- Earnings call transcript Q3 2022

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Operator

Good afternoon. And welcome to the Yellow Corporation’s Third Quarter 2022 Earnings Call. All participants will be in listen-only mode. After today’s presentation, there will be a question-and-answer session. Please note, this event is being recorded. like Vice the Investor President would Tony over Relations. I Senior Carreno, of now, to conference turn to And Treasury and Please go ahead.

Tony Carreno

Corporation’s and Welcome conference Operator, afternoon, third Yellow call. you, earnings quarter Thank XXXX good to everyone.

us Chief Officer; Hawkins, Officer. and are Financial Executive Chief on the Olivier, Joining today Darren call Dan

session. and Harris, In Officer be addition, President Darrel available will Operating Chief during today’s question-and-answer

that federal and make During forward-looking statements historical statements of we all meaning statements forward-looking may not some be this securities call, on These this the laws. are made call, might other within which facts, and all not discuss are subject to allow The uncertainty differ does and fully a to of number these therefore, of results format risks, us call risk actual of factors. this materially. may

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

for and which Additionally, presentation, call adjusted filed X-K, our over earnings the a please issued presentation see today’s call. during release, I we The turn on release with along a reconciliation In now the an conjunction EBITDA. earnings the was net be today’s is referenced to may available in income of website. with release will Darren. to

Darren Hawkins

expense ago, a to improvement. an year third-party joining ago. In year-over-year claims compared QX, call. improved a despite our the revenue quarter good for income year from and unfavorable you Tony, operating increased Thank to higher income Thanks, compared everyone. afternoon, sixth liability Operating and impact of marking consecutive

to our it of ago. the One final moving LTL in demand basis quarter following points to LTL year-over-year for freight Yellow. and the by execute we kept fuel, be expense Our supply. revenue focus plan capacity year and strategy transportation network XXX as on incremental including In improving per includes quality as decreased the the transformation profitability XXXX, moderating, the to consistently in to our and that a of Overall, a steps through demand we hundredweight, QX, compared where appears have third the percentage Throughout our mitigating revenue, continues XX.X%. purchase exceeded increased period a be

environment However, the pricing favorable. remains

delivery month terminals the Yellow of Phase of the to approximately integrate the pickup of of both that the regional of and executed YRC increase X went September, October, negotiations. in define set success. into support X% the with we of For transition optimization Western as In and X an averaged U.S. operations. would the long-haul goals well and legacy and network impacts Phase runaway We straightforward optimization. Freight network XX as long-haul contract service, a successfully

super network. First, as to the begin operating up stood a regional we terminals

pickups than and We the across codes, driver reducing congestion at miles terminal shipments facilities designed. one as customer and move closer earlier and our customers, employees things Our positioning delivered up docs. Freight picking YRC our simpler realigned to customers Reddaway network our resulted brands, make deliveries X,XXX for and our more travel. in which optimized and reduced both zip enabling We them having by customer’s and city delivering

the plan regional year. expectations carrier. performance the the valuable engaged to this remain implementation lessons as changes, rest We us the excited our and end we throughout integrate to a following super of the prepare implementation data network rest of when about entire around we allowing the to the of highly as meeting of Phase of the employees our these is capture the learned The network Finally, and network. the transformation have is X network operating what completed are means of

be will terminals overlapping XXX an the that proximity One as of of territories. other able service in to terminals LTL such have dispose network with than benefits more as optimizing to we of close ours each

or not sacrifice service customer However, to we plan do geography.

to opportunities terminals paying proceeds. own the these for excess debt look with down will derisking sell sheet that expect the We balance we by to and continue we

recently the company loan progress asset-based the has One transformation improve facility, our us terms enhancing the to the to our position made helped Turning including of the facility, to extended of during Yellow liquidity.

quarter. and more now will to, will additional Thank Dan, joining from about who over hear Dan. will for You this the details I call about you turn us the share today

