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Yrc Worldwide Reports 2015 Third Quarter Earnings

The following excerpt is from the company's SEC filing.

Reports fifth consecutive quarter of year-over-year operating income improvement and a $118.1 million

increase in LTM Adjusted EBITDA to $344.3 million; highest in seven years

OVERLAND PARK, Kan., October 29, 2015 YRC Worldwide Inc. (NASDAQ: YRCW) today reported financial results for the third quarter of 2015.

Consolidated operating revenue for the third quarter of 2015 was $1.245 billion with consolidated operating income reported at $47.7 million, which included a $0.9 million loss on property disposals. As a comparison, the company reported consolidated operating revenue of $1.323 billi on for the third quarter of 2014 with consolidated operating income of $26.7 million, which included a $0.2 million loss on property disposals.

Third Quarter 2015 Financial Highlights

On a non-GAAP basis, the company generated Adjusted EBITDA of $99.1 million for a consolidated Adjusted EBITDA margin of 8.0%, and a $17.5 million increase compared to the $81.6 million reported in the prior year comparable quarter (as detailed in the reconciliation below).

Last twelve month (LTM) Adjusted EBITDA increased to $344.3 million, an improvement of $118.1 million from the $226.2 million of LTM Adjusted EBITDA reported in the third quarter of 2014.

Improved yield from continued pricing discipline contributed to an operating ratio of 96.2 on a consolidated basis, which was a year-over-year improvement of 180-basis-points. Additionally, YRC Freight reported an operating ratio of 97.9, which was an improvement of 110-basis-points on a year-over-year basis, and a year-over-year improvement of 230-basis-points at the Regional segment, with an operating ratio of 92.6.

The total debt-to-Adjusted EBITDA ratio continues to improve, moving from 4.94 times just 12 months ago and 3.33 times last quarter to 3.15 times this quarter.

Continued to reinvest in the business spending $29.2 million in capital expenditures and entered into new operating leases for revenue equipment that have a capital value equivalent of $25.5 million for a total reinvestment of $54.7 million. The $54.7 million represents a $26.5 million increase over the $28.2 million investment in the third quarter of 2014. The vast majority of the investment was in tractors and technology.

Third Quarter 2015 Operational Highlights (year-over-year comparison)

Continued strategy of placing freight mix, yield improvements and profitability over market share and tonnage growth.

Tonnage per day decreased 6.2% at YRC Freight and decreased 3.5% for the Regional segment.

Excluding fuel surcharge, revenue per shipment increased 7.0% at YRC Freight and revenue per hundredweight increased by 5.8%. Including fuel surcharge, revenue per shipment increased 0.7% and revenue per hundredweight decreased by 0.4%.

At the Regionals, excluding fuel surcharge, revenue per shipment increased 5.0% and revenue per hundredweight increased by 4.1%. Including fuel surcharge, revenue per shipment decreased 0.7% and revenue per hundredweight decreased by 1.5%.

Workers compensation expense decreased by $4.5 million due to decreased claim frequency in 2015 driven by our safety initiatives but slightly offset by negative development of prior years claims.

During the third quarter of this year, we continued to stay committed to our strategy of placing pricing improvements and profitability ahead of tonnage growth, said James Welch, chief executive officer of YRC Worldwide. We stayed focused, we stayed disciplined, we invested in our people and we invested in the business. As a result, operating, financial and safety performance improved. We are pleased to see the positive results of successfully implementing our strategy and staying the course, and we plan to continue focusing on operational improvements while reinvesting back into our people, equipment and technology, concluded Welch.

Liquidity Update

At September 30, 2015, the company had cash and cash equivalents and Managed Accessibility under its ABL facility totaling $244.8 million. For comparison, as of June 30, 2015, cash and cash equivalents and Managed Accessibility totaled $226.1 million.

For the nine months ended September 30, 2015, cash provided by operating activities was $91.5 million as compared to cash used in operating activities of $26.3 million for the nine months ended September 30, 2014, an improvement of $117.8 million.

Key Segment Information

third quarter 2015 compared to the third quarter of 2014

Percent

Change

Workdays

Operating revenue (in millions)

Operating income (in millions)

Operating ratio

Total tonnage per day (in thousands)

Total shipments per day (in thousands)

Revenue per hundredweight incl FSC

Revenue per hundredweight excl FSC

Revenue per shipment incl FSC

Revenue per shipment excl FSC

Total weight/shipment (in pounds)

Regional Transportation

Review of Financial Results

YRC Worldwide Inc. will host a conference call with the investment community today, Thursday, October 29, 2015, beginning at 4:30 p.m. ET, 3:30 p.m. CT. The call will be available to listeners as a live webcast and as a replay via the YRC Worldwide website

yrcw.com

Non-GAAP Financial Measures

EBITDA is a non-GAAP measure that reflects the companys 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 companys 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...


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