YRCW - Earnings call transcript Q3 2017

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Operator

Good afternoon, and welcome to YRC Worldwide's Third Quarter 2017 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Tony Carreno, Vice President of Investor Relations. sir. ahead go Please

Tony Carreno

good earnings Welcome conference and third YRC quarter XXXX call. afternoon, operator, to everyone. Worldwide's Thanks,

Joining us CFO on Freight. Chief and Executive the Hawkins, call today of Darren Worldwide; are YRC Stephanie of Fisher, President of Worldwide; Officer YRC YRC James Welch,

we you the in must inherent discussion this remind in forward-looking statements our I afternoon. begin, uncertainties Before of any

on and statements call a During this assumptions to might materially. This Federal of does to Securities fully of within the this not meaning risks The that not are call, the strategies we includes which uncertainty expectations, statements These and may call, events may future. company's and on allow factors. forward-looking intentions us the actual historical make be thus all future subject regarding other some made discuss number forward-looking statements are results this statements all laws. risk facts, of differ of the regarding and format

For differ, that a and recent full discussion our yrcw.com. the SEC available earnings XX-Q. items on filings, at refer Forms our are this please results website our release most These including factors afternoon's cause could and to XX-K of the risk to

release adjusted EBITDA basis today's reconciliation see please basis. a a income and to a Additionally, segment net EBITDA operating of on income for adjusted consolidated on to

question-and-answer Stephanie, Darren will from to I’ll call the now the update over James. afternoon's comments will James, will with the a available which EBITDA. X-K, along simply this YRC by an with During presentation, and discuss of turn measure presentation our earnings on non-GAAP referenced today's have call, was followed our release is we call. The may format In results. The a conjunction as will issued followed in release, our include adjusted EBITDA during Freight website. an on an session. refer prepared with of call filed conclude financial overview to who earnings the we be by this

James Welch

Tony, good Thanks, and afternoon, everyone.

today’s provided we’ll few color our quarter any comments preliminary results prepared the earnings release, we and issued taking third XXXX with keep questions. before a With combined ago, weeks brief

reinvest interest investors. strategy have this onboarding in firm best equipment loan with customers, We weighted diligently and extending the employees of the later on belief July. revenue years company, has a amending as our it’s that the the in towards been we to year that additional no of in and recent with XXXX in exception worked was successfully term the to completed in focused

new in and of We upgrade expect of XXXX of to XXXX tractors which XXXX, for than our fleet. XXXX XX% first approximately fourth quarter beginning quarter a take total just an XXXX, delivery is more of than the of more

delivery more total XXXX first We the more XXXX than a expect since XXXX to than of also for in XXXX quarter quarter and fourth of start XXXX. the take trailers of

As for major implementing this is YRC operations we look opportunities month. a Freight change to productivity, enhance of

demand environment the the We more economic ongoing excited are efforts to network in minutes. impact and to about hear gain Freight’s this economy the from and you’ll a upgrade Between the from few Darren and high continues about strength. hurricanes, large YRC this very current recovery

strategy in We’re intend to the at and freight We the with mix Systems. also to companies equipment, profitability. operations YRC yield haul price, revenue our momentum, Line Freight, we’re of new improve and excited change investments about and P&D making stick additional our operating

now to the a With call results. these Stephanie of turn I’ll for financial our comments, review over

Stephanie Fisher

afternoon Thanks James everyone. and good

increase freshly results primarily improvement revenue fuel by the combined operating quarter company reported in XXXX, XX.X yield, surcharge a higher impacted were the were expenses XXXX. by reported due compared EBITDA XX.X period an items revenue, For transportation basis, regional consolidated benefit offset quarter million income the supplies. in adjusted XX.X with X.X% XXXX, with in cost, and increase wage the of operating of million, an higher carriers. third year. and million year-over-year and in same company third last the and of On contractual to third XX.X the in These The to volume favorably purchase million an increases, at the compared quarter for

million, financial XX.X in with Adjusted last Turning year. income in results the which to in the million XXXX. the million was same XXXX, the XX.X by in reported EBITDA of the third quarter quarter Freight XX.X line million, of reported operating compared segment; XX.X to period YRC for is