Dan Olivier

you, everyone. and Thank Darren, good afternoon,

net EBITDA third compared for EBITDA million $XX.X operating year. the end in to as of Operating disposals, million Adjusted $X.XX was was billion, XXXX XXXX $XX.X income $X.X months Adjusted a $XX.X to million quarter, income revenue XXXX. in in gain million of compared quarter $XX.X was third of the to billion property XXXX. operating The compared on quarter the for of $XXX.X million the ago. prior million, a XX including third $X.X $XXX.X to was year last million, compared the

quarter volume. fuel and was in to continued and third ago to year growth compared revenue per XX.X% quarter offset of revenue Including LTL performance surcharge was lower revenue the reflects by third a up fuel up LTL year yield shipment partially Our X.X% ago. XX.X% revenue, compared surcharge, strong higher a hundredweight per

follows; per weight XX.X% and preliminary compared hundredweight basis was down sequential was the compared XX% in LTL XX.X%. as LTL were workday LTL decrease approximately year. and tonnage by per the in LTL per Sequential August day XX.X%, down and per tons year our XX.X% prior Excluding historical in X% up per tonnage per X.X% compared of down up was driven last October, roughly was per surcharge, trends a On day was our ship. On XX.X% X% a day to a and to LTL revenue September a October to down LTL XX.X%, from XX.X%. centers trend decrease X%. between to down July September basis, down fuel shipment LTL per shipments quarter third revenue LTL day

million compared ago, liquidity mostly unfavorable impacted million, year significant a claims. to the quarter compared of million during to claims, of outstanding were including months nine the million nine of $XXX.X months quarter compared Capital for claims at compared capital XXXX. third the million quarter year million, end of several $XXX.X at prior XXXX. the $XXX.X $XX.X were most expenditures of the million, due results resolution the to the increase year $XX.X quarter of our Total expense for ago. third the first was third-party development Our a third the to $XX.X for $XX.X by the liability a negatively in first end expenditures Total were to

$XXX Act. million to $XXX year expenditures million the down in Also year. million, $XXX XXXX, of of that million reminder $XX.X adjusting also are certain capital pertaining payroll million payment is XXXX in to $XXX our deferred We full of to remaining deferral liquidity, half million. we a range million to December December in the guidance of taxes from We first this under the due paid and for $XX.X of $XX.X provisions CARES that XXXX

or Finally, the lending of our ABL we completed facility. asset-based recently extension

and to opportunities Darren strengthen $XXX lenders, addition reduced by comments. points. as turn We seek extending from of capital January XXXX, some by to our our I to years from XXXX will continue back XX facility and interest maturity for closing size In million $XXX increased the structure. support basis the two now the rate to forward, we we over appreciate the we January to the will also million of the up to move call

Darren Hawkins

we this regional Thank afternoon. together term. super We Yellow’s network continue time any XXXX, in and of answer service. final transformation am would proud of employees that in to The near see the bring stages Customers, best the execution to you, Thanks operationally of for financially. I may think the possible our now When and I and should Dan. about to be this questions you into very shareholders company One employees Yellow as have. the accomplishments benefits the our puts in strong your moving position happy improving

Operator

Thank And Stephens. first Jack Yes. with comes the question you. from Atkins

Grant Smith

my Good you for Jack. on is for Thank Hey. guys. afternoon, question. This taking Grant

Darren Hawkins

Grant. Hello,

Grant Smith

first we the How Yellow on I if the is start going? with of guess integration. part could One

could it’s on savings update Just a a going little per seeing cost and quantify bit? you how are maybe of on of any that kind share, lot a shipment level an you kind

Darren Hawkins

Darren. This Thank you, is Grant.

