OVERLAND PARK, Kan. (
CEO Bill Zollars said the trucking company has entered 2010 on a more solid financial base with good momentum.
Zollars' comments came as
posted an operating loss in the fourth quarter of $95.4 million, which narrowed on a year-over-year basis and also shrank from the previous quarter.
YRC Worldwide CEO Bill Zollars
The trucking company did not offer earnings on a per-share basis as it was still calculating its income-tax provision following its recent $464 million
A sharp decline in YRC Worldwide's quarterly revenue was troubling, though. Average shipments per day were down 40%, and revenue dropped to $1.15 billion from $1.93 billion in the year-ago quarter. That was below the Thomson Reuters average estimate for revenue of $1.22 billion.
liquidity position has been a major concern for investors. Cash and equivalents decreased by roughly $228 million during the fourth quarter, YRC Worldwide said in its release. The company ended the quarter with cash and equivalents of $98 million and $160 million left in its $950 million revolving credit facility.
"With our significantly improved balance sheet and additional liquidity resulting from our debt-for-equity exchange, we entered 2010 on a more solid financial base with good momentum," Zollars said in a statement Friday.
YRC Worldwide President and COO Tim Wicks spoke with
in a post-earnings interview, in which he said customers are returning to the trucking company after a tense fourth quarter.
TheStreet: In the earnings report, average shipments per day were down sharply, but it seems as though you're fighting hard to retain and earn back customers. Can you discuss what you're seeing with your customers in regards to retention after the debt-exchange offer?
Wicks: The retention has been very good. A lot of the effort that we've been focused on has been around new customer acquisitions while we're driving retention. We've seen 600 new or returning customers in the fourth quarter and a little more than 400 already in the first several weeks of 2010. Around 60% of those numbers are related to new customers coming on board. The other 40% or so are related to customers coming back to us. So we're seeing large, mid-sized, and small customers who had left us returning and we are being successful at getting new customers, predominantly in the mid-size and small-size areas
Obviously, liquidity has been a major concern for investors, even after the debt-for-equity swap. Some still believe you're going to have significant cash burn in this quarter. What do you say to those critics?
The thing that
critics continue to miss when they focus merely on cash burn is that, when you get into a seasonally challenging time of year, everybody in this business burns cash. It has been typical that we burn cash in the first quarter. Typically we won't burn as much in the fourth quarter while we're collecting receivables from the seasonally higher period of the year. I will tell you that if you stay completely focused on cash burn, you miss the point of the degree of turnaround in the business.
Don't get me wrong. We obviously want to be cash flow positive, because that is the most important objectives we can achieve for our investors. But when you look at what the economy has gone through and what this company has gone through, in terms of restructuring and the work we've done to turn around the business in the last year, the change in
earnings before interest, taxes, depreciation and amortization, or EBITDA from the end of last year's first quarter to the end of last year's fourth quarter, we produced an improvement in EBITDA of over a quarter of a billion dollars in that time. That's a very substantial turnaround and that's why we have confidence moving forward.
Seasonality is one challenge YRC Worldwide is up against. Another challenge is from analysts who have been negative about YRC Worldwide in the time leading up to the completion of the exchange offer. What do you say to those critics in the wake of YRC's fourth-quarter results?
Analysts have been fairly unrelenting in their hypotheses and theories about our demise. Frankly, what's been great is that we've proven them wrong at every juncture. One of our customers said to me that we need a bigger tombstone because we have to scratch out all the dates that analysts put out there about us being dead. I found that to be funny because that came from a customer who really got it.
We've been up against analysts who had a theory we wouldn't make it. Competitors have tried to price in ways to make it more challenging to make it. But we have continually proven them wrong. You saw it in how we got through the note exchange. You saw it in this morning's results. There continues to be this focus on will we or won't we be able to plow through this remaining
$45 million debt portion of the stub from the debt-for-equity exchange. We are in discussions and we have confidence that we'll get there as well.
-- Written by Robert Holmes in Boston
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