YRC Worldwide Remains Volatile

Zacks

YRC Worldwide Inc. (NasdaqGS:YRCW - News) reported moderate financial results for the second quarter of 2011. Quarterly GAAP net loss from continuing operations was $39.1 million or a loss of 81 cents per share compared with a net loss of $10.3 million or 24 cents in the year-ago quarter.

However, second-quarter 2011 EPS of a loss of 81 cents was lower than the Zacks Consensus Estimate of a loss of 96 cents.

Quarterly operating revenues were $1,257.2 million, up 12.3% year over year, ahead of the Zacks Consensus Estimate of $1,229 million. The increase was primarily attributable to massive growth at the YRC National and YRC Regional Transportation segments.

Quarterly consolidated operating expense was $1,258.8 million, up 17.6% year over year. Operating loss in second-quarter 2011 was $1.6 million compared with an operating income of $48.3 million in the year-ago quarter.

Operating ratio was 100.1% compared with 95.7% in the prior-year quarter. Second-quarter adjusted EBITDA was $63.2 million compared with $39.2 million in the year-ago quarter.

During the first half of 2011, YRC Worldwide consumed $61.3 million of cash for operations compared with $14.5 million in the prior-year period. Free cash flow in the reported period was a negative $84.1 million compared with $25.3 million in the year-ago period.

At the end of the second quarter of 2011, YRC Worldwide had $155.9 million of cash & cash equivalents compared with $143 million at the end of fiscal 2010. Total debt at the end of the reported quarter was nearly $1,128.3 million compared with $1,060.1 million at the end of fiscal 2010.

YRC National Transportation Segment

Quarterly operating revenues were $826.9 million, up 11.5% year over year. Operating income was $10.6 million compared with $33.1 million in the prior-year quarter. Second-quarter 2011 operating ratio was 98.7% compared with 95.5% in the year-ago quarter.

YRC Regional Transportation Segment

Quarterly operating revenues were $401.7 million, up 14.3% year over year. Operating income was $14.7 million compared with $22.4 million in the prior-year quarter. Second-quarter 2011 operating ratio was 96.3% compared with 93.6% in the year-ago quarter.

YRC Truckload Segment

Quarterly operating revenues were $25.5 million, down 9.6% year over year. Operating loss was nearly $3.7 million compared with $2 million in the prior-year quarter. Second-quarter 2011 operating ratio was 114.7% compared with 107% in the year-ago quarter.

Outlook

Based on continued operating momentum, the company expects to achieve positive adjusted EBITDA in the rest of 2011. For fiscal 2011, management expects gross capital expenditure will be up to $125 million. Excess property sales are expected to range from $30 million to $40 million.

Recommendation

The trucking industry is highly competitive. YRC Worldwide is gradually loosing market share to its competitors Arkansas Best Corp. (NasdaqGS:ABFS - News), Con-way Inc. (NYSE:CNW - News) and Knight Transportation Inc. (NYSE:KNX - News). We maintain a long-term Neutral recommendation on YRC Worldwide. Currently, the company holds a short-term Zacks #4 Rank (Sell) on the stock.

YRC WORLDWIDE INC (YRCW): Read the Full Research Report

Zacks Investment Research



More From Zacks.com
View Comments (0)