which expectations. Western As It’s XX I living script, our the stated went of well. up terminals to involved our change, in the

investments the and management then XXXX. things We exceeding facilities, total, to the in two. Those get It be delivering early different size XX,XXX we can the savings. moving miles than go geography without in be look to to that XXX are that benefits without as a and between any do about driver of all X and those also available into up is accomplished When disruption those it’s we with is see away of will be excited sell the employees. YRC operational reduction regional debt make to you we to XXX the involves changes of and start time. the areas are to cost a pieces is people synergies I then I that now city be wrapping time come costs we facility also linehaul between and related and longer need another generate with just picking what need be going end Freight to it year. areas, the company we or rather already these am delivery going reduction a these debt facilities whole, those at as into now One together. But requires and terminals in the benefits will an and free Yellow those are end pickup on. year the are that this one customers this the near-term iterative and of giving the XX up that But we up be about think expecting immediately. will forward. no the to will exciting want up doing are will together, terminals when those When and longer play have we to the The operating that for Reddaway The creating that’s over put to applied The changes, costs and processes and from coming Certainly, immediately super you density I comment service go Phase Freight up of service going focused the reduction the wrap changes on, no generated we benefit. of and will

Grant Smith

demand there. on and And maybe Thank from Yeah. provide how what you color service, if maybe could on hearing I and maybe see customers service are on us wondering you a trending of on you for telling detail forward? Yellow going seeing them? little bit bit kind how a the are that little you you on trends mentioned what and and One just little just levels is customers Thanks. out impacting customers a And there of you what are you also

Darren Hawkins

the like customer our Yeah. of retail channel demand industrial a demand is and Even take up, side most it but Certainly, in in our revenue I the first the of October, discussion. are in a carriers, into portion go and slackening in the largest the we we then of channel. retail saw customers our saw LTL larger retail in and will channel. some actually channel held demand slackening though

with is a when our what in stacking I and operating I overall, we good improvement customer thing straight to we revenue From overall the economy. Yellow. six be quarters on I So, have about like strategy that’s broader our feel done the in look that expected great have of at seen plan. perspective, and retail what pricing income, about

from for West place the changes mentioned our with employees it in And a loyalty got a to these talking long-term have large high customer play. to and we see of are it have in benefited while employees also able engagement, Yellow I excited as been and being One and a into we they as have as seen have in We base script. come the those a level operate about

the got on at a that standpoint, customer network capitalize customer and the service certainly, economy us, bring standpoint, confident great economy. have whatever what on benefits throw So in the to depending will opportunity a redundancies into we I from going the reducing a throughout happens broader may our feel

Grant Smith

you Thank time. guys for the Great.

Darren Hawkins

Thank you.

Operator

Research. the comes with Thank Wolfe you. Group from And next question Scott

Erin Weed

Thanks on Hey. taking my This is Scott. Erin for actually questions. for

Darren Hawkins

afternoon, Good Erin.

Erin Weed

Hey.

-- kind next of you I know update So expense any fourth a the about and should a payroll just an just in few little color think costs quarter I thinking to maybe just of just How here trend the with about progression. underperform quarter. mentioned OR seasonality, we on sequential -- the and anything takes bit guess it outperform and sequential expect from on would you that? puts

Dan Olivier

afternoon, Good is Dan. Erin. Yeah. This

also we a now Darren were that, revenue I let improve consecutive able pleased am First, say to year-over-year on operating mentioned, as six basis me quarters. income and that for

Our was was which quarter ratio third points the XX worse operating the prior than XX.X%, for basis year.

remarks, as in claims the third by impacted the of in opening claims my third-party of our development mentioned due on However, $XX.X years. level resolution have from was prior and to expect quarter to any I unusually of which quarter single were mostly expense, year-over-year results third points. a liability million increase negatively That which quarter OR basis the expense, we elevated not negative high in of impact for continue XXX do unfavorable

trends year recent and approximately of which improvement. been in would So XXX would points with last better basis profitability line been have excluding the our than more that, XX%, OR have

from as of basis sequential about QX, think Now changes our see to operating about points. ratio XXX we QX in historically I degradation

So if That’s touched you to expense just the the of the in impact off going QX. sequential expect from I only payroll slightly OR the better historical point Cares a change will finally, that be that QX not fully that our XX our Act repayment I than cash from referenced, consider impact on to be jumping of that’s would being to in taxes, and QX. then, QX trend. QX OR accrued deferral And I to

Erin Weed

are now going That’s to No. to then like you when GRI about just plans, right And that very you are it. do guys one? the we or hear next expect helpful. planning Got -- also

Dan Olivier

is Dan This Yeah. again.

