Thursday, October 23, 2008

YRC earnings, revenue decline

YRC Worldwide Inc. earnings and revenue fell during the third quarter as the economic slowdown continued to take a toll.

The Overland Park-based trucking company on Thursday reported third-quarter earnings of $36.6 million, or 63 cents a share, down 10 percent from earnings of $40.7 million, or 70 cents a share, during the same quarter a year before.

Revenue was $2.38 billion for the quarter, down 6 percent from $2.46 billion in the third quarter of 2007.

The results don’t include potential non-cash writedowns based on tests YRC is doing, the release said.

“Throughout the third quarter, the operating environment progressively weakened, resulting in lower-than-expected volumes and more competitive pricing,” YRC CEO Bill Zollars said in the release. “Although the economy slowed more than we expected during the quarter, we still generated solid free cash flow and paid down debt, in addition to removing significant cost from our business.”

Earnings beat analyst estimates. Nine analysts surveyed by Thomson First Call reported a consensus estimate for a loss of 8 cents a share for the quarter. Six analysts reported a consensus revenue estimate of $2.34 billion for the quarter.

YRC is focused on adjusting to a weak economy while maintaining service quality, Zollars said in the release. The company continues to integrate its Yellow and Roadway divisions and hopes to improve operating income by at least $200 million by the end of 2009.

YRC didn’t provide specific earnings guidance for the fourth quarter because of economic uncertainty but said it expects to reduce debt by at least $100 million during the quarter, which would bring debt reduction of $150 million for the year and keep its leverage ratio in compliance with requirements. For the third quarter, the leverage ratio was 3.18 times against a limit of 3.75 times.

YRC said in an Oct. 8 filing with the Securities and Exchange Commission that because of its current market capitalization and current economic conditions, it may face a goodwill and trade name impairment for its National Transportation division, trade name impairment for its Regional Transportation division and goodwill impairment for its YRC Logistics division.

YRC said in the filing that it was conducting tests of the assumptions and expected to include any write-downs when reporting its third-quarter financials. Impairments aren’t included in leverage ratio calculations.

In January, YRC reported one-time goodwill impairment charges of $782 million in the fourth quarter, stemming mostly from a drop in the estimated value of the former USF Corp. companies, which YRC bought for $1.5 billion in 2005. They constitute most of the Regional Transportation unit.

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