the compared the quarter is to in regional of was to of with year which Adjusted million, XX.X quarter third for line XX.X reported the in Moving they XXXX, carriers, XX.X a EBITDA of million XXXX. for also ago. quarter million million third XX.X income operating the the

are quarterly filed in in release Our stats today. earnings included the the presentation earlier

of is August, So in comments I’ll tonnage of few year-over-year increase X.X% of This and July quarter XXXX was key day X.X% Freight In up per X.X%. results. the focus third YRC tonnage decreases approximately October, X.X%. and my year-over-year in was comprised on X% a in At Freight, up per September. an year-over-year day YRC

hundredweight For up X.X%. and was was quarter per X.X% fuel XXXX, the of revenue third hundredweight excluding surcharge up year-over-year including revenue per fuel surcharge

surcharge. surcharge was fuel For when and X.X% X.X% for third of including quarter XXXX, up the shipment year-over-year up excluding fuel

year-over-year day September. [X.X%] the up Turning comprised in This third year-over-year tonnage day the per segments quarter [X.X%] per stats tonnage X.X% August, of X%. up the X.X%. approximately In in was segment; October, for XXXX in regional and to the increases was of was regional year-over-year July,

surcharge hundredweight and For the third up including revenue excluding fuel revenue XXXX, per hundredweight per X.X%. quarter year-over-year X.X% fuel up was was surcharge

and year-over-year X.X% surcharge. X.X% quarter including fuel up per shipment For the when XXXX, up was fuel excluding surcharge revenue third

our and terms managed September million. of at our accessibility and equivalent was liquidity, cash the facility cash ABL under In XXX.X XXXX

million, has quarter the we a since is extension of cash As XXX.X available at conjunction down loan which reduced the debt a third lowest pay the Total first has been used it XX.X through XXXX. in of with quarter company million reminder, to during term the the the XXXX. been

to ratio covenant, facility credit our X.XX was over regarding the our million EBITDA covenant turn last Freight. Finally, call discuss debt-to-adjusted to At of to Darren then XX September times adjusted now XXXX, months times. this [X.XX] maximum facility credit a EBITDA YRC I’ll funded time, was compared XXX.X and through

Darren Hawkins

afternoon October, versus year positive QX sequentially prior excluding year-over-year yield Stephanie fuel compared the everyone. continued to XQ Yield basis improvement surcharge XXX YRC metric In X.X% and compared same Freight which is Thanks result. a last XXXX. quarter, points year, in per we see QX income straight EBITDA with a ago. the XXXX to to operating hundredweight tonnage of good and adjusted positive second with consistent fairly were years’ were revenue in for

we the As up have company improved mentioned been day earnings The XX. previous at our September October on our metric on and price this per mentioned very month tonnage X.X%, X% to we X.X% and change and QX addition as has to per and you the believe X%. for implemented quarter last industry time to have call yield of weekend strong can Stephanie, day trend. calls, of We business. to that of tonnage taken XXXX. pricing moving with QX as this heard approved by of we the November due Year-over-year a area will James increases strongest was overall quarter encouraged in operations we freight is to average X.X% in of take the as compared be actions the are negotiations specific momentum discussed from customer

essentially design we nominal The a are our to network, expenditures network improve Freight’s reminder, this network with capacity expected adds facility required is volume As of utilization productivity enhancement increasing terminals. reliability. since (inaudible) and at to YRC the existing

that in momentum we stay perceiver that and your drivers the reduce flexible, safely I time employees and and adversity Freight is employees to the on with network allow hurricanes give expect right the will the our additional and home for focused the balance the change work we’re this stayed along our at capacity afternoon. confident the of customer. in experiencing YRC hotel through yield to trip. the QX of the use operation from YRC enhancing Additionally, utility and moving In who more direction. implementing Freight, of of me efficiencies be (inaudible) layovers of created return within adding turns closing, we same will and contributions more appreciate our Thanks of continues tonnage

any you have. We that happy may answer to questions will now be

Operator

[Operator Instructions] Delco And comes the from of Brad question first Stephens.

