Yellow misses Q1 consensus; network overhaul continues


LTL carrier Yellow Corp. reported its best first quarter in six years after the market closed on Tuesday. The period was slightly better than the breakeven on the operating line at an operating ratio of 99.3%, 300 basis points better year-over-year.

Demand from industrial and retail customers for Yellow remains strong, according to CEO Darren Hawkins.

“Looking forward, demand for LTL capacity still appears to be strong with inventory levels remaining below normal and a manufacturing sector catching up with supply chain disruptions and a tight labor market,” Hawkins said. analysts on a call.

Yellow (NASDAQ: SHOUT) posted a net loss of 54 cents per share in the first quarter, less than half the loss recorded in the first quarter of 2021, but worse than the consensus estimate calling for a loss of 41 cents per share.

Revenue increased 5% year over year to $1.26 billion. The tonnage per day fell by 20%, but the revenue per quintal excluding fuel increased by 22%. Yellow is using a favorable demand environment to replace low-margin freight with more profitable shipments.

Tonnage declines peaked in February, down 27% year-on-year. March was down 18% with April between 14% and 15%. COVID-related labor headwinds and bad weather forced Yellow to limit shipments to some terminals in February.

Prices for contracts renewed in April increased by 10% to 11%.

The margin improvement in the first quarter was driven by yield growth and a 400 basis point decline in wages, salaries and benefits as a percentage of revenue and a 200 basis point decline in purchased transportation. Adjusted trailing 12-month earnings before interest, taxes, depreciation and amortization doubled from a year ago to $341 million.

Normally, the company sees between 350 and 400 basis points of sequential improvement in RO from the first to second quarter of each year. Management expects to exceed this level of improvement due to turnaround initiatives and its performance improvement strategy. The improving outlook includes a roughly 5% increase in union wages and benefits, representing a headwind of 40 to 50 basis points.

The pay increases took effect on April 1.

Table: Yellow Corp. Key Performance Indicators

Closure of terminals in the West as One Yellow turnaround moves forward

One Yellow’s restructuring brought together all LTL carriers and the logistics company separately managed by Yellow on the same technology platform. The next phase includes a terminal-by-terminal overhaul in the West. Yellow recently filed change of operations requests with the Teamsters to consolidate 20 YRC Freight and Reddaway terminals and realign zip codes. The plan will result in the closure of nine facilities.

The changes also called for the addition of 11 speed distribution centers, a new line haul network and 260 utility driver positions.

Phase two is scheduled at carrier New Penn in the third quarter and phase three at carrier Holland will take place in the fourth quarter.

In total, the company plans to reduce its number of terminals to around 300 by the end of the year (from 316 currently), which represents a reduction from the previous forecast of operating 308 or 309 terminals. here the end of the year. However, management noted that the changes did not reduce network capacity and that a drop in the number of gates would not be as pronounced.

The changes will deliver immediate cost savings across 28% of its network starting in the third quarter.

“Once this transformation is complete, our customers will benefit from interacting with North America’s second-largest super-regional LTL network for regional and long-haul shipments,” Hawkins said in a press release. “We expect network transformation will also lead to better asset utilization, improved network efficiency, cost savings and capacity creation without the need to add new endpoints. .”

Yellow ended the quarter with $277 million in free cash, up from $423 million a year ago. Outstanding debt rose 10% year over year to $1.61 billion. The company’s debt soared following the full withdrawal of a $700 million COVID relief loan deal with the government. The deal allowed it to modernize its fleet and buy out leases.

Cash flow used in operations was down 14% year over year to $34 million in the quarter.

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the FREIGHTWAVES TOP 500 The list of for-hire carriers includes Yellow Corp. (#5), Universal logistics (#23) and Forward aerial (#37).


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