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YRC Worldwide Inc. (YRCW)
Q1 2009 Earnings Call
April 24, 2009; 9:30 am ET
Bill Zollars - Chairman, President and Chief Executive Officer
Tim Wicks - Chief Financial Officer
Sheila Taylor - Vice President of Investor Relations
Tom Wadewitz - JP Morgan
Justin Yagerman - Wachovia
Edward Wolfe - Wolfe Research
Jon Langenfeld - Baird
David Ross - Stifel Nicolaus
Thom Albrecht - Stephens Inc.
Greg Olif - BB&T Capital
Previous Statements by YRCW
» YRC Worldwide Inc. Q2 2009 Earnings Call Transcript
» YRC Worldwide, Inc. Q4 2008 Earnings Call Transcript
» YRC Worldwide Inc. Q3 2008 (Qtr End 09/30/08) Earnings Call Transcript
I would now turn the call over to Sheila Taylor, Vice President, Investor Relations.
Thanks, Leslie. Good morning and thanks for joining us for the YRC Worldwide first quarter 2009 earnings call. Bill Zollars, the Chairman, President, and CEO of YRC Worldwide; and Tim Wicks, our CFO, will provide our comments this morning. Our operating company President Mike Smid, Keith Lovetro and Jim Ritchie are available for questions. I would also like to welcome [Jeff Schiebel], our new Director of Investor Relations to the call. Jeff has been with YRC for a few years in our forecasting area and I’m pleased to have him on the team.
Now for our disclaimers; statements made by management during this call that are not purely historical are forward-looking statements. This includes statements regarding the company’s expectations and intentions on strategies regarding the future.
It is important to note that the company’s future results could differ materially from those projected in such forward-looking statements due to a variety of factors. The format of this call does not allow us to fully discuss all these risk factors. For a full discussion, please refer to last night’s earnings release, and our SEC filings including our 10-K and today’s 8-K filings.
I will now turn the call over to Bill.
Thanks Sheila good morning. The first quarter was historic, not only for YRC, but for the LTL industry as we successfully integrated Yellow and Roadway into the most comprehensive single network in the market. This did require a lot of hard work and effort by our employees, and a lot of patients have support from our customers. The process wasn’t perfect, and we had some hurdles in the first couple of weeks, but given the size of the integration and the history of our industry, we feel very good about what we accomplished in a relatively short period of time.
In a minute I’ll give you some more color about where and when we expect to see the benefits of the integration, but first, let me touch on the first quarter results and the operating environment. As we commented recently, the economy progressively weakened throughout the first quarter. This went to more volume decline than we initially expected at all of our operating companies.
We’ve effectively removed a significant amount of costs from the business or with an unprecedented economic environment coupled with separate national networks that was challenging for us to get ahead of the declining volumes. This was the clear driver behind our operating loss after taking out the non-recurring charges from our internal initiatives and significant accrual adjustments. We provided a detail of these charges at our recent analyst meeting, but Tim can give you an update in a minute.
In addition to the economy, we believe we are still experiencing some customer diversion due to concerns surrounding the integration. It’s difficult to quantify this volume, but we believe it’s about a third of our year-over-year decline at national or about 10%. We believe much of that volume will return, and in fact some of it already has, but we can’t predict how quickly or at what levels the rest will come back.
With respect to yield, our national company continues to see trends better than the current market given the customer mix improvements that we initiated prior to the integration and our ability to obtain contractual increases. If you exclude fuel, the nationals LTL revenue per hundredweight was up more than 1% in the first quarter compared to year ago. This is also bought a 2% improvement from the fourth quarter trends.
We continue to feel good about the ability of our national company to secure price increases even in the current competitive environment. As for pricing at the regional companies, it remains competitive given the over capacity in the regional markets and the economic recession that is significantly impacting Holland’s core territory.
For the quarter, yields at the regionals was down a couple of percent after excluding fuel. We are encouraged by some initiatives in the early stages at the regional companies to expand and diversify their customer base and approve their contractual increases.
Given that, all the regional brand services are now consistently in the high 90s, which obviously is a great leading indicator for future business. Before getting back to our national integration, let me quickly say that YRC Logistics and Glen Moore, our truckload company, continue to make adjustments for the economic environment.
Logistics reported declines in revenues as the global economy worsened, but in response removed a significant amount of cost from the business. Keep in mind that we continue to record our investments in Jiayu and JHJ through the equity method which means their results are not reflected in the logistics results. We remain pleased with our opportunities that these investments in China provide our U.S. based customers.