Brad Delco

so James you than it regional, you regional? of first freight question, more dollars? can what think it what at terms of can all the you think to quantify But guys some freight you I’m you cost hurt in context us give assuming did hurricane in

James Welch

Sure.

but we a certainly lot hurt down it’s And get double to couple more But up stab really and We Brad, that right a in YRC only to believe Freight Holland facilities in regions had will at the range did it we to trying YRC time low it of to some a millions it’s Freight. just than hard quantify dollar. a it digit it give of specific spent it area. definitely you’re

it a miles think we had about gradually in terminals, bigger took over I or of the haven’t how the having all to lost you certainly that there, it that haul their If got freight short they their and used to effort call get length and down expensive transportation, of up over impact at that XXXX entire it to opportunities. YRC network freight we’d once knew customer of lot mean and had rehandle and area to having stacked purchase country Freight. revenue

Brad Delco

the I We of that could on see guess. rentals [PT], some and

James Welch

Absolutely.

Brad Delco

point be course year similar what were of seemed you And with get more I headwind. some to to, then roughly to X.X results The to working less ago want days. had the a pretty

these ago days, positive to addition imaging is haul but you can line anything you starting least a to fairly fewer the optimization in specifically is side what because was some be with of So driving on help, working freight to out? from the do year think that at similar hurricane call the results in

James Welch

Really will our investment really side, of is the yield. operationally biggest there’s that drive results that our from could yield do or the on like we improvement nothing and driver technology

profit it’s tightening do at pushing on us to and the same an improvement standpoint needs the a been yield and the and more so just button, capacity take freight here raised and have driver and importantly opportunity opportunity tough a mix yield’s general freight basis, meeting at to been us really think look out or main certainly a our with thing that’s adjust to some for our there. prices continual other allowed it’s So good freight carriers and from not

Brad Delco

ask, may know that don’t be I more will most capacity. think additional of for And add YRC I understand the us focused capacity. this is is of if I needing and this then change operation, additional can Darren, some on

context to maybe have? in We’re focused probably put on opposed as profitability. you provides this that type this to more the of some just capacity improved comment savings what of will you to Can money the on allow

Darren Hawkins

the That’s in which haul the eight shipment the profitability where largest in of addition our the come category, call Certainly. facilities, through certainly around got, side. From think efficiencies more additional These big than you is other rather on our we’ve reduces network the our the additional piece travels in and productivity. that from drives break time when about enhanced current line creates segment through have eight aspect facility. a country it miles a the will the be the having productive already density path and this facilities faster network, to XX that the our having facilities expense and

expectation, The other for day It’s that capacity our provides, facilities these piece want it aspect. from certainly thrown expanding. sure greater that to revenue got a carries, the our what standpoint X,XXX than comes ’XX allowed to our from hundredweight and higher is these to additional per prepared that accelerated in and make a service and network that keep that consider we new shipments service you is,

James Welch

stands some dock stand dock Texas, one to running able A little some Pennsylvania it’s from this change will two of dock, our Brad, for operations on we’ll I’m two-dock as the unproductive inefficiencies the said more at of two excited freight is very Dallas, good. them, example dock. to and large Harrisburg, go then take, to And color able because to out be go one are Darren that facilities from allowed be not about James. to us

Freight able to think in (inaudible) will a other going us is just a be it offering benefit think. and have higher service consistent I freight big ratio being I to YRC handling for give put So facilities these more

Operator

The next Deutsche come question Amit of will Bank. from Mehrotra

Amit Mehrotra

at from I headwinds cash EBITDA So are I what’s the the least see expected the of you third would third rather fourth have new I disruptions those in but just guidance. understand quarter, about uptick sequential in or quarter wanted to I as extraordinary sequential to guess, to obviously the quarter, movement earnings some the implied ask some or flow by reversed.

kind just of walk, it. through the could you I’d us sequential appreciate If walk

Stephanie Fisher

Yeah Amit this is Stephani.

we the still that were rightful of fourth the So quarter in back hurricane were sure at equipment think to positioning the trying about and delivery. get their if proper impact the October shipment think making terminals about we we back and for in to

still we of So the early a October. in have overhang hurricanes little bit from

Additionally, about won’t equipment the an automatically in if from fourth disappear that where shortage quarter. we think we’re at just equipment perspective,

especially the So in around short term as continues those fourth to quarter capacity tighten. rentals to will hand

operating our one in well. continue that. isn’t operating to fourth things as quarter continue through who We‘ll the manage to of so through continue And as very companies well we’ll manage to regional will

still hopefully we to as quarter, we the get taken XXXX. we behind some of in got running those and but headwinds fourth move can care So to us in

