YRC Worldwide Inc. (NASDAQ:YRCW) announced that it has launched an
amendment to its Term Loan Credit Agreement including an adjustment
to the leverage ratio covenant from the first quarter of 2017
through the fourth quarter of 2018.
“Since 2011, we have made strides to strengthen
our Company, including significantly improving Adjusted EBITDA and
operating cash flow while reinvesting back into the business and
reducing debt to the lowest level in more than a decade,” said
James Welch, chief executive officer of YRC Worldwide. “However,
over the past few years the less-than-truckload sector has seen
tonnage decline and lower fuel surcharge revenue from falling
diesel prices. We have remained in compliance with the leverage
ratio covenant since the inception of the term loan and we are
launching the amendment to take uncertainty out of the market
regarding our expected ongoing compliance. Preliminary financial
results are being released as a step in the amendment process and
we look forward to discussing them in greater detail on our fourth
quarter earnings conference call. We appreciate the support of our
lenders and expect to continue executing our plan to strengthen the
Company,” concluded Welch.
For the three months ended December 31, 2016,
YRC Worldwide Inc. anticipates reporting consolidated operating
revenue of approximately $1.143 billion to $1.153 billion and
consolidated operating income of approximately $10 million to $20
million. The Company also anticipates reporting Adjusted
EBITDA of approximately $53 million to $63 million and a total debt
balance of approximately $1.010 billion which reflects a $40.5
million pay down of the term loan in fourth quarter 2016.
For the year ended December 31, 2016, the
Company anticipates reporting consolidated operating revenue of
approximately $4.692 billion to $4.702 billion and consolidated
operating income of approximately $119 million to $129 million. The
Company also anticipates reporting Adjusted EBITDA of approximately
$293 million to $303 million.
At December 31, 2016, the Company had cash and
cash equivalents and Managed Accessibility (as defined in the
company’s most recently filed periodic reports on Forms 10-K and
10-Q) under its asset based loan facility totaling $181.1
million.
Cautionary Statement
Although the company has not yet reported the
results for fourth quarter and full-year 2016, the preliminary
financial and operational information included in this news release
reflects management's estimate of results based on currently
available information. There can be no assurance that these
estimates will be realized, and estimates are subject to risks and
uncertainties, many of which are not within the Company's control.
Accordingly, you should not place undue reliance upon this
preliminary financial and operational information.
Fourth Quarter 2016 Earnings Conference
Call
On Monday, February 6, 2017, at 4:30 p.m. ET,
company executives will host a conference call with the investment
community to discuss fourth quarter 2016 financial results.
Fourth quarter earnings will be released the same day, Monday,
February 6, 2017, following the close of the market.
The call will be webcast and can be accessed
live or as a replay via YRC Worldwide’s website www.yrcw.com.
Non-GAAP Financial Measures
EBITDA is a non-GAAP measure that reflects the
company’s earnings before interest, taxes, depreciation, and
amortization expense. Adjusted EBITDA (defined in our credit
facilities as Consolidated EBITDA) is a non-GAAP measure that
reflects the company’s earnings before interest, taxes,
depreciation, and amortization expense, and further adjusted for
letter of credit fees, equity-based compensation expense, net gains
or losses on property disposals, restructuring professional fees,
nonrecurring consulting fees, expenses associated with certain lump
sum payments to our union employees and gains and losses from
permitted dispositions and discontinued operations, among other
items, as defined in the company’s credit facilities. EBITDA
and Adjusted EBITDA are used for internal management purposes as a
financial measure that reflects the company’s core operating
performance. In addition, management uses Adjusted EBITDA to
measure compliance with financial covenants in the company’s credit
facilities and to pay certain executive bonus compensation.
However, these financial measures should not be construed as better
measurements than net income, as defined by generally accepted
accounting principles (GAAP).
EBITDA and Adjusted EBITDA have the following
limitations:
- EBITDA does not reflect the interest expense or the cash
requirements necessary to service interest or fund principal
payments on our outstanding debt;
- Adjusted EBITDA does not reflect the interest expense or the
cash requirements necessary to fund restructuring professional
fees, nonrecurring consulting fees, letter of credit fees, service
interest or principal payments on our outstanding debt or fund our
lump sum payments to our IBT employees required under the ratified
Memorandum of Understanding;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will have to be replaced
in the future, and EBITDA and Adjusted EBITDA do not reflect any
cash requirements for such replacements;
- Equity-based compensation is an element of our long-term
incentive compensation program, although Adjusted EBITDA excludes
certain employee equity-based compensation expense when presenting
our ongoing operating performance for a particular period;
- Other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure.
Because of these limitations, EBITDA and
Adjusted EBITDA should not be considered a substitute for
performance measures calculated in accordance with GAAP. We
compensate for these limitations by relying primarily on our GAAP
results and using EBITDA and Adjusted EBITDA as secondary
measures. The company has provided reconciliations of its
non-GAAP measures, EBITDA and Adjusted EBITDA, to GAAP net income
(loss) and operating income (loss) within the supplemental
financial information in this release.
