ended March 31, 2016, cash used in operating activities was $11.1 million as compared to cash used in operating activities of $25.8 million for the three months ended March 31, 2015, an improvement of $14.7 million.

"In the first quarter of 2016, our consolidated Adjusted EBITDA improved by 7% compared to a year ago and improved 20% on an LTM basis," said James Welch, chief executive officer at YRC Worldwide. "These results were driven by consistent and improved customer service, base rate increases, tightly managed costs and productivity gains. Additionally, our ongoing focus to improve price, freight mix and profitability has contributed to higher year-over-year revenue per hundredweight, excluding fuel surcharge, for 8 consecutive quarters at YRC Freight and 20 consecutive quarters at the Regional segment," stated Welch.

"While we have made significant strides, we must balance the volume equation with our strategy to get the right freight at the right price running through our networks," Welch continued. "Our intent is to remain disciplined and true to this strategy. We believe that reinvesting in our people, technology and equipment, combined with projected capacity constraints from regulations and eventually a stronger economic environment will bode well for us over the long term. Despite near-term headwinds from decreasing fuel surcharge revenue and an inconsistent industrial economy, we believe LTL pricing remains rational.

"We take pride in partnering with our customers and their feedback was the driving force behind the addition of YRC Freight's new Accelerated service. The company's existing dual speed network made the addition of this service possible. I'm extremely proud of our employees for implementing this new offering while enhancing our flexible supply chain solutions and most importantly, meeting our customers' needs," concluded Welch.

Key Segment Information - first quarter 2016 compared to first quarter 2015

YRC Freight 2016 2015 Percent
Change
Workdays 63.5 62.5
Operating revenue (in millions) $ 695.7 $ 737.6 (5.7 ) %
Operating income (in millions) $ 4.1 $ 0.2 NM (a)
Operating ratio 99.4 100.0 (0.6 ) pp
Total tonnage per day (in thousands) 23.38 25.05 (6.7 ) %
Total shipments per day (in thousands) 39.58 41.66 (5.0 ) %
Revenue per hundredweight incl FSC $ 23.42 $ 23.55 (0.5 ) %
Revenue per hundredweight excl FSC
Revenue per shipment incl FSC
Revenue per shipment excl FSC
Total weight/shipment (in pounds)
$ 21.42
$ 277
$ 253
1,181
$ 20.66
$ 283
$ 249
1,203
3.7
(2.3
1.8
(1.8

)

)
%
%
%
%

[(a)] Not Meaningful

Regional Transportation 2016 2015 Percent
Change
Workdays 64.5 64.5
Operating revenue (in millions) $ 424.8 $ 448.8 (5.3 ) %
Operating income (in millions) $ 12.4 $ 4.6 169.6 %
Operating ratio 97.1 99.0 (1.9 ) pp
Total tonnage per day (in thousands) 29.46 30.64 (3.8 ) %
Total shipments per day (in thousands) 39.65 40.58 (2.3 ) %
Revenue per hundredweight incl FSC $ 11.19 $ 11.36 (1.6 ) %
Revenue per hundredweight excl FSC
Revenue per shipment incl FSC
Revenue per shipment excl FSC
Total weight/shipment (in pounds)
$
$
$

10.27
166
153
1,486
$
$
$

10.03
172
151
1,510
2.4
(3.1
0.8
(1.6

)

)
%
%
%
%

Review of Financial Results

YRC Worldwide Inc. will host a conference call with the investment community today, Thursday, April 28, 2016, beginning at 4:30 p.m. ET, 3:30 p.m. CT.

A live audio webcast of the conference call and presentation slides will be available on YRC Worldwide Inc.'s website yrcw.com. A replay of the webcast will also be available at yrcw.com.

Non-GAAP Financial Measures

EBITDA is a non-GAAP measure that reflects the company's earnings before interest, taxes, depreciation, and amortization expense. Adjusted EBITDA (defined in our credit facilities as Consolidated 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, equity-based compensation expense, net gains or losses on property disposals, restructuring professional fees, nonrecurring consulting fees, expenses associated with certain lump sum payments to our IBT employees and results of permitted dispositions and discontinued operations among other items as defined in the company's credit facilities. EBITDA and Adjusted EBITDA are used for internal management purposes as a financial measure that reflects the company's core operating performance. In addition, management uses Adjusted EBITDA to measure compliance with financial covenants in the company's credit facilities...


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