Amit Mehrotra

can when all going us And to update actually just the you equipment delivered. on revenue be is

mentioned there final or of kind you’re number, of year and on any prospectively happen. thoughts that think a from year, is end position that good just I early to from January go this next a when delivery will you

Stephanie Fisher

Well we call, that the we but think then as and February in that invest continue another move come December XXXX, in to revenue will March. and through XXXX mentioned equipment the a chunk of on chunk big big I we’ll in

through next of out be chunk of four over move next and big So five to here, months the spread we couple kind two a the will quarters. as it

Amit Mehrotra

reductions me this $XX just talked then one cost about earlier guys million from And the you follow-up, efficiency the year. of of

was then to do much talk won’t we that incremental can reversal just ‘XX of those about bottom as year. next tailwinds But you this have about you remember so ’XX, that most from how freight, about, implementing you type items if started was I impact. there you year-over-year start some the because, hopefully I what kind of event think line or you’ll think And year. will to on just the see ’XX two you XX I regional basis of from in Hopefully that a hurricane correctly. walk be another be just cycling that of can actually talk through. as But from million

Stephanie Fisher

million That on. back income Those speed that XXXX. carry will statement. dollar XX hard continue of Amit full we’ll that to have cost find savings were savings for won’t the themselves in to

for together in and other to increases things All wages about is the increase there. of X, the Union, increases, those The benefits about that April have the increases for is wage August benefit X% in, think benefit X. we wage both and XXXX at

for So those the are headwinds year. big the

James Welch

what me jump Amit about a James, let this I’m in is more XXXX. color give and about little excited

here. number maintenance good wanted of the just equipment looking expectations to and we and volume move that. run. a YRC miles based expense, driver freight, to high we’re [cite] mileage, yield models fewer forward operation for is were going us and service, you be Freight – safety QX, over morale. the on We Better better major equipment better tractors have of certainly downtime, on something one. at on That and and going that our harder better on the you company technology, what fuel we so effect even as of the getting coming positive these versus in hurt of they less working that’s which us which good lot go We Missed at that a to was question the be the asked have a we’re change

profitability has as to for a meeting place. there slight right bring capacity some more the market we environment and side and we’ve time, on at in current going customers be us on always adjust a opportunity seeing it’s to goals they’re us but think can what to want would based have locked tied the to now at on the we we right think there’s business have work So the capacity and some that price We business, our up the up growth certainly we to. larger allows new and

I far very I So for we not that entering And a think for of the harbors making growth. I’ll tell we’re good then finally would just from tell you investments some for time. that balanced have yielding you, technology environment too we’ve been on some these up

’XX count and we to a So with headwinds, add out be think when it going that good for that you year up us. is couple

Amit Mehrotra

clear ’XX. time especially the somewhat It first guys, enter Thanks the you that for while to that. seem as been for a certainly in has runway you

So luck that on executing opportunity. in best I of wish you the

Operator

of The next David Ross question Stifel. from comes

David Ross

in as that what the in gone for you than this was from James to year, than here been expected you XXXX, better would a look besides good now, what you’re lookout this hurricanes, year? worse XXXX, November say you has has but back expected and

James Welch

’XX to positive, think we’ve the at companies, higher made has just keeping that public this equipment make. out but underway got any is road wanted [metals] business haven’t opportunity about that. to business The the could and are of like. some point with drivers we liked money than that and than as I’m like, we’ve we a older four us we us has the is thing that’s not weren’t with the new we the right we committed that there adjust the and frankly that we we momentum like, all didn’t across we I other we our productivities quite mix But a Certainly the on big what cost hurt we move been out for of that. Disappointed that is thought more maintenance thought the drag our than to we had our happy safe the we that and time on at well has equipment had Short-term yield there been I would know having anticipating. equipment Certainly thought. make, gained

bad good of a not the there’s takes are lot either. but and overall. disappointed So it totally that thrilled puts and with with not I’m year,

David Ross

is talk dock, specific or coming it easy haul productivity area you line thought. not PND, more troublesome that’s you there expectations, as not have line as in when be whether with And about would any

