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YRC Worldwide Inc. Message Board

  • tx.iconoclast Jul 22, 2010 11:14 AM Flag

    Big Lie #2 EARNINGS (long & detailed) all you want know


    Big Lie #2 EARNINGS

    Example: 45mm/qtr x 4 = 180mm profit = .18 EPS


    2nd qtr was improved over q1

    It is not as good as pumpers/idiot longs lead you to believe

    Lets start with the press release.

    Adjusted EBITDA increased 77mm ( I'm using low end of range, high is 10mm more).

    Good. One reason YRCW has hope and I'm interested. Rest of the story.

    What is ADJUSTED EBITDA? Look at the press release. It is a nonGAAP ( non generally accepted accounting principle) calculated number their lenders require. YRCW itself says in the PR it is not as good a measure as operating income or EPS.

    Lets look at operating income. WTF! It went from -229 to +43 a swing of 272mm. This shows how stupid and lazy pumpers are. They could have used this number for hype (watch them try now). Why did it not track EBITDA? The equity based compensation expense. The biggest line item in the release for q2 by a factor of 2 and no one (pumpers or bashers) talks about it. Just a few analytical types like cohen82, myself, and a couple others I think.

    This expense is required. It was intended for high tech companies that constantly issued stock to employees and so reported earnings were really inflated each quarter. It requires them to expense theoretical value of options granted each quarter. Then in subsequent quarters to adjust expense up or down as the price of the stock impacts the value of the option.

    Works good for that in normal circumstances. It was not intended for near BK companies that do a one time 25% option grant.

    So they expensed 110mm in q1. Oops, q2 the stock tanked big time so they are reversing 82mm of it. This is a 192mm swing which renders operating income meaningless.

    So look at operating income without it. It went from -119mm to -39mm an improvement of 80mm and now we are tracking the EBITDA change.

    Again better but still losing money. And wait that is before interest. Last quarter was 40mm and should be similar this one. Should be no tax benefit. So you have earnings of -79mm. (High side of their range is 69mm). -79mm is -.08 per share.

    That is the real "earnings" story.

    Earnings will be released 8/3 per the company PR. 7/26 is nothing now.

    The equity compensation problem will continue each quarter until options are exercised or expire.

    This topic is deleted.
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