YRC Worldwide posts huge loss as customers flee

Within its National Transportation network, total shipments per day fell 37 percent from a year ago. In its regional unit, shipments were down 22 percent. YRC said it is continuing to "right size" its network to account for lower demand.

By SAMANTHA BOMKAMP
The Associated Press

7/31/2009

NEW YORK — YRC Worldwide Inc., one of the country's largest trucking companies, posted a huge second-quarter loss on Thursday as customers defected amid bankruptcy rumors and the recession continued to depress shipping demand.

The Overland Park, Kan.-based company — which runs trucks across the nation under the Yellow Transportation and Roadway names— on Thursday posted a loss of $309 million, or $5.20 per share, compared with profit of $35.8 million, or 62 cents per share a year ago.

Excluding a slew of one-time charges, YRC's loss would have been $3.53 per share. YRC booked costs for worker's compensation, additional union employee stock awards, investment writedowns and bad debt.

Revenue sank 45 percent to $1.33 billion.

Thomson Reuters says analysts forecast a loss of $1.71 per share on $1.59 billion in sales. Analysts usually leave out one-time items from their estimates.

Within its National Transportation network, total shipments per day fell 37 percent from a year ago. In its regional unit, shipments were down 22 percent. YRC said it is continuing to "right size" its network to account for lower demand.

YRC delivers a variety of retail, industrial and commercial goods for customers including Toyota North American Parts.

"We continue to win new business, and customers have returned shipments to our networks, though it has not happened as quickly or at the levels we were initially expecting," CEO Bill Zollars said in a statement. "Although misinformation about our financial stability creates noise in the marketplace, many of our key customers stand firmly behind our plans and show their support with their business every day. We believe that as we continue to make significant progress on our plans, the tremendous support of our employees, lenders and other stakeholders can provide all of our customers with the confidence they need to completely return."

The company also said Thursday it finalized an amendment to a credit agreement with its lenders. It waives a third-quarter earnings benchmark for the company to avoid default and lowers the hurdle for the next two quarters. YRC has made similar deals with creditors in recent quarters.

Many analysts have suggested in recent months that YRC may be on the road to filing for bankruptcy protection. Besides facing the worst shipping demand in decades because of the recession, YRC lost customers as it integrated its Yellow and Roadway networks and rumors circulated about its financial health.

The company got a possible lifeline this month with a tentative deal to cut wages of union workers further. If approved, the pay of some 35,000 union members will be cut by an additional 5 percent — following a 10 percent pay cut earlier this year. That will save the company $45 million to $50 million per month.

The deal will also end pension contributions for 18 months, in an effort to lower the struggling trucker's costs. The deal is now being voted on by union members. Results are expected in early August.

Nonunion employees of YRC Worldwide have also taken cuts in pension, retirement and other benefit programs as well as salary and wage reductions.

Along with Teamsters concessions, Overland Park, Kan.-based YRC Worldwide has cut thousands of employees, sold real estate and re-negotiated terms of its debt to stay afloat. It has retained financial advisory firms to help it figure out a way to rebalance its business and get more cash.

The company sold and leased back $127 million in properties in the second quarter. This allows the company to get the cash value of the properties while still occupying them.

YRC Worldwide Inc. says it sees signs of the economy improving but isn't ready to say the worst is over. CEO Bill Zollars said in a conference call he doesn't expect significant improvement in the economy this year or in 2010.

Shares dropped 29 cents, or 17.1 percent, to $1.40 in electronic trading after the market closed Thursday. They ended up 3 cents to close in the regular session at $1.67. Since peaking at $20.53 a year ago, the stock has steadily declined, bottoming at a 52-week low of 89 cents earlier this month.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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