YRC CEO: Volume May Be Bottoming; Rules Out Bankruptcy
January 30 2009 - 1:28PM
Dow Jones News
Trucking giant YRC Worldwide Inc. (YRCW) weighed in on the steep
slump in freight volumes Friday, with Chief Executive Bill Zollars
voicing some optimism that the industry-wide trend at least may be
bottoming.
"The percentage declines year-over-year have started to
stabilize" in the early weeks of 2009, Zollars said in an
interview. "Believe me, we're looking really hard for any sign of
improvement."
Meanwhile, Zollars reiterated that bankruptcy isn't being
considered as an option for debt-laden YRC. He said talks aimed at
relaxing some debt covenants have been proceeding well with lenders
and should be successfully completed by mid-February.
YRC shares were trading recently at $3.01, off 3.8%, after
falling about 20% Thursday.
Shipping volumes have been on the wane for some time industry
wide, but freight haulers - including fellow trucking companies
J.B. Hunt Transport Services Inc. (JBHT) and Con-way Inc. (CNW), as
well as top U.S. railroads - have reported that the trend
accelerated in the fourth quarter, in line with the deteriorating
economy. Most have been hesitant to call a bottom.
Zollars concurred that the overall economy "definitely
decelerated" in the fourth quarter, noting that YRC's freight
volumes "progressively weakened" each month. Per-day tonnage for
YRC's national segment dropped 15% in the quarter, with its
regional business seeing a 14% drop when adjusted for network
changes that took place early this year.
But Zollars said the trend "looks like it has stabilized" since
the end of the year, particularly when adjusted for poorer weather
conditions this winter.
Still, he said YRC isn't planning for an economic recovery in
2009 and still assumes freight volumes will be down overall from
2008 levels. YRC has been experiencing pricing pressure as well -
with prices down an average 1.5% in the fourth quarter - although
Zollars said he expects YRC to do better on pricing than the
trucking sector overall this year.
Additional insight on the outlook for industry freight volumes
likely will come Tuesday, when United Parcel Service Inc. (UPS),
the largest U.S. package shipper, posts fourth-quarter
earnings.
The UPS results are coming on the heels of a report Thursday
indicating that international air cargo fell 23% in December from a
year earlier, signaling a broader slump in global trade. The report
from the International Air Transport Association includes freight
on both passenger carriers and all-cargo carriers.
YRC, created through a 2003 combination of the Yellow and
Roadway trucking brands, logged fourth-quarter results late
Thursday, posting a narrower net loss on fewer write-downs.
The company's net loss came in at $244.4 million, or $4.14 a
share, compared with a year-earlier net loss of $735.8 million, or
$12.99 a share. Excluding write-downs, which in the latest quarter
included charges related to the Roadway trade name, the loss was
$1.63 a share.
Revenue dropped 18% to $1.93 billion.
On average, analysts surveyed by Thomson Reuters projected a
66-cent-a-share loss and revenue of $2.04 billion.
YRC has $1.36 billion in debt, a portion of which it has been
struggling to refinance. But because of a sinking bottom line, the
company is at risk of falling out of compliance with credit lines
and has been working to renegotiate covenants.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com
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