Feb.28--With a new five-year labor contract in place and five years until long-term debt comes due, YRC Worldwide is prepared to focus on improving service, lowering cost and balancing the network at struggling long-haul subsidiary YRC Freight.
As of today, YRC Freight has a new president, Darren Hawkins, formerly senior vice president of sales and marketing. The company also will get new dimensional scanning equipment to help price freight more accurately and much needed new trucks this year.
YRC Worldwide, the fourth-largest U.S. trucking operator, scraped through 2013, increasing annual revenue by less than 1 percent to $4.87 billion as it dropped its net loss by 39 percent to $83.6 million, compared with a $136.5 million net loss in 2012.
Last year was the seventh straight year of net losses for YRC Worldwide. Combined, the less-than-truckload operator’s annual losses since 2007 total $3.1 billion. However, YRC Worldwide also reported its second consecutive annual operating profit — $28.4 million — following a $24.1 million operating profit in 2012.
In the fourth quarter, YRC Worldwide increased revenue 3.3 percent to $1.21 billion and reported an operating loss of $1.6 million, compared with a $30 million operating profit a year ago. Thanks to $39 billion in tax benefits, however, the holding company managed to eke out a $400,000 net profit in the quarter.
A strong performance by regional carriers Holland, New Penn and Reddaway helped. The regional LTL group increased operating profit 170 percent to $22.7 million on a 10.3 percent jump in revenue to $431.9 million in the quarter. For the full year, the regional group increased operating profit 14.1 percent to $79.9 million while the carriers’ combined revenue rose 5.4 percent to $1.73 million.
“The regional carriers define what a successful union carrier can do in this industry,” YRC Worldwide CEO James Welch said in an earnings conference call.
YRC Worldwide now looks to put the “distraction” of its labor and refinancing battles behind it and get back to improving “fundamental freight processes” at YRC Freight, Welch and CFO Jamie Pierson told investment analysts Feb. 27.
“The management team has now turned its attention time and resources to the freight business, not financing,” Welch said during a conference call. “We can now focus all our attention to service and operational improvements,” said Pierson.
Hawkins will lead that effort at YRC Freight, succeeding Welch, who took over in September from former president Jeff Rogers. The national less-than-truckload carrier lost $15.4 million on $768.4 million in the fourth quarter and had an operating loss of $31.2 million on $3.14 billion in revenue for the full year.
“2013 was not the year we forecast for YRC Freight,” Welch said. “But the short-term pain will result in long-term improvements as we move into 2014 and beyond.”
YRC Freight did see tonnage per day rise 3.2 percent and total tonnage increase 4.1 percent in the fourth quarter, while total LTL shipments increased 1.8 percent, despite chronic disruption caused by severe winter storms in December.
“Even though the weather was volatile, freight volumes were stable,” said Welch. Pierson estimated the weather took about $10 million to $15 million from earnings before interest, taxation, depreciation and amortization in the quarter.
The weather was hardly better in January and February, but Welch is more optimistic about the state the economy will be in once spring finally arrives. "When the network is free and clear, business is strong," he said.
(Source:JOC)