YRC Worldwide (YRCW)

Q3 2011 Earnings Call

November 04, 2011 9:30 am ET

Executives

Jeffery A. Rogers - President

Phil J. Gaines - Senior Vice President of Finance

James L. Welch - Chief Executive officer and Executive Director

Jamie G. Pierson - Interim Chief Financial Officer

Paul F. Liljegren - Chief Accounting Officer, Vice President of Investor Relations and Controller

Analysts

Scott H. Group - Wolfe Trahan & Co.

David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division

Jack Waldo - Stephens Inc., Research Division

Thomas S. Albrecht - BB&T Capital Markets, Research Division

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Justin B. Yagerman - Deutsche Bank AG, Research Division

Presentation

Operator

Good morning. My name is Michelle, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the YRC Worldwide Third Quarter Earnings Conference Call. [Operator Instructions] I will now turn the call over to Paul Liljegren, Senior Vice President, Finance and Controller.

Paul F. Liljegren

Good morning. Thanks for joining us for the YRC Worldwide Third Quarter 2011 Earnings Call. James Welch, Chief Executive Officer of YRC Worldwide; Jamie Pierson, our CFO; and Jeff Rogers, President of YRC will provide comments this morning. James, Jamie, Jeff and Phil Gaines, CFO of YRC and I will be available for questions following their comments.

Now for our disclaimers. Statements made by management during this call that are not purely historical facts are forward-looking statements. These include statements regarding the company's expectations and intentions on strategies regarding the future. It is important to note the company's future results could differ materially from those projected in such forward-looking statements due to a variety of factors.

The format of this call does not allow us to fully discuss all these risk factors. For a full discussion, please refer to this morning's earnings release and our SEC filings, including our 10-K, 10-Q and today's 8-K.

Additionally, please see today's release for a reconciliation of our GAAP measures to non-GAAP measures, such as a reconciliation of operating loss to adjusted operating loss and adjusted EBITDA, and the reconciliation of adjusted EBITDA to net cash flow from operating activities and adjusted free cash flow. During this call, we may refer to the non-GAAP measure of adjusted EBITDA simply as EBITDA.

Now I'll turn the call over to James Welch.

James L. Welch

Thank you, Paul, and good morning, everyone, and thanks for taking the time to join us this morning. As most of you know, I've just concluded my 100th day back at YRC Worldwide this week after leaving 4.5 years ago. And while I was disappointed and concerned about the condition of the company during the time I was gone, I have to tell you that we have made a lot of progress moving the company forward over these last 100 days, but we still have much to do, no doubt, and I'm not at all satisfied with where we're at and how we're performing but we will get better.

Let me start with a few comments on our restructure, which was closed on July 22. While we now have a restructured balance sheet that provides us with runway, we must sharpen our focus on the operations and the delivery of consistently reliable service to all of our customers. I'm very pleased with the service given by Holland, Reddaway and New Penn, but we have to push further improvements at YRC, and we are in fact making good progress, but it will take time. And as we improve service at YRC, I believe that we will restore confidence and build operations and sales, which should lead to higher yield and more volume.

If you have read the recent press releases or news articles about YRCW over the last 100 days, you will know that I did not waste any time in making changes on how we will manage the holding company and operating companies moving forward. The holding company was much too involved in the day-to-day business of the operating companies in my opinion. The way the company was previously structured created bottlenecks in strategy, decision making and execution along with creating inefficiencies.

Today, I have eliminated 4 C-level positions at the holding company and have for the most part, put the power and the responsibility back at the operating companies. I can absolutely assure you that each of the operating company presidents have not only fully embraced this change, but they have been asking for it for some time. For example, up until just a few weeks ago, YRC did not have a separate management team actually leading that $3 billion company. There was a very active and oftentimes unnecessary involvement from the holding company, and YRC critical functions were basically blended into the holding company without a separate and distinct leadership team. Another example, the sales organization reported through the shared services organization at the holding company level, yet, YRC operations reported through a field alignment to a different leader, and the 2 groups were not talking and not working together nearly as much as they must moving forward.

Truthfully and in my opinion, that organization structure made little business sense, so to that end, we recently named Jeff Rogers, President of YRC. Jeff has extensive industry experience, and he has successfully served the company in a number of roles, most recently as President of Holland. And if you remember, when Jeff went to Holland about 3 years ago, Holland was a company that was basically in a mess and losing a lot of money, but he worked hard to create a vision and a roadmap for its operational turnaround and worked to focus the organization on those objectives. Jeff led Holland back to be the next-day carrier in the footprint. He's also led Holland closer to its historical level of operating profitability, and I have great confidence that Jeff will do the same at YRC.

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