Yellow Reports Q1 Loss
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Less-than-truckload carrier Yellow Corp. announced first-quarter earnings May 3 that missed Wall Street revenue and income expectations as the company’s leadership said its efforts to consolidate its network will help improve its efficiency in the coming months.
Officials also said the ongoing negotiations with the International Brotherhood of Teamsters and its unionized drivers will be successful, amid concerns from Teamsters officials who have expressed their displeasure with some of the company’s reorganization plan, called “One Yellow,” believing it could cost union members their jobs, a charge company officials dispute.
The company reported a loss of $54.6 million in its first quarter, or negative $1.06 a share, compared with a loss of $27.5 million, negative 54 cents, the same period a year ago.
Yellow’s quarterly revenue fell 8% to nearly $1.16 billion from $1.26 billion a year earlier in the same quarter. Analysts with Seeking Alpha had forecast revenue of $1.18 billion.
Analysts before the earnings release were forecasting a share price for the quarter of negative 56 cents a share.
Leaders with the Overland Park, Kan., company explained the slowing U.S. economy was an important factor in the company not hitting its numbers.
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“The soft demand environment during the first quarter was similar to the slowing pace we experienced late last year,” CEO Darren Hawkins said. “The daily shipment count remained steady from January through March without the typical seasonal uplift in demand in the second half of the quarter. However, year-over-year pricing continued to improve despite following exceptionally strong growth a year ago.”
For more than a year, Yellow has embarked on the consolidation plan to make the carrier much more efficient and easier for shippers to use. Hawkins said his vision is for Yellow to become a super regional LTL company with a national footprint, focusing on next- and second-day service by bringing together the company’s YRC Freight, New Penn and Holland linehaul network and terminal operations.
In 2022, phase one of the plan, Yellow integrated the linehaul networks of YRC Freight and Reddaway in the Western region to support both regional and longhaul services. Yellow eliminated nine West Coast terminals, consolidated several others and created approximately 360 “utility driver” positions.
Similar changes are taking place in the Midwest and East Coast during 2023 and the company says once the changes are implemented this will reduce road turns, meet and turns, layovers as well as reducing the number of sleeper team drivers.
“Customers are seeing the benefits of phase one with an improvement in the percentage of shipments going out for delivery before 9:00 a.m. and a reduction in missed pickups,” Hawkins said. “Phase two will consist of legacy YRC Freight, Holland and New Penn terminals in the Midwest, Northeast and Southeast, and covers approximately 70% of the network.”
The company’s efforts are being met with opposition from the Teamsters. In an April 26 letter to the company, the union accused the company of trying to “cherry pick” operational changes that violate the existing contract and the union said it would not be willing to reopen the existing contract unless Yellow was willing to negotiate in good faith and come up with significant financial incentives to do so.
“Please be assured that while we would like to see Yellow be successful and grow, we are not interested in “one-way” bargaining where the company takes and we only get vague promises of future benefits that never materialize for the membership,” the union wrote.
Just before it received the union’s letter, the company said it was accepting the union’s challenge to begin to negotiate its proposed network overhaul changes with the union during contract bargaining.
The existing contract ends March 31, 2024, and bargaining over a new one had been expected to begin later this year.
“It is imperative that we complete our One Yellow strategy, which will strengthen the company, protect 22,000 union jobs and ensure that our customers are well cared for and receive the range of services that today’s market demands,” Hawkins said.
Yellow’s operating ratio for first-quarter 2023 was 100.8 compared with 99.3 in first-quarter 2022.
Operating ratio measures a company’s expenses as a percentage of revenue and determines efficiency. The lower the ratio, the greater the company’s ability to make a profit.
Yellow ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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