X.X% So implemented we about for GRI Xrd. at in a place now. month October That’s effective actually been a

Erin Weed

renewal lower trended do believe. moving throughout how like you in I that I and April, and about lapping then there forward X% had XQ? maybe it. from price why of could you is the contract priced just renewals through was Got are earlier go as guess, ask now like that decelerated up puts side, Any in of And just of I or more, and sort kind now? takes stuff just you you the here if the also balance year mentioned noticed some October and one in on we and I since of kind volumes think that’s that, and

Dan Olivier

yield X.X%. excluding growth basis saw continued fuel Yeah. revenue the revenue performance Well, me per on let a a QX, and year-over-year to start hundredweight third again saw with surcharge, QX quarter We strong from we was per during LTL yield was up sequentially that. LTL up sequential shipment X.X% and

renewals even comparisons come So that although quarters, will recent we believe moderate. percentage of contractual to can historically the to the achieve level yield our though continue down a year-over-year in level sequential growth, we from continue has high

Erin Weed

Got it.

time. the Okay. Thank Appreciate you, guys.

Darren Hawkins

Thank you.

Operator

from Thank you. Research comes Jeff question And Vertical Kauffman next the Partners. with

Jeff Kauffman

Thank you very guys. Hi, much.

Darren Hawkins

Jeff. afternoon, Good Hi.

Dan Olivier

Hey, Jeff.

Jeff Kauffman

Good afternoon.

right about Is is a how you statement? one-off So if and a I in probably current quarter. is XX% $XX.X more to that the operations, think million the fair of related performed true-up to bogey really not payment about the and think

Dan Olivier

Yeah. Jeff. That’s fair,

Jeff Kauffman

right. All

switch have how renegotiating on needed. me straight right gears out for customer going tonnage still wrong much because down. -- the But seeking to cold, now we know or let to you to the been through tonnage, is that the double-digit there and have slowing size you price? What this quarters have been something we is it’s and are network world six almost mix, So at tonnage have down point, the be I more because yield your was that improving at the

Darren Hawkins

is making strategy changes company these been not when that point. right the the and we on been any have Darren. profitability for this tonnage to road were am I pulling on. in more we also this It’s our Jeff, interested at

the demand we to environment going terminals. at are protect we prioritize XXX about With you the to are that land and we profitability going now, and But we are out, changes certainly the through network yield going to new that we think process. laid seeing are right our have when our

giving any We geography service area. up are or not

are of X% dollars. basically our We giving up

Phase through are doors I the we is our away So XX are doors, if which X% and throughout Phase going take up giving of X,XXX that those facilities you II, system.

freight. we will that got along the costs when control Yellow providing growing But the complete we all that tonnage shipments our right absolutely, But matching plan and the also a and doesn’t make XXXX, One purchase for capacity with in utilization certainly the don’t our is proposition to we we story, through be way So labor transportation, it’s work this any or expand that plan. loyal in to proposition overall bring want changes nationwide. One on will of We pieces growth and normal the our volume. have by the is, right contribute and reduction to the of our through as whatever value cartage, Yellow economy landscape the way profitably CapEx, our but changing want the Yellow absolutely our value the base and them customer will the not

Jeff Kauffman

Thank helpful. was follow-up. last That you. One

at As you about bit little strength your through think one seen changing you where the eyes a I and how that, kind incremental weakness, have buckets industry are and things freight you downturns. this as some upturns, some see seen areas, product or it seeing you different What’s of right is market which you where look like now? of an whether incremental or have customer

