Trucker may miss lender’s earnings requirement
YRC Worldwide warned it may not reach its second quarter earnings requirement as the fragile financial standing at the nation’s largest heavy-freight trucking company seems to be getting shakier.
YRC’s lenders placed strict targets on its quarterly earnings (before accounting for interest and taxes) in 2009, with a second quarter earnings requirement of $45 million.
In a May 11 filing with the Securities and Exchange Commission, however, YRC said there was “substantial risk” that recent cost reductions and shipment increases at the company would not be enough to meet that target. YRC is negotiating with its bank group to amend its credit agreement before the second quarter ends June 30.
YRC’s operating revenue was down 33 percent in the first quarter compared with the prior year and the company lost $257 million. Regional tonnage was down 28 percent; national tonnage fell 30 percent.
One Wall Street analyst is not optimistic about YRC’s recovery chances in the thick of a recession.
“We have a difficult time seeing how the math works here to restore the company to profitability,” said David Ross of Stifel Nicolaus. “It has already had its employees take a 10 percent wage cut. Plus, we do not see industry volumes rebounding this year, and industry pricing remains very competitive.”