Another big loss for YRC

YRC Worldwide Inc., the struggling Overland Park trucking company, posted another big loss in the second quarter amid plunging revenues.

Including special charges, YRC lost $309 million, or $5.20 a share for the three months ended June 30. Excluding charges related to reducing and merging trucking operations, the loss was $3.53 a share.

Revenues plummeted 45 percent for the quarter to $1.33 billion, compared to $2.40 billion in the same quarter last year. Quarterly revenues had fallen 33 percent in the first quarter. The results were much worse than forecast by analysts, who on the average expected a $1.71 per share loss.

Shares in YRC closed at $1.69, up 3 cents. The earnings were released after the closing bell on Wall Street.

"The second quarter was focused on executing our comprehensive plan to realize efficiencies from the YRC integration, restore financial strength and position our operating companies for future success," said YRC chairman and CEO Bill Zollars in a statement.

YRC lost $257 million in the first quarter and accumulated $1.6 billion in losses in 2008 and 2007.

Many analysts have speculated whether YRC can survive the economic downturn without filing for bankruptcy. The company's future may hinge on whether its union drivers and dock workers accept more compensation cuts that could save the company $825 million through 2010.

Voting on those concessions will conclude next week.

In addition, YRC said its lending group today agreed to eliminate operating earnings requirements for the third quarter. The banks now will require the company to post operating earnings of $15 million and $20 million for the fourth quarter and 2010 first quarter, respectively.

The company had $164.5 million in cash and cash equivalents on June 30, compared to $325.3 million at the start of the quarter.

UPS Q2 profit falls 49%

The recession continued to take a toll on package shipping giant United Parcel Service Inc.

Atlanta-based UPS on Thursday said its net income for the second quarter fell 49 percent to $445 million, as revenue dropped 16.7 percent to $10.8 billion. Its net income in the second quarter of 2008 was $873 million and its revenue was $13 billion.

Earnings per share were down 48.2 percent to 44 cents.

U.S. Domestic package revenue declined 12 percent to $6.8 billion, while international package revenue decreased 23.8 percent to $2.2 billion and supply chain and freight revenue fell 23.3 percent to $1.8 billion.

Average daily volume in the U.S. Domestic Package segment declined 4.6 percent in the quarter and international export volume decreased 7.3 percent.

“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, UPS chairman and CEO, in an earnings statement. “We continue to invest in growth opportunities, even as UPSers improve productivity and help our customers manage through these challenging times. We are a company that can weather this recession, positioning ourselves well to benefit when economic recovery occurs.”

Arkansas Best loses $15.4 million in second quarter

Fort Smith-based Arkansas Best Corp. posted a second quarter net income loss of $15.4 million, marking the third consecutive quarter the company posted a loss — and with those losses adding up to about $44.5 million in the past nine months.

It’s the economy.

The nationwide depression in the freight industry began in October 2006 and, obviously, continues. Arkansas Best Corp., whose primary subsidiary is ABF Freight System, a nationwide less-than-truckload carrier, posted second quarter revenue of $362.6 million, a per day decrease of 26.7% from the $498.5 million in the 2008 period.

The number of ABF shipments in the first six months of 2009 is down 16.2% compared to the same period in 2008, and the company’s tonnage shipped is down 17.3% in the first half of 2009 compared to the first half of 2008.

“The effects of lower freight levels and a competitive pricing environment that has intensified since the first quarter were the main challenges faced by our company in the second quarter,” Robert Davidson, Arkansas Best president and CEO, said in the earnings statement released Wednesday morning (July 22). “In addition, our results were affected by unusual increases in nonunion healthcare and pension, workers’ compensation and third-party casualty insurance claims costs versus last year.”

For the first six months of 2009, Arkansas Best has lost $33.6 million, compared to a net income of $24.6 million in the first six months of 2008.

Bob Costello, an economist with the American Trucking Associations, said in a June 29 report that the worst of the freight depression is over, but the trucking sector may not see improving conditions.

“I am hopeful that the worst is behind us, but I just don’t see anything on the economic horizon that suggests freight transportation is ready to explode,” ATA Chief Economist Bob Costello said in a statement. “The consumer is still facing too many headwinds, including employment losses, tight credit, rising fuel prices, and falling home values, to name a few, that will make it very difficult for household spending to jump in the near term.”

Despite the previous quarterly losses, Arkansas Best has little long-term debt and a $325 million line of credit. More importantly, the company has $191.4 million in cash or cash equivalents, down slightly from the about $200 million at the beginning of the year.

The company, with its relatively strong cash position, continues to investigate acquisition possibilities. The recession is creating fire-sale prices at transportation-related companies, Davidson told The City Wire in an April interview.
“This is the best buying opportunity I’ll ever have,” Davidson said.

However, the company continues to cut costs — personnel and equipment — to manage the downturn.

“ABF continues to manage its network resources, especially labor and equipment, to the level of freight moving throughout its network. As needed, additional reductions in system resources and costs have been made in the last few months,” Davidson said in the earnings statement.