Darren Hawkins

and Yellow was that And just what is the that’s an have unusual to our XX last from Yes. are that it channel. days it at certainly you demand happening we Darren seen the me retail is in challenging, seen in have was This and we the in. October cycle as over This progress and we right. to data noticeable were

customer the Board even in if decline be lost half customers, top that of channel. saw significant over we will any you October. those largest retail haven’t in XX areas in our the those look area, and though we tonnage Our base, shipment at across And accounts in

definitely the is book retail it’s industrial of And have evident in the we got business demand in thing the still of is So channel. some interesting that firm.

as October, our watch. on confidence the involved So to interesting sight forward that’s also forward amount mean, others the inflation and moving and going levels with big of I that which retail reshoring, will moves seen gets economy in sense. near have inventory line have change clear us that are, for us and shows piece difference got makes where America a be over shoring and is they have data to But this that we time. as of we

So reduction the of a lot would goes respond like that, areas. spent good all we transportation, on XXXX to to through money cartage, and company in efforts of those although for well then keep those make thing that X sure we And as doing our customers. can lot and will purchase we also be our on are a going training to and employees in to have driving that, about of academies time hiring our we and focusing we in other And also, need Phase board. our employees

the Yellow. So the that’s of end I out see of for now kind playing year -- between how and next the

Jeff Kauffman

Well, congratulations. very Okay. much you thank and

Darren Hawkins

Thank you, Jeff.

Dan Olivier

Jeff. you, Thank

Operator

Bruce Stifel. last And question you. with Thank comes Chan from

Andrew Cox

on Good afternoon. Hey. Afternoon, for Andrew team. is This Bruce. Cox

Darren Hawkins

Yeah. Good Andrew. afternoon,

Andrew Cox

Hey. you. hear Good to from

a for be the refresh of there. So that that to related heard just I equipment insight be any you fleet am insight looking much would needed refreshment just trying CapEx and how coming more little the bit how down you. of Is still delays I the helpful? into to is is guided here, Thank year. I to from guys fleet more rest along? for understand the am

Dan Olivier

Dan. Yeah. Good afternoon, is Andrew. This

the CapEx around come million. the of I end to full for spend mentioned between has from our in a $XXX due OEMs needed the scaled none reduction comments, to of keep due to is was to of work items with my year we down equipment $XXX of a on, line projected other continue of half lower capacity, About in production the half guidance guidance and XXXX guidance to the support million As XXXX. the range opening And that our to of prior timing production We to closely do back trends. but just sight some good to due of because volume delays. amount reduction year to

Andrew Cox

that same If That’s have softer note how the One time volumes the expectation And Okay. flex things or that that scope the for do of I changed down ability of moving project? process? up from guess here, Yellow line kind guys expectation or helpful. along what of in evolve forward, to further you has

Darren Hawkins

is Andrew, this Darren.

are it. we in of other inflation, Yellow. external have We regardless with to a bringing change will opportunity that Yellow. of are the This service track from That marketplace One this and excited inputs long-term something pieces. chapters to is right like on is right final of a super not regional strategy brand economy, be the Very

the -- time. between will So will we line that be we certainly year, will now executing and the the be time of and prepared end that very

Andrew Cox

All to Thanks the I that’s forward all Look the progress. had. Well, so happens from here. right. congratulations time what and for seeing much on

Darren Hawkins

you, Andrew. Thank

Dan Olivier

you. Thank

Operator

this Thank conference the to like earnings concludes the any call. remarks. for And I over would closing back you. turn company to our

Darren Hawkins

and and you concludes Operator, the to Operator, call, thanks This us additional you, I any our joining call questions for Tony turning you. may back that am today. Please contact have. everyone with Thank again to

Operator

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

lines. now may You your disconnect

Yellow (YELLQ) 3 Nov 222022 Q3 Earnings call transcript