YRC loss widens in 4Q, full year losses hit $104 million

YRC Worldwide, parent of the fourth- and seventh-largest groups of LTL carriers, lost $104 million last year, compared with $20.2 million net profit in 2018.

YRC’s total revenue for last year fell 3.4% to $4.871 billion from $5.092 billion in 2018. YRC reported consolidated operating revenue for fourth quarter 2019 of $1.16 billion and consolidated operating income of $9.8 million. By comparison, in the fourth quarter 2018, YRC reported operating revenue of $1.247 billion and consolidated operating income of $55.1 million.

YRC’s fourth quarter net loss of $15.3 million was a $32 million swing from its fourth quarter net income of $17.5 million in 2018. YRC officials blamed a slump in industrial and manufacturing for the financial decline.

“Despite a challenging industrial backdrop in the back half of 2019, it was a very active year for us as we kicked off our multi-year enterprise transformation strategy,” Darren Hawkins, YRC Worldwide CEO said in a statement. “Our strategy will build on the strengths and breadth of our regional and national networks and the equally respected brand names associated with each and is intended to enhance our customer experience with the end goal of improving our profitability and cash flow.”

Hawkins said YRC management remains “intensely focused” to improve YRC’s longer-term earnings. He said management is “laser focused” on enabling shippers to access YRC’s five brands (long-haul, three regionals and a logistics unit) through one network and one “enterprise-wide” service offering.

YRC’s fourth quarter 2019 net loss was $15.3 million compared to a net income of $17.5 million in fourth quarter 2018. Jamie Pierson, YRC’s CFO, said at long-haul YRC Freight, total LTL tonnage per day was down 4.5% in October, down 10.2% in November and down 4.7% in December. That’s a decrease of 6.6% for the quarter.

At YRC’s Regional segment, October was down 5.7%, November was down 11.2% and December was down 6.0% for the quarter being down 7.4%.

“At least preliminarily for January, YRC freight is only down 80 (basis points), and the Regional segment is only down 3.7%,” Pierson said on a conference call with analysts.

YRC’s consolidated operating ratio for the quarter was 99.2 compared to 95.6 in 4Q18. The operating ratio at YRC Freight was 98.4 compared to 94.9 for the same period in 2018. The Regional segment’s fourth quarter 2019 operating ratio was 99.1 compared to 96.0 a year ago.

At YRC Freight, 4Q19 LTL revenue per hundredweight, including fuel surcharge, decreased 1.1% and LTL revenue per shipment increased 1% when compared to the same period in 2018.  Excluding fuel surcharge, LTL revenue per hundredweight was flat and LTL revenue per shipment increased 2.1%.

At the Regional segment, 4Q19 LTL revenue per hundredweight, including fuel surcharge, decreased 0.7% and LTL revenue per shipment decreased 0.2% when compared to the same period in 2018. Excluding fuel surcharge, LTL revenue per hundredweight increased 0.2% and LTL revenue per shipment increased 0.7%.

Fourth-quarter LTL tonnage per day decreased 6.6% at YRC Freight and decreased 7.4% at the Regional segment compared to tonnage levels the fourth quarter of 2018, YRC said.

Besides operations improvement, YRC is working feverishly to stay within the legal covenants of its long- term loans.

Under YRC’s new term loan covenants, YRC must maintain a minimum of $200 million in adjusted earnings before interest, taxes and amortization (EBITA). YRC ended 2019 at $211 million EBITA. With seasonality of the industry being that the first quarter is the weakest one within the calendar year, YRC officials know they are close to operating in the “red zone” of its loan restrictions.

“But right now, we are in compliance and laser-focused on the network and the operational optimization thereof,” YRC’s Pierson said on the analysts call. “Again, if we do it right, results should follow.”