YRC swings back to modest profit

YRC Worldwide, which owns the largest combined less-than-truckload fleet in North America, said it posted a second quarter profit of $36.2 million, moving into the black after a difficult two quarters that included some large restructuring charges.

The results were in the upper range of financial targets provided by company officials since mid-April.

YRC, based in Overland Park, Kan., is the holding company for long-haul LTL carriers Yellow Transportation and Roadway Express, as well as regional carriers USF Holland, USF Reddaway, New Penn and Reimer Express in Canada. USF Glen Moore is a truckload carrier in its portfolio.

The transportation conglomerate recorded a $736 million loss in the fourth quarter of 2007 and an operating loss of $53 million in the first quarter of this year primarily due to poor performance of its USF regional LTL properties amid general freight weakness across the industry. The improved financial results primarily stem from changes YRC made to streamline its USF terminal network and cut overhead costs.

The company also benefited in the second quarter from a one-time gain of about $39 million from combining several retirement benefit plans inherited when it acquired several trucking companies in recent years.

Operating income improved to $71.3 million from the first quarter, but was down from $108.4 million in the first quarter of 2007.

Overall revenue declined to $2.2 billion from $2.3 billion. YRC National's revenue stayed almost flat at $1.7 billion, but YRC Regional's revenue dropped 11.7 percent to $533.5 million from $604.2 million in the year-ago period. Operating income fell 19.6 percent to $74.6 million at YRC National and 86.3 percent to $2.1 million, year-over-year.

YRC said its national carriers achieved an 8.2 percent increase in revenue per hundredweight, but noted a significant tonnage drop of 9.9 percent. Regional tonnage was down 17.6 percent compared to an already soft period a year ago.

Revenue was also stable for YRC Logistics at $159.8 million, with profit up 22 percent to $1.87 million. Truckload operations lost $4 million. Operating ratios worsened to 103.4 percent for the Regional group, but sharply deteriorated for USF Glen Moore to 115 percent.

YRC offered third quarter guidance of 35 cents to 45 cents per share before including a further 70-cent share boost ($1.05 to $1.15 per share total) for continuing elimination of duplicate pension plans. The financial targets include increased expenses (15 cents per share) for health and pension benefits that kick in for a new union contract, although the company expects to counter some of that cost through efficiency gains from additional operational flexibility it negotiated with labor.