YRC Earnings Rise 4%
YRC Worldwide Inc. reported that earnings rose 4% in the second quarter due to the decline in expenses outpacing the drop in revenue for the company’s two less-than-truckload divisions.
The company posted $27.1 million in net income, or 83 cents per share, compared to $26 million in profits, or 80 cents a share during the same period in 2015.
Revenue declined 4% to $1.21 billion, or about $50.8 million lower year-over-year. The company posted higher profits after it reduced supplies and operating expenses by 15% to $198.6 million and lowered purchased transportation costs 8% to $136.7 million.
"The second-quarter 2016 financial results did not meet our expectation, but operationally we continue to strengthen the company for the long term,” YRC CEO James Welch said in a statement. “Year-over-year tonnage per day was down during the quarter, but in June the decline was much smaller than April and May. Pricing discipline in the LTL sector remains steady despite the ongoing challenges from the industrial economy and lower fuel surcharge revenue.”
Revenue at the YRC Freight National unit dropped 5.1% to $775 million. Operating income, after expenses were deducted from revenue, rose 26.2% to $28.4 million, boosted with an $11.2 million gain from property disposals in the quarter.
YRC ranks No. 5 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
Revenue per 100 pounds of freight remained relatively unchanged as compared to the same period last year, although it rose 2.9% after excluding fuel surcharges. Revenue per shipment also dropped 1.6% overall but rose 1.4% when the fuel surcharges were removed.
Total daily shipments fell from 43,950 to 41,930 and total weight per shipment also fell 1.5% year-over-year.
Like other LTL carriers and logistics firms, Welch says that prices remain steady in the sector, despite challenges from the industrial economy, lower volume and lower fuel surcharge revenue compared to previous years.
“YRC Freight was negatively impacted from the adverse development of prior-year liability claims. We also had higher wage and health care rates, including a 34-cent-per-hour wage increase for our union employees in April,” Welch added on a conference call with investors and analysts.
Revenue at YRC Regional Transportation fell 2.2% to $452.8 million year-over-year. Operating income after expenses fell 19% to $30.6 million.
Similar to the Freight National division, revenue per 100 pounds of freight and per shipment were down year-over-year between 1.5% and 2.5% with the fuel surcharge, but slightly higher for both when the surcharge was eliminated, although the growth was less than 1.5%.
There were 500 fewer shipments per day year-over-year and total tonnage was down 770 per day. Total weight per shipment also fell 0.8%.
“We were on a tear last year at this time, raising rates, and so we’re facing tougher comps [comparables] on the yield side [year-over-year], but in shipping we’re facing some easier comps on the tonnage side,” CFO Jamie Pierson said on the call.
YRC earnings were 30 cents higher than the consensus from analysts, as compiled by Bloomberg News. Revenue and net income also were higher the estimates.
Operating ratio improved at YRC Freight from 97.2 to 96.2, while it deteriorated at the Regional Transportation division from 91.9 to 93.2.
