YRC Worldwide Reports Fourth Quarter and Full-Year

Fourth quarter results include Operating Income of $14.9 million and Adjusted EBITDA of $57.7 million

Year-end debt balance is the lowest in eleven years

OVERLAND PARK, Kan., Feb. 06, 2017 (GLOBE NEWSWIRE) -- YRC Worldwide Inc. (NASDAQ: YRCW ) reported consolidated operating revenue for fourth quarter 2016 of $1.148 billion and consolidated operating income of $14.9 million, which included a $3.4 million gain on property disposals. As a comparison, for the fourth quarter 2015, the Company reported consolidated operating revenue of $1.143 billion and a consolidated operating loss of $15.3 million, which included a non-union pension settlement charge of $28.7 million and a $0.4 million loss on property disposals.

Consolidated operating revenue for the year ended December 31, 2016 was $4.698 billion with consolidated operating income of $124.3 million, which included a $14.6 million gain on property disposals. This compares to full-year 2015 consolidated operating revenue of $4.832 billion with consolidated operating income of $93.0 million, which included the settlement charge referenced above and a $1.9 million loss on property disposals.

In January 2017 the Company completed an amendment to its Term Loan Credit Agreement to adjust the leverage ratio covenant from the first quarter of 2017 through the fourth quarter of 2018, to reduce uncertainty regarding its ongoing compliance with that covenant.

Financial Highlights

• Fourth quarter 2016 operating income was $14.9 million compared to a loss of $15.3 million in 2015. The fourth quarter 2015 results included the $28.7 million non-union pension settlement charge. The full-year 2016 operating income increased to $124.3 million, an improvement of $31.3 million compared to 2015.    
• On a non-GAAP basis, the Company generated Adjusted EBITDA of $57.7 million in fourth quarter 2016 for an Adjusted EBITDA margin of 5.0% compared to $66.0 million and 5.8% in the prior year comparable quarter (as detailed in the reconciliation below). Consolidated Adjusted EBITDA for full-year 2016 was $297.5 million with an adjusted EBITDA margin of 6.3% compared to $333.3 million and 6.9% in 2015.  
• The total debt-to-Adjusted EBITDA ratio for fourth quarter 2016 was 3.40 times compared to 3.25 times for fourth quarter 2015. This complied with the 3.50 maximum total leverage ratio covenant as of December 31, 2016 under the Term Loan Credit Agreement.  
• Reinvestment in the business continued in 2016 with $100.6 million in capital expenditures and new operating leases for revenue equipment with a capital value equivalent of $152.5 million, for a total of $253.1 million. This is equal to 5.4% of operating revenue for 2016 and represents a $13.4 million increase over the $239.7 million invested in 2015. Tractors, trailers and technology were the primary investments during the quarter.

Operational Highlights

• The consolidated operating ratio for fourth quarter 2016 was 98.7 compared to 101.3 for the same period in 2015.  YRC Freight’s operating ratio was 100.0 compared to 102.9 in fourth quarter 2015 and the Regional segment improved its operating ratio by 160 basis points to 96.1.  
• For full-year 2016, improved yield from continued pricing discipline contributed to a consolidated operating ratio of 97.4 compared to 98.1 in 2015.  YRC Freight improved its operating ratio by 120 basis points to 98.2 while the Regional segment reported a 95.3 operating ratio compared to 95.2 in 2015.   
• Fourth quarter 2016 tonnage per day increased 1.9% at YRC Freight with no change at the Regional segment compared to fourth quarter 2015.  
• At YRC Freight, excluding fuel surcharge, fourth quarter 2016 revenue per shipment increased 0.5% and revenue per hundredweight decreased by 1.5% when compared to the same period in 2015. Including fuel surcharge, revenue per shipment increased 0.2% and revenue per hundredweight decreased by 1.8%.  
• At the Regional segment, excluding fuel surcharge, fourth quarter 2016 revenue per shipment increased 0.9% and revenue per hundredweight increased 0.3% when compared to the fourth quarter 2015. Including fuel surcharge, revenue per shipment increased 1.0% and revenue per hundredweight increased 0.4%.  
• With a continued focus on safety, fourth quarter 2016 liability claims expense decreased by $13.8 million and workers’ compensation expense decreased by $3.1 million compared to fourth quarter 2015.

Liquidity Update

• At December 31, 2016, the company had cash and cash equivalents and Managed Accessibility (as defined in the company’s most recently filed periodic reports on Forms 10-K and 10-Q) under its ABL facility totaling $181.1 million compared to $209.3 million as of December 31, 2015.  
• For the full-year 2016, cash provided by operating activities was $103.1 million compared to $140.8 million in 2015.

“In the fourth quarter 2016, year-over-year tonnage per day was up at YRC Freight and flat at the Regional segment,” said James Welch, chief executive officer at YRC Worldwide. “However, YRC Freight’s year-over-year revenue per hundredweight declined which impacted its ability to offset cost increases during the quarter. Our pricing strategy remains focused on profitability while delivering award-winning customer service. Overall, we believe pricing discipline in the LTL space remains stable,” stated Welch.

“During the quarter we used our liquidity position to pay down a portion of the term loan, further derisking the balance sheet and reducing long-term debt to the lowest level since 2005. The term loan amendment allows us to maintain our focus on running the business and positioning the Company for long-term success.

