Asset sales of $39.3 million help swing YRC Worldwide, parent of long-haul YRC Freight and three regional subsidiaries that combined are the second-largest less-than-truckload (LTL) operators nationally, in the first quarter.
YRC earned $4.3 million on $1.15 billion revenue in the first quarter, compared with a net loss of $49.1 million on $1.18 billion revenue in the year-ago quarter. Without the asset sales, however, YRC would have suffered a $35 million pre-tax loss.
“Despite the COVID-19 pandemic and ensuing economic fallout during the first quarter of this year, we have continued our enterprise transformation efforts, working toward our vision of combining the power of our five brands into one network and one enterprise-wide service offering,” YRC Chief Executive Officer Darren Hawkins said in a statement.
Hawkins said as YRC management realized the seriousness and severity of its impact on the economy and the LTL industry, it took immediate and swift liquidity preservation actions. These included:
“I have always been proud of our employees, but today is like none other in my career,” Hawkins added. “I stand in awe of their dedication and resilience to deliver essential goods, and as the nation gets back to business, our employees will continue to be there to help put America on the road to recovery” concluded Hawkins.
As for financials on a non-GAAP basis, YRC generated consolidated Adjusted EBITDA of $34.1 million in the first quarter, compared to $30.1 million in the prior year comparable quarter Full-year consolidated Adjusted EBITDA was $214.6 million compared to $292.2 million in 2019.
Consolidated 1Q20 LTL revenue per hundredweight including fuel surcharge decreased 4.2%. But, inversely, weight per shipment increased 3.9% for the quarter resulting in a LTL revenue per shipment decrease of just 0.4% when compared to the same period in 2019.
Excluding fuel surcharge, LTL revenue per hundredweight was down 4.0% and LTL revenue per shipment was essentially flat. Consolidated operating ratio for the 1Q20 was 97.6 compared to 102.7 in 1Q19, the company said.
As for liquidity, YRC said based on current expectations and in conjunction with the COVID-19 pandemic, “We think it will be unlikely that we be in compliance with the Adjusted EBITDA covenant when it becomes applicable again at the end of first quarter of 2021 or possibly the liquidity covenant required by the amendment to our term loan facility over the specified period that covenant is applicable.’
As a result, Hawkins added, “We will need to either seek an extension of the waiver period or otherwise modify the covenant.”