James Welch

issues A of of but some had one (inaudible) haul, equipment is a well, some there on and we but a accounts of line any again Darren purchase I’ll of that do type see productivities that in the as three the from And a Those for bit been that productivity. pressure going all not our few a of the lot have Again ’XX, of and a we’ve those. start some of based hurts mixes, those. residential businesses on plus think comments, for let we that we little Darren in transportation to three the alive lot of opportunity comment with in my continue challenges opportunities to drag. of with this and think come expensive pickups the help thoughts technology of but build I use on the bit, our all has larger three of excitement to to is that’s future that? are we some and delivery them good retail is

Darren Hawkins

YRC bag Yeah, said James absolutely specifically. from mixed Freight what a is David at it

I have pickup Quintiq, project on, to and line encouragement in is struggled also Our but part us in were haul to my Freight of. YRC average standpoint really positive efficiencies When come delivery things steps [Siznet], with large did dock are in But From in [Optum], a YRC just think few at that network about going ’XX of year-to-date, and Those specifically load taken days. production things large together. they we’ve more going a are with carrier ’XX in that’s But All than numbers around the piece financial are has you our we James of about efficiency have was system (inaudible). the rent that’s the and change and with delivery when this for metric just big also the from. our because take acute right that that wrong, we terms you through there win. implementation that XX XXXX. a Freight a XX rent In and think XXXX by versus big the together to make, when QX operation can’t lose performance we that’s on XX those struggle about enhancement and by and of equipment happening utilization the think trailers is we going that going pickup means foot and and XXXX running you foot rentals, the that those of we’re what I trailers, proud internally.

David Ross

aware wasn’t I interesting, challenge. rental very XX That’s about that

tractors if today were count that national. between If of you [clean] what was do all the and able number have all rentals and regional you tractors and look at you the fleet, look XXXX in that How in do XXXXX like would rid the with many your equipment? get to

Darren Hawkins

XXX rentals, It’s XX,XXX I have the you We picking as recall. still remember. We’ll get back out that, to numbers about (inaudible) can’t there. on still I on would

David Ross

Stephanie covenants were you but then liquidity wiped I negotiations, of be? you while. last terms liquidity want seems any like a and availability away where think you of in And the on us seen how number restrictions, where liquidity they to view remind side, are in in you in we’ve lowest last Can it the that the question,

Stephanie Fisher

made a Great million debt $XX question fourth David, of if you the we we quarter pay a in pay-down million the down. debt XXXX, $XX quarter XXXX correctly of in then third made and remember

XXX, to gap between nine So down of call we’ve needed to that of of XXX bridge XXX year of throughout paid the liquidity. we either last, the equipment. and lease or we’ve opportunity debt feel been the million like year, about it the good or feel months kind just debt the $XX pay to We helps the the down given and purchase still that in

sweet past, number. spot the around we’ll to our and that manage is we’ve $XXX of million continue liquidity as said So in

David Ross

where want you minimum you Do So to to is want that be. you a have don’t number go below? XXX million

Stephanie Fisher

Of I the but in as say let million, course if cash to. and Remember to I XXX, million CFO, would us that in $XXX being $XXX to we revenues of million, licensing number as said that get first for kinds can here XXX the have the a first things for and cash those that quarter. set with quarter a outflow been is huge down we of

So first start like, gets but XXX we lower building then than and lower quarter little a would than in definitely second million, cash we the third quarter.

David Ross

But more is better --. or is there

Stephanie Fisher

More is to amount in better. liquidity. online the absolutely is about up be More going think of More better. if that going quarter, you tractors the first good truck. pretty here and stuck we’re on bring that’s But to fourth

manage we So, tightly. it

David Ross

least at the should leverage ratio. to portion But EBITDA help it

Operator

next Group Research. our Wolfe question comes of And from Scott

Scott Group

the in tonnage freight weight say and on what Can what’s shipment up October regional? numbers, you per

Stephanie Fisher

For at October, those this I time. have stats don’t point in

James Welch

not I’d down. just third bit say it’s it’s similar versus quarter, a to going up

Scott Group

shipment in a not count weight shipment? seeing you per pickup Are

James Welch

in little weight third is a saying than it No, as better I’m shipment per maybe or the good October quarter. in perhaps was

