Yield-focused YRC turns second consecutive quarterly profit

YRC Worldwide, continuing its turnaround under CEO James L. Welch, posted its second straight quarterly profit in the fourth quarter of last year.
 
Benefiting from a strong freight environment, sharpened focus on operational improvements at long-haul unit YRC Freight and wage and benefit concessions from its 7,500-member Teamsters union work force, YRC posted a net profit of $6.2 million on operating revenue of $1.218 billion in the fourth quarter. That compared with a $400,000 loss on $1.208 billion revenue the fourth quarter of 2013.
 
At the same time, consolidated operating income increased $32.8 million, from an operating loss of $1.6 million, to operating income of $31.2 million, YRC said. Operating income in 2014 included a $5.8 million gain on asset disposals compared to a $300,000 gain on asset disposals in 2013.
 
For the full year, YRC had a $67.7 million loss on $5.07 billion revenue, compared with $83.6 million in losses on $4.86 billion revenue in 2013.
 
“YRC Freight continues to improve profitability by executing on its operational initiatives and significantly increasing technology investments,” Welch said in a statement. But he warned that in 2015, the lower price of diesel and the resulting lower fuel surcharges will be a “headwind” for the entire LTL industry.
 
“Going forward, we will continue growing base rates and getting paid for the service we provide while continuing to realize the benefits of investments already made in technology, safety, driver recruitment and employee engagement,” Welch added.
 
At YRC Freight, the nation’s third-largest LTL operating company, fourth quarter operating revenue was $795.5 million, an $18.8 million increase over the $776.7 million reported in the fourth quarter of 2013. YRC Freight’s operating income increased $39.9 million, from an operating loss of $15.4 million in the 2013 fourth quarter, to operating income of $24.5 million.
 
 
“During the fourth quarter of 2014, YRC Freight experienced yield growth compared to the prior year of 5.7 percent including fuel surcharge and 7.3 percent excluding fuel surcharge,” Welch said.
 
YRC Freight enjoyed continuing improvements on a year-over-year basis during the quarter, Welch said. YRC Freight achieved total revenue per hundredweight (including fuel surcharge) increases of 4.8 percent in October, 6.9 percent in November and 5.7 percent in December.
 
“The year-over-year increase in yield continued the trend that began in the third quarter and continued to pick up momentum, especially when compared to the results excluding fuel surcharge and is a testament of improving base rates and fundamental pricing,” Welch said.
Additionally, on a year-over-year basis, YRC Freight reported tonnage per day decreases of 1.6 percent in October, 3.2 percent in November and 3.2 percent in December. The decreases in tonnage were a result of prioritizing yield improvement and profitability over volume, Welch explained.
 
For the full year, YRC Freight posted a 96.9 operating ratio, a 5.1 basis point improvement over the 102 OR for all of 2013.
 
“YRC Freight continues to improve profitability by executing on its operational initiatives and significantly increasing technology investments,” continued Welch. “In 2015, the lower price of diesel and the resulting lower fuel surcharge revenue will be a headwind for the entire LTL industry. Going forward, we will continue growing base rates and getting paid for the service we provide while continuing to realize the benefits of investments already made in technology, safety, driver recruitment and employee engagement.”

At YRC’s three regional units (New Penn, Holland and Reddaway), the picture wasn’t quite as good. Operating revenue for the 2014 fourth quarter of 2014 was $422.2 million, an $8.8 million decrease from the $431 million reported in the fourth quarter of 2013. At the same time, operating income decreased $12.1 million, from operating income of $22.7 million to operating income of $10.6 million, YRC said.
 
“The fourth quarter results for the Regional segment were negatively impacted by 4 fewer workdays compared to the prior year and approximately $10.2 million of additional year-over-year expense related to liability claims and an additional $2 million of workers’ compensation expense,” said Welch. “We pride ourselves on getting our employees home safely every night, and in 2015, we will increase our intensity and investments around our safety initiatives, not just at the Regional companies, but across the entire organization,” Welch added.
 
YRC’s regional companies posted a collective 97.5 OR in 2014, a 2.8 basis point decline from the 94.7 OR they enjoyed in 2013.

In the fourth quarter, YRC’s regional companies experienced yield growth compared to the prior year of 3.5 percent including fuel surcharge and 4.8 percent, excluding fuel surcharge, the company said.
 
On a monthly year-over-year basis, the Regionals achieved total revenue per hundredweight (including fuel surcharge) increases of 2.7 percent in October, 2.8 percent in November and 4.9 percent in December, and reported tonnage per day increases of 0.6 percent in October and 2.5 percent in November and a 0.3 percent decrease in December, the company said.
 
“Improving base rates, operating efficiencies and safety performance will continue to be a focus for the Regional companies as they too will be challenged with the lower fuel price environment,” concluded Welch.