YRC Worldwide sees improvement during Q2
During the second quarter, YRC Worldwide saw its net loss improve, year-over-year, from $15.1 million to $4.9 million; however, a rough first quarter means that the company’s year-to-date loss stands at $75.1 million, compared to a loss of $39.6 million during the same period in 2013.
YRC’s second-quarter operating revenue rose, year-over-year, from $1.24 billion to $1.32 billion. The company finished the quarter with an operating income of $20 million, up from $14.3 million in the second quarter of 2013; for the first six months of 2014, though, YRC’s operating loss stands at $12.4 million.
YRC Freight’s operating revenue for the second quarter ticked up from $797.6 million a year ago to $842.1 million, and operating revenue for regional transportation rose by 6.9 percent to $475.5 million. The regional transportation segment saw a slight year-over-year decline in operating income during the quarter, down from $25.2 million to $23.2 million, but YRC Freight’s operating loss improved from $8.5 million to $0.3 million.
Officials said YRC Freight’s increased revenue comes from an uptick in revenue per hundredweight and an increase in volumes. The volume increase, according to YRC Worldwide Chief Executive Officer James Welch happened because “of the overall economic improvement and renewed shipper confidence due to the successful completion of our refinancing and modified labor agreement in February 2014.”
He said profitability took a hit due to “the network not being fully in cycle, which resulted in a decrease in productivities, the re-handling of freight and less than optimal use of purchased transportation.” He pointed out that expenses derived from bodily injury claims rose by $7.5 million, year-over-year, and cargo claims expense rose by $2.9 million, compared to the second quarter of 2013.
Darren Hawkins, YRC Freight’s president, said the segment opened three new terminals, used more purchased transportation, and increased its use of part-time employees to generate a better network performance. He added that to achieve a better blend of capacity and demand, which is increasing, YRC Freight will turn three terminals into distribution centers during the third quarter.
"Overall, the freight environment in which we are currently operating bodes well for YRC Freight. From a macro perspective, we are experiencing a robust pricing environment, and at YRC Freight, specifically, we are being disciplined in obtaining pricing increases on lower margin accounts," Hawkins said in a statement.
He continued, "As the second quarter progressed, we achieved significant contractual negotiated pricing increases and in July we continue to see these levels of increases. With continued improvement in the economy and our service levels, we expect our ability to increase pricing should remain strong.”
In an earnings note, Thom Albrecht of BB&T Capital Markets noted that a turnaround for YRC may be on the horizon.
“For a company that almost failed several times in recent years, we view the Q2’14 performance as a step in the right direction,” he wrote. “Service and operations are improving, while pricing began to make material strides in June and the stage is set for a return to profitability during 2H'14, in our opinion.”