“Despite the soft industrial conditions and lower fuel surcharge revenue during the year, we reported the highest full-year operating income since 2006. We also increased our capital value equivalent investments, including technology and new tractors and trailers for the fifth consecutive year.  Until we see a stronger freight environment it is critical that our investments and self-help actions drive improvements,” concluded Welch.

Key Segment Information – fourth quarter 2016 compared to fourth quarter 2015

Key Segment Information – full-year 2016 compared to full-year 2015

Review of Financial Results

YRC Worldwide Inc. will host a conference call with the investment community today, Monday, February 6, 2017, beginning at 4:30 p.m. ET. 

A live audio webcast of the conference call and presentation slides will be available on YRC Worldwide Inc.’s website www.yrcw.com . A replay of the webcast will also be available at www.yrcw.com .

Non-GAAP Financial Measures

EBITDA is a non-GAAP measure that reflects the company’s earnings before interest, taxes, depreciation, and amortization expense. Adjusted EBITDA (defined in our credit facilities as Consolidated EBITDA) is a non-GAAP measure that reflects the company’s earnings before interest, taxes, depreciation, and amortization expense, and further adjusted for letter of credit fees, equity-based compensation expense, net gains or losses on property disposals, restructuring professional fees, nonrecurring consulting fees, expenses associated with certain lump sum payments to our union employees and gains or losses from permitted dispositions and discontinued operations, among other items, as defined in the company’s credit facilities. EBITDA and Adjusted EBITDA are used for internal management purposes as a financial measure that reflects the company’s core operating performance. In addition, management uses Adjusted EBITDA to measure compliance with financial covenants in the company’s credit facilities and to pay certain executive bonus compensation.  However, these financial measures should not be construed as better measurements than net income, as defined by generally accepted accounting principles (GAAP).

EBITDA and Adjusted EBITDA have the following limitations:

• EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt;
• Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to fund restructuring professional fees, nonrecurring consulting fees, letter of credit fees, service interest or principal payments on our outstanding debt or fund our lump sum payments to our IBT employees required under the ratified Memorandum of Understanding;
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
• Equity-based compensation is an element of our long-term incentive compensation program, although Adjusted EBITDA excludes certain employee equity-based compensation expense when presenting our ongoing operating performance for a particular period;
• Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA as secondary measures.  The company has provided reconciliations of its non-GAAP measures, EBITDA and Adjusted EBITDA, to GAAP net income and operating income (loss) within the supplemental financial information in this release.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as “will,” “expect,” “intend,” “anticipate,” “believe,” “could,” “would,” “should,” “may,” “project,” “forecast,” “propose,” “plan,” “designed,” “enable,” and similar expressions which speak only as of the date the statement was made are intended to identify forward-looking statements. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Our future financial condition and results could differ materially from those predicted in such forward-looking statements because of a number of factors, including (without limitation): our level of indebtedness; our ability to generate sufficient cash flows and liquidity to fund operations and satisfy our cash needs and future cash commitments, including (without limitation) our obligations related to our indebtedness, cash interest and lease and pension funding requirements; the impact of restrictive covenants in the documents governing of existing and future indebtedness; our failure to comply with the covenants in the documents governing our existing and future indebtedness; our holding company structure that makes us dependent on the ability of our subsidiaries to distribute funds to us; the uncertainty in the overall economy; business risks, including expense volatility, including (without limitation) volatility due to changes in purchased transportation service or pricing for purchased transportation; competition and competitive pressure on pricing; labor relations; our obligations to multi-employer health, welfare and pension plans; our exposure to self-insurance claims expense and higher insurance costs; our ability to finance the maintenance, acquisition and replacement of revenue equipment and other necessary capital expenditures; our ability to comply and the cost of compliance with federal, state, local and foreign laws and regulations, including (without limitation) laws and regulations for the protection of employee safety and health, as well as state and federal labor laws; the costs of complying with environmental regulations and our exposure to liabilities for violations of such laws; terrorist attack; the impact of claims and litigation to which we are or may become exposed; the success of our management team in continuing with its strategic plan and operational and productivity initiatives; our ability to attract and retain qualified drivers; our dependence on our information technology systems in our network operations and the production of accurate information, as well as the risk of system failure, inadequacy or security breach; risks associated with doing business in foreign countries; our dependence on the services of key employees; inclement weather and seasonality; fuel shortages, changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility; volatility in the price of our common stock; the dilutive effects of future issuances of our common stock; our intention not to pay dividends; our ability to issue preferred stock; and other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the SEC, including those described under “Risk Factors” in our annual report on Form 10-K and quarterly reports on Form 10-Q.

About YRC Worldwide

YRC Worldwide Inc., headquartered in Overland Park, Kan., is the holding company for a portfolio of less-than-truckload (LTL) companies including YRC Freight , YRC Reimer , Holland , Reddaway , and New Penn . Collectively, YRC Worldwide companies have one of the largest, most comprehensive LTL networks in North America with local, regional, national and international capabilities. Through their teams of experienced service professionals, YRC Worldwide companies offer industry-leading expertise in flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.

Please visit our website at www.yrcw.com for more information.

SOURCE:  YRC Worldwide

Investor Contact:  Tony Carreño 913-696-6108 investor@yrcw.com Media Contact:     Mike Kelley 916-696-6121 mike.kelley@yrcw.com