Scott Group

Can if profitable quarter, Penn New Penn you is of say and regional already drag third kind think the right or now? what in not was you New on

James Welch

results Penn the you one, we report don’t tell individual we New regional in positive brand. that very I But on segment. that on [up-co] can Well are

this focus place we seven of and that challenges energy about effort they recovery a off there. to new in President, we so lot operating think of technology spent had their business the that One projects in direction already good you we of many really because three Moshier, past the a about good Howard headed just to year, that were plan, New the feel the and implementing the lagging Penn got is day companies we’re day and like feel I changing things. were about time, to other had But the bit,

New are the and I next see think perspective rebound from year. we in the environment with Penn So opportunities, that business you’ll yield

Scott Group

regional your that flattish, just sense. you down two of trying No, basis I’m at of seeing quarter. points about one Were other to good margins a the pressure where think improvement were – makes other XX all that is to in the just plan the But to the sense the not quarter? and fix got you’ve third out a at or two it fell way get and

James Welch

with companies the we Penn I that mentioned we operated in just what Penn, do will have a Certainly plan can fix New two a say than other ago. think minute regional And better I that. yes, place New

Scott Group

Stephanie CapEx you can and CapEx equivalent is have through, just then for if us the and Okay. would like cash on be and the your what ’XX? helpful walk it ’XX the view then you number

Stephanie Fisher

think year, the to and the CapEx given throughout X% we projections CapEx we’ve we If X% be that of about to to expect revenues. including that at equivalent be

of it $XXX call million So million to $XXX equivalent. CapEx

average. work fleet, move we than to refresh to We the just we forward, have more the average to know be and we industry As that continue X%. is we do know that

in still beyond. as XXXX probably probably we probably limits the and push move of forward X% higher that that we’ll through So range

Scott Group

And just from good the financial with out? understand want of benefit the leases just of what’s coming drag I rent there’s expense, new on operating equipment, income. about most third of year to the on understand the this equipment but leases, the I number the in to is the next think margin impact all

Stephanie Fisher

an probably months, expense it here X.X% think on rent we lease That over to expense to five will X% of probably is maybe probably coming magnitude range. If that of about are in there. X% next the leases that to the be additional, four X% X.X%, additional

Scott Group

what? of X% to X.X%

Stephanie Fisher

that much think lease today. cost we as have cost about Additional how we

Scott Group

current to Relative lease the cost.

Stephanie Fisher

yes. right, exactly That’s

Scott Group

the then And the question, covenant in gets I last fourth were quarter. think covenants, so a the real tougher

bank any there. you one? are of are if a amendment or in comfortable you Are any in need like ton So there’s – you cushion you don’t get not with and to say another can you discussion the

Stephanie Fisher

we are manage more projections point we that covenant we continue time gave than this above that range The us we need and to we’ll At forward. one. get in as comfortable don’t it move

Operator

we follow-up from have a of Stephens. Brad now Delco And question

Brad Delco

a what a rent X% of percentage of you’re it X% that just asked, from just May just saying to X%. to follow-up as be now, what on X% additional expense is expenses, Scott the will up the be or quickly revenue is

Stephanie Fisher

expense is From what the now.

Brad Delco

Just the million other line then I And want was to of clarify make sure there $XX expense, I that noticed was that. that? below what

Stephanie Fisher

So our part extension, that. cost to expense of related we the some term had to loan of

was that accounting expenses loan the related term of of So that the $X of that to were part about expensed extension. million

Brad Delco

nature, in Kind of is non-recurring fair to say. I guess

Stephanie Fisher

You bet.

Operator

our the conference concludes session. would like and over closing I for company to the question any This answer back remarks. turn to

James Welch

about optimistic excited certainly year are and trucking improving and solid for should to in watch, fourth we’re to we a summarize, to Again be looking our ago, XXXX the compared a forward industry. performance start quarter

appreciate all and a interest rest your and So Thanks. in of good day. the have time the we company,

Operator

concluded. The today’s conference Thank attending presentation. is for now you

You may now disconnect.

Yellow (YELLQ) 2 Nov 172017 Q3 Earnings call transcript