Restructuring returns YRC to profitability

YRC Worldwide Inc. returned to profitability in the second quarter after a restructuring of operations.

The Overland Park-based trucking giant on Thursday posted profits that were in line with previous company forecasts, earning 62 cents a share, or $36.27 million, on $2.40 billion in sales. That is down from the same time last year, when the company earned $55.37 million, or 95 cents a share, on $2.49 billion in revenues.

The performance for the three months ending June 30 included one-time gains of 39 cents a share and combined charges of 16 cents a share. Excluding those items, YRC would have earned 39 cents a share, in line with its predicted 30 to 40 cents.

YRC shares closed Thursday at $20.29, down 73 cents.

Bill Zollars, YRC’s chairman and chief executive, said the company achieved its earnings goals despite a challenging economy. In the first half of the year, YRC scaled back its regional trucking operations through terminal closings and layoffs.

“Our actions to improve operational efficiency, get our regional companies back on track and reduce overhead costs have been effective,” he said in a statement.

The company said it expects to earn from $1.05 to $1.15 a share in the third quarter. Those results will include a curtailment gain of 70 cents a share and increased union benefit costs of 15 cents a share attributed to a new contract. YRC added that the curtailment gains of the second and third quarters are related to bringing nonunion employees under the same pension plan by 2009.

Although YRC’s earnings were lower than the 2007 second quarter, the results were a marked improvement from the first quarter of this year, when the company lost 81 cents a share. YRC earned 1 cent a share in the 2007 fourth quarter before taking charges totaling $13 a share.

Earlier this month, YRC restructured operations at its three biggest subsidiaries, Yellow Transportation, Roadway and USF Holland. The new Teamsters contract provided the company flexibility on work rules that YRC expects will lead to improved delivery times for those carriers.

One analyst said YRC’s latest results are encouraging but the company needs to keep making progress.

“When you look at the quarter, YRC is heading in the right direction, but they’re still not out of the woods,” said Jason Seidl, director of equity research at Dahlman Rose & Co. “The trucking market hasn’t gotten any worse, but it has gotten any better, either.”