Anatomy of a Turnaround: YRC Worldwide

After seven years of financial turmoil, the big trucking company finally exits survival mode
This is the first in a series of six articles about the volatile financial misfortunes and turnaround of trucking company YRC Worldwide.

If there were a Comeback Player of the Year award for corporate performance, YRC Worldwide might have taken home the trophy for 2014. Not that the $5 billion trucking company is now a superstar — far from it. Rather, such recognition would be testimony to how low YRC had sunk.

After years of finance jockeying that barely kept the company from tripping into bankruptcy, its footing is relatively secure now. A smorgasbord of entwined elements converged in the rescue: a new labor deal, a deft debt restructuring, an equity offering that allowed for debt paydown, an operational downsizing, the improving economy, and plain luck.



The seeds of the turnaround were sown in 2011, when James Welch and Jamie Pierson came on board as chief executive and CFO, respectively, replacing top executives who had come under heavy fire for their management decisions. Indeed, their arrival may have ultimately proved to be the biggest factor of all.

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YRC Cuts $16M From Year-Over-Year Loss

Trucking giant YRC Worldwide posted a fourth quarter net income of $6.2 million, much improved from $400,000 the same time a year earlier. It was the second straight quarterly profit for the company, which was still in the red all of last year.

Consolidated operating revenue for the fourth quarter of 2014 was $1.218 billion, a $10-million increase over the $1.208 billion reported for the fourth quarter of 2013.

For all of last year the company recorded a loss of $67.7 million compared to a loss of $83.6 million in 2013, with a loss per basic share of $3 in the most recent quarter compared to $8.96 a year earlier.

Revenue for last year moved higher to $5.07 billion from $4.87 billion in 2013.

YRC Freight

During the fourth quarter of 2014, YRC Freight, the company’s largest operation, saw yield growth compared to the prior year of 5.7 percent, including fuel surcharge, and 7.3 percent, excluding fuel surcharge.

YRC Freight achieved total revenue per hundredweight, including fuel surcharge, increases of 4.8 percent in October, 6.9 percent in November and 5.7 percent in December.

CEO James Welch commented: “The year-over-year increase in yield continued the trend that began in the third quarter and continued to pick up momentum, especially when compared to the results excluding fuel surcharge and is a testament of improving base rates and fundamental pricing,”

On a year-over-year basis, YRC Freight reported tonnage per day decreases of 1.6 percent in October, 3.2 percent in November and 3.2 percent in December. The decreases in tonnage were a result of prioritizing yield improvement and profitability over volume, according to Welch.

Operating revenue for the fourth quarter of 2014 at the company’s regional carriers was $422.2 million, down from the $431 million reported in the fourth quarter of 2013. At the same time, operating income decreased from $22.7 million to $10.6 million.

"The fourth quarter results for the regional segment were negatively impacted by four fewer workdays compared to the prior year and approximately $10.2 million of additional year-over-year expense related to liability claims and an additional $2-million of workers' compensation expense," Welch said.

During the quarter, YRC said the regional companies saw yield growth compared to the prior year of 3.5 percent, including fuel surcharge, and 4.8 percent, excluding fuel surcharge. On a monthly year-over-year basis, the regional operations achieved total revenue per hundredweight, including fuel surcharge, increases of 2.7 percent in October, 2.8 percent in November and 4.9 percent in December, and reported tonnage per day increases of 0.6 percent in October and 2.5 percent in November and a 0.3-percent decrease in December.

"Improving base rates, operating efficiencies and safety performance will continue to be a focus for the regional companies as they too will be challenged with the lower fuel price environment," Welch said.

Byron Bramwell—Missouri Driver of the Month

Congratulations go out to Driver Byron Bramwell on receiving the Driver of the Month Award for the State of Missouri.  He will be recognized for this honor at the Missouri Trucking Association Convention Banquet on February 5 in Branson, MO.

In addition, Byron and representatives from YRC Freight have been invited to appear before the Missouri State Legislature in Jefferson City, MO, to be recognized for this significant accomplishment.

Throughout the year, 12 drivers from Missouri Trucking Association member companies will be chosen to represent the State of Missouri as Driver of the Month, culminating in one of those 12 drivers becoming Missouri Driver of the Year.  The winning drivers are honored at the Missouri Trucking Association Annual Luncheon for their accomplishments.

Individuals are nominated for the Driver of the Month award based on safety records, care and operation of equipment and self-improvement and community involvement.  In addition, in order to receive this award, a driver must be a member of the Missouri Trucking Association and be a resident of Missouri (or travel regularly between a domiciled terminal and a Missouri terminal).

Located at Terminal 326 in Kansas City, MO, Byron is a city driver with an accumulated 2,634,920 safe-driving miles.  An impressive number on any given set of roads, reaching this milestone as a city driver requires unwavering attention and commitment to safety.

Having been a Captain on America’s Road Team, Byron is no stranger to spreading the word about safety.  For two years, he was able to travel alongside other Team Captains and speak on behalf of the trucking industry to promote highway safety to motorists.  During his career of over 35 years, he has participated in more than 20 truck driving championships and was named Missouri Grand Champion in 2010.

Congratulations on this latest accomplishment, Byron!