YRC Worldwide Inc. (YRCW)
Q4 2009 Earnings Call Transcript
February 5, 2009 9:30 am ET
Paul Liljegren -- VP, IR and Treasurer
Bill Zollars --Chairman and CEO
Tim Wicks -- President and COO
Sheila Taylor - EVP and CFO
Justin Yagerman -- Deutsche Bank
Tom Wadewitz -- JP Morgan
Jason Seidl -- Dahlman Rose
Jon Langenfeld -- Robert W. Baird
Allison Landry -- Credit Suisse
Edward Wolfe -- Wolfe Research
John Barnes -- RBC Capital Markets
Jack Waldo -- Stephens, Inc.
Previous Statements by YRCW
» YRC Worldwide Inc. Q2 2009 Earnings Call Transcript
» YRC Worldwide Inc.Q1 2009 Earnings Call Transcript
» YRC Worldwide, Inc. Q4 2008 Earnings Call Transcript
I would now like to turn the call over to Paul Liljegren, Vice President, Investor Relations and Treasurer.
Good morning, and thank you for joining us for the YRC Worldwide fourth quarter and full-year 2009 earnings call. Bill Zollars, the Chairman and CEO of YRC Worldwide; Tim Wicks, our President and Chief Operating Officer; and Sheila Taylor, our CFO will provide comments this morning.
Now for our disclaimers, statements made by management during this call that are not purely historical facts 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 this morning’s earnings release and our SEC filings including our 10-K and today’s 8-K filing.
Now I’ll turn the call over to Bill.
Thanks, Paul, and good morning. Let me start by saying that 2009 was an important year for YRC Worldwide and their stakeholders. The headwinds of the general economic recession and the third consecutive year of volume declines in our industry we developed and executed a comprehensive plan that allowed us to mitigate those obstacles.
During the year, we made significant progress in our comprehensive plan to improve our operating efficiencies, restore financial strength, and position our Company for future success, and we’ve created significant momentum on all fronts.
Most recently, on December 30, we successfully completed our debt for equity exchange. As you know, we launched our note exchange in early November and did need to extend the offer several times, which is certainly not uncommon for these types of deals.
But we were ultimately successful. These extensions did create uncertainty and noise in the marketplace and caused certain customers to divert their shipments with us especially during the latter part of December when this was all going on. Despite this temporary diversion, we were able to deliver results, which improved throughout the quarter.
We’ve been pleased to see many of those customers returning their shipments to our network following the completion of the exchange and we’re grateful to the majority of our customers that had the confidence in our comprehensive plan and maintain their shipment volumes with us during this entire note exchange process.
Turning to December our shipment trends have improved in January and now into February as well. Tim is going to provide further comments related to our customer confidence in a minute.
The December exchange removed about one-third of the debt from our balance sheet, so, it was extremely significant for us. As we said in our press release, the Company is executing on its plan to raise new capital sufficient to satisfy the remaining 2010 note obligations and we are in advanced discussions with investors. On this subject, we won’t be taking any further questions later when we get to the Q&A period.
Moving to our operating results in the fourth quarter, you will see continued significant sequential improvement, which we began in the second quarter. In addition, we now achieved an operating income improvement on a year-over-year basis.
Pricing in the industry remains competitive and market demand remained weak during the quarter. Our quarter-to-quarter volume changes were 10.7% in national and 8.2% at regional, about half of that was normal seasonality.
While year-over-year yield trends declined due to lower fuel surcharges, the quarter-over-quarter yield for National improved by 1.5% and Regional revenue per shipment was consistent with third quarter. These volume trends not only reflected the economic environment and the financial noise during the quarter, but along with better than industry average yield demonstrated our continued commitment to price discipline and revenue mix management. We’re just not chasing bad business.
Moving to our segments and starting with National, our earnings for the National part of our business improved sequentially by more than $40 million from the third quarter to the fourth quarter despite the headwind of a seasonal revenue decline as I mentioned, and has now achieved an improvement year-over-year of $20 million.
Our Regional business improved its earnings by over $20 million from the same quarter a year ago and again was close to breakeven in Q4. When you account for seasonal and volume adjustments, the Regional showed continued sequential operating improvement in the quarter.
Our YRC Logistics company reported breakeven earnings in the fourth quarter as it continues to prudently manage its pricing and cost while delivering quality service to its customers.
Finally, I’ll add a few comments on our new board and our upcoming special shareholder meeting. According to the terms of the note tender, we are in the process of selecting directors to join our board. We are really pleased with the broad range of skills and experience the successful candidates will bring to the Company.
We also acknowledge the dedicated service of our current board that provided critical guidance and counsel as we developed and executed our comprehensive plan.