The following table provides a reconciliation of operating
income to Adjusted EBITDA for the three months ending December 31,
2016.
|
Three Months Ended December 31,
2016 |
|
|
Low |
High |
(in thousands) |
|
|
Reconciliation
of operating income to Adjusted EBITDA: |
|
|
Operating income |
$ |
10,000 |
|
$ |
20,000 |
|
Depreciation and amortization |
|
40,000 |
|
|
40,000 |
|
Gains on
property disposals, net |
|
(3,000 |
) |
|
(3,000 |
) |
Letter of
credit expense |
|
1,700 |
|
|
1,700 |
|
Permitted
dispositions and other |
|
1,200 |
|
|
1,200 |
|
Equity
based compensation expense |
|
1,300 |
|
|
1,300 |
|
Other
nonoperating, net |
|
1,800 |
|
|
1,800 |
|
Adjusted EBITDA |
$ |
53,000 |
|
$ |
63,000 |
|
|
|
|
|
|
|
|
The following table provides a reconciliation of operating
income to Adjusted EBITDA for the twelve months ending December 31,
2016.
|
Twelve Months Ended December 31,
2016 |
|
|
Low |
High |
(in thousands) |
|
|
Reconciliation
of operating income to Adjusted EBITDA: |
|
|
Operating income |
$ |
119,000 |
|
$ |
129,000 |
|
Depreciation and amortization |
|
160,000 |
|
|
160,000 |
|
Gains on
property disposals, net |
|
(14,000 |
) |
|
(14,000 |
) |
Letter of
credit expense |
|
7,700 |
|
|
7,700 |
|
Permitted
dispositions and other |
|
3,000 |
|
|
3,000 |
|
Amortization of ratification bonus |
|
4,600 |
|
|
4,600 |
|
Equity
based compensation expense |
|
7,300 |
|
|
7,300 |
|
Other
nonoperating, net |
|
5,400 |
|
|
5,400 |
|
Adjusted EBITDA |
$ |
293,000 |
|
$ |
303,000 |
|
|
|
|
|
|
|
|
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act. Words such as “will,”
“expect,” “intend,” “anticipate,” “believe,” “could,” “would,”
“should,” “may,” “project,” “forecast,” “propose,” “plan,”
“designed,” “enable,” and similar expressions which speak only as
of the date the statement was made are intended to identify
forward-looking statements. Forward-looking statements are
inherently uncertain, are based upon current beliefs, assumptions
and expectations of Company management and current market
conditions, and are subject to significant business, economic,
competitive, regulatory and other risks, uncertainties and
contingencies, known and unknown, many of which are beyond our
control. Our future financial condition and results could differ
materially from those predicted in such forward-looking statements
because of a number of factors, including (without limitation): our
level of indebtedness; our ability to generate sufficient cash
flows and liquidity to fund operations and satisfy our cash needs
and future cash commitments, including (without limitation) our
obligations related to our indebtedness, cash interest and lease
and pension funding requirements; the impact of restrictive
covenants in the documents governing of existing and future
indebtedness; our failure to comply with the covenants in the
documents governing our existing and future indebtedness; our
holding company structure that makes us dependent on the ability of
our subsidiaries to distribute funds to us; the uncertainty in the
overall economy; business risks, including expense volatility,
including (without limitation) volatility due to changes in
purchased transportation service or pricing for purchased
transportation; competition and competitive pressure on pricing;
labor relations; our obligations to multi-employer health, welfare
and pension plans; our exposure to self-insurance claims expense
and higher insurance costs; our ability to finance the maintenance,
acquisition and replacement of revenue equipment and other
necessary capital expenditures; our ability to comply and the cost
of compliance with federal, state, local and foreign laws and
regulations, including (without limitation) laws and regulations
for the protection of employee safety and health, as well as state
and federal labor laws; the costs of complying with environmental
regulations and our exposure to liabilities for violations of such
laws; terrorist attack; the impact of claims and litigation to
which we are or may become exposed; the success of our management
team in continuing with its strategic plan and operational and
productivity initiatives; our ability to attract and retain
qualified drivers; our dependence on our information technology
systems in our network operations and the production of accurate
information, as well as the risk of system failure, inadequacy or
security breach; risks associated with doing business in foreign
countries; our dependence on the services of key employees;
inclement weather and seasonality; fuel shortages, changes in the
cost of fuel or the index upon which we base our fuel surcharge and
the effectiveness of our fuel surcharge program in protecting us
against fuel price volatility; volatility in the price of our
common stock; the dilutive effects of future issuances of our
common stock; our intention not to pay dividends; our ability to
issue preferred stock; and other risks and contingencies, including
(without limitation) the risk factors that are included in our
reports filed with the SEC, including those described under “Risk
Factors” in our annual report on Form 10-K and quarterly reports on
Form 10-Q.
About YRC Worldwide
YRC Worldwide Inc., headquartered in Overland
Park, Kan., is the holding company for a portfolio of
less-than-truckload (LTL) companies including YRC Freight, YRC
Reimer, Holland, Reddaway, and New Penn. Collectively, YRC
Worldwide companies have one of the largest, most comprehensive LTL
networks in North America with local, regional, national and
international capabilities. Through their teams of experienced
service professionals, YRC Worldwide companies offer
industry-leading expertise in flexible supply chain solutions,
ensuring customers can ship industrial, commercial and retail goods
with confidence.
Please visit our website at www.yrcw.com for
more information.
SOURCE: YRC Worldwide
Investor Contact:
Tony Carreño
913-696-6108
investor@yrcw.com
Media Contact:
Mike Kelley
916-696-6121
mike.kelley@yrcw.com
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