Wednesday, November 3, 2010

YRC Worldwide (NASDAQ: YRCW): Q3 Quarter Earnings Preview 2010

YRC Worldwide Inc. (NASDAQ: YRCW) is scheduled to release its third quarter earnings before the opening bell on Friday, November 5, 2010. Analysts, on average, expect the company to report a loss of $1.31 per share on revenue of $1.14 billion. In the year ago quarter, the company reported a loss of $65.50 per share on revenue of $1.31 billion. 

YRC Worldwide, through wholly owned operating subsidiaries offers its customers a range of transportation services. These services include global, national and regional transportation, as well as logistics.

In the preceding second-quarter, the Overland Park, Kansas-based company's net loss was $9.5 million, or 1 cent a share, compared to a loss of $309 million, or $5.20 a share, in the year-earlier period. Revenue declined 8.7% to $1.2 billion. Analysts, on average, expected the company to post a loss of 8 cents per share on revenue of $1.19 billion. 

The company has been through a massive restructuring and downsizing over the past two years while enduring huge losses. In addition to closing hundreds of terminals, laying off about one-half its work force and sharply cutting compensation, YRC avoided bankruptcy in late 2009 when most of its bondholders agreed to convert debt to equity and gain ownership of most of the company.

Recently, the company said that it expects a third quarter 2010 operating loss within a range of $18 million to $22 million. As a comparison, the company reported an operating loss of approximately $35 million for the second quarter of 2010 when excluding an $83 million non-cash benefit from an adjustment to the fair value of the March 2010 union employee equity award.The company expects third quarter 2010 positive adjusted EBITDA within a range of $42 million to $46 million. For the second and third quarters of 2010, the company expects cumulative adjusted EBITDA within a range of $82 million to $86 million, which exceeds the $50 million covenant level required by its credit agreement. 

For the third quarter of 2010, tonnage per day for YRC National and YRC Regional was 1.2% and 2.1%, respectively, higher than the tonnage per day for the second quarter of 2010. Revenue per shipment during the third quarter of 2010 for YRC National and YRC Regional was 1.9% and 3.7%, respectively, higher than the third quarter of 2009.

At September 30, 2010, the company's estimated cash and cash equivalents were $115 million, restricted revolver reserves were $123 million, and unrestricted availability was $46 million, for a total of $284 million. During the third quarter of 2010 the company repaid $25 million of outstanding borrowings on its asset-backed securitization facility.

The company recently announced that members of the Teamsters union approved a third round of concessions to help make YRCW viable as a transportation entity going forward. The new labor contract extends the previous agreement, slated to expire in 2013, until 2015 and maintains 15 percent wage cuts that were accepted last year. This agreement would help YRC Worldwide to save $350 million a year through March 2015 and improve its competitive position.The company said that the new labor contract addresses the company's competitiveness, re-entry into multi-employer pension funds and progress toward long-term growth. 

Among other developments, the company recently announced an amendment to renew its asset-backed securitization facility. The amended ABS has a facility commitment of $325 million as compared to the company's usage of $195 million at September 30, 2010. The wew maturity date is October 19, 2011. YRC also instituted a 1 for 25 reverse stock split to regain compliance with Nasdaq listing requirements.

In terms of stock performance, YRC Worldwide shares have lost nearly 33% since the beginning of the year.

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