YRC Worldwide Inc. (NASDAQ: YRCW) reported certain operating
results for the fourth quarter 2018.
For the three months ended December 31, 2018,
the Company anticipates reporting consolidated operating revenue of
approximately $1.2 billion to $1.3 billion and consolidated
operating income of approximately $55.0 million to $65.0 million,
which will include an approximate $28.0 million gain on property
sales. This compares to consolidated operating revenue for the
three months ended December 31, 2017 of $1.2 billion with
consolidated operating income of $22.1 million, which included a
$3.6 million gain on property disposals.
On a non-GAAP basis, the Company anticipates
reporting fourth quarter consolidated Adjusted EBITDA of
approximately $100.0 million to $110.0 million compared to
consolidated Adjusted EBITDA of $58.5 million in fourth quarter
2017 (refer to the reconciliation of operating income to Adjusted
EBITDA below).
As of December 31, 2018, the Company anticipates
reporting 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 ABL Facility of more than $200.0
million compared to $118.3 million as of December 31, 2017.
“I am proud of the year-over-year operational
improvement in our fourth quarter,” stated Darren Hawkins, chief
executive officer of YRC Worldwide. “At the beginning of the year,
we laid out our strategy to improve our yield metrics by
effectively pricing freight and balancing our network capacity, as
well as to continue reinvestment in our tractor and trailer fleet.
Our 2018 results demonstrate successful execution in these areas
and we remain committed to these objectives moving
forward.
“I believe we have a solid foundation to
continue improving our operating results. Going into 2019, our
liquidity position is strong. We will continue our focus on yield
discipline, realizing returns on our investments in revenue
equipment, and increasing the coverage of our customers’ supply
chain needs with HNRY Logistics,” concluded Hawkins.
Review of Financial Results
YRC Worldwide Inc. will host a conference call
with the investment community on Thursday, January 31, 2019,
beginning at 9:30 a.m. ET. Fourth quarter 2018 financial results
will be released the same day, January 31, 2019, before the market
opens.
A live audio webcast of the conference call and
presentation slides will be available on YRC Worldwide Inc.’s
website www.yrcw.com. A replay of the webcast will also be
available at 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: a non-GAAP measure that
reflects EBITDA, and further adjusts for net gains or losses on
certain property disposals, letter of credit expenses,
restructuring charges, transaction costs related to issuances of
debt, nonrecurring consulting fees, permitted dispositions and
discontinued operations, equity-based compensation expense,
non-union pension settlement charges, and expenses associated with
certain lump sum payments to our union employees, among other
items, as defined in our 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. We
believe our presentation of EBITDA and Adjusted EBITDA is useful to
investors and other users as these measures represent key
supplemental information our management uses to compare and
evaluate our core underlying business results both on a
consolidated basis and across our business segments, particularly
in light of our leverage position and the capital-intensive nature
of our business. Further, EBITDA is a measure that is commonly used
by other companies in our industry and provides a comparison for
investors to evaluate the performance of the companies in the
industry. Additionally, Adjusted EBITDA helps investors to
understand how the company is tracking against our financial
covenants in our term loan credit agreement as this measure is
calculated as prescribed in our term loan credit agreement and
serves as a driving component of key financial covenants. 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 service interest or fund principal
payments on our outstanding debt, letter of credit expenses,
restructuring charges, transaction costs related to debt, or
nonrecurring consulting fees, among other items;
- 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
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, our non-GAAP
measures 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 our non-GAAP measures as secondary measures. The company has
provided reconciliations of its non-GAAP measures to GAAP
operating income (loss) below.
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Three Months Ended December 31,
2018 |
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(in
thousands) |
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Low |
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High |
Reconciliation of operating income to Adjusted
EBITDA: |
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Operating
income |
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$ |
55.0 |
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$ |
65.0 |
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Depreciation and amortization |
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37.5 |
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37.5 |
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(Gain)/loss
on property disposals, net (a) |
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1.0 |
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1.0 |
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Letter of
credit expense |
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1.5 |
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1.5 |
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Equity-based compensation expense |
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1.0 |
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1.0 |
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Non-union
pension and post retirement benefits |
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0.5 |
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0.5 |
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Other,
net |
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3.5 |
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3.5 |
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Adjusted
EBITDA |
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$ |
100.0 |
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$ |
110.0 |
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Three Months Ended December 31,
2017 |
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(in
thousands) |
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Reconciliation of operating income to Adjusted
EBITDA: |
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Operating
income(b) |
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$ |
22.1 |
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Depreciation and amortization |
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36.7 |
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(Gain)/loss
on property disposals, net |
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(3.6 |
) |
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Letter of
credit expense |
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1.7 |
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Equity-based compensation expense |
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1.2 |
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Non-union
pension and post retirement benefits |
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(3.2 |
) |
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Other,
net |
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3.6 |
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$ |
58.5 |
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(a) |
During the
fourth quarter, the Company recorded an approximate $29.0 million
property gain on the partial sale of a YRC Freight facility. This
property gain was not excluded from Adjusted EBITDA as the Company
continues to operate at this facility on the remaining dock. |
(b) |
Due to the
adoption of ASU 2017-07, Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost,
"Operating income" and "Other, net" for 2017 have been updated to
reflect the reclassification of pension expense. |
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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,” “should,”
“may,” “project,” “forecast,” “propose,” “plan,” “designed,”
“estimate,” “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):
general economic factors; business risks and increasing costs
associated with the transportation industry; competition and
competitive pressure on pricing; the risk of labor disruptions or
stoppages; increasing pension expense and funding obligations
subject to interest rate volatility; increasing costs relating to
our self-insurance claims expenses; 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, or liability resulting from violation of,
federal, state, local and foreign laws and regulations including
(without limitation) labor laws and laws and regulations regarding
the environment; impediments to our operations and business
resulting from anti-terrorism measures; the impact of claims and
litigation expense to which we are or may become exposed; failure
to realize the expected benefits and costs savings from our
performance and operational improvement initiatives; our ability to
attract and retain qualified drivers and increasing costs of driver
compensation; a significant privacy breach or IT system disruption;
risks of operating in foreign countries; our dependence on key
employees; seasonality; shortages of fuel and 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; our ability to generate sufficient
liquidity to satisfy our cash needs and future cash commitments,
including (without limitation) our obligations related to our
indebtedness and lease and pension funding requirements, and our
ability to achieve increased cash flows through improvement in
operations; limitations on our operations, our financing
opportunities, potential strategic transactions, acquisitions or
dispositions resulting from restrictive covenants in the documents
governing our existing and future indebtedness; our failure to
comply with the covenants in the documents governing our existing
and future indebtedness; fluctuations in the price of our common
stock; dilution from future issuances of our common stock; our
intention not to pay dividends on our common stock; that we have
the ability to issue preferred stock that may adversely affect the
rights of holders of our common 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 Holland, New Penn,
Reddaway, YRC Freight, and YRC Reimer as well as the logistics
company HNRY Logistics. Collectively, YRC Worldwide companies have
one of the largest, most comprehensive logistics and 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.
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Investor Contact: |
Brianne Simoneau |
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913-696-6108 |
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investor@yrcw.com |
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Media Contact: |
Mike Kelley |
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916-696-6121 |
|
mike.kelley@yrcw.com |
SOURCE: YRC Worldwide
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