Yellow Corporation reports fourth quarter and full year 2022 results

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Yellow Corporation (NASDAQ: YELL) reported results for the fourth quarter and year ended December 31, 2022.

Fourth quarter operating revenue was $1.200 billion and operating income was $40.3 million, which included a $28.2 million net gain on property disposals. In comparison, operating revenue in the fourth quarter of 2021 was $1.309 billion and operating income was $55.8 million.

Net loss for the fourth quarter of 2022 was $15.5 million, or $0.30 per share. This compares to a net loss of $44.7 million, or $0.88 per share, in the fourth quarter of 2021, which included a $54.9 million or $1.08 per share non-cash, non-operating settlement loss resulting from a Partial Pension Annuitization of the Company’s qualified non-union pension plans. Excluding the impact of the Partial Pension Annuitization, the fourth quarter of 2021 net income was $10.2 million, or $0.20 per share.

On a non-GAAP basis, the Company generated an Adjusted EBITDA of $54.6 million in the fourth quarter of 2022 compared to $115.5 million in the prior-year comparable quarter (as detailed in the reconciliation below). 

Operating revenue for the full year 2022 was $5.245 billion and operating income was $197.8 million, which included a $38.0 million net gain on property disposals. This compares to full-year 2021 operating revenue of $5.122 billion and an operating income of $103.6 million.

Full-year net income for 2022 was $21.8 million, or $0.42 per share, compared to a net loss in 2021 of $109.1 million, or $2.15 per share. Excluding the impact of the Partial Pension Annuitization, the full-year 2021 net loss was $54.2 million, or $1.07 per share.

Full-year 2022 Adjusted EBITDA was $343.1 million compared to $306.0 million in 2021 (as detailed in the reconciliation below). 

“In the fourth quarter, demand for LTL capacity decreased compared to the tight environment a year ago contributing to the decline in tonnage per workday,” said Darren Hawkins, chief executive officer. “The manufacturing sector’s strength began to waver, similar to the retail sector earlier in the year, pointing to a loss of economic momentum. In response, during the quarter we adjusted our workforce to align with the muted volume and we continued to closely manage the use of purchased transportation and other expenditures. Despite the near-term headwinds, the yield environment remains stable. We have stayed consistent with our strategy of improving the yield on the freight moving through Yellow’s network and for the full year 2022, we reported the best operating income and operating ratio in 16 years.

“Phase one of our network optimization that was successfully implemented in the western United States in September is operating as a super-regional carrier. For phase two we are working through a similar planning process as we did with phase one to ensure we have the best execution strategy for our customers, employees, and shareholders. Phase two consists of legacy YRC Freight, Holland, and New Penn terminals in the Midwest, Northeast, and Southeast. Between these two phases, approximately 90% of our network will be operating as a super-regional carrier. We expect to integrate the remaining 10% of the network in the central United States after we implement phase two. The network optimization is expected to improve asset utilization, enhance network efficiencies, lead to cost savings, and create capacity without the need to add terminals.

“As we optimize the network, we plan to sell approximately 17 excess terminals that have overlapping service territories. We do not plan to sacrifice geographical service coverage or expect this to unfavorably impact customer service. In the fourth quarter, we sold one of the excess terminals for approximately $31 million and the net proceeds were used to pay down a portion of the term loan. In early January, we also paid the outstanding $66 million balance of the CDA notes in compliance with the terms of the agreement. Reducing our outstanding debt by nearly $100 million is another important step on the path to refinancing and strengthening our capital structure,” concluded Hawkins.

Operational and Financial Update

• The operating ratio for the fourth quarter of 2022 was 96.6 compared to 95.7 in the fourth quarter of 2021.
• Including fuel surcharge, in the fourth quarter of 2022 LTL revenue per hundredweight increased by 21.1% and LTL revenue per shipment increased by 17.8% compared to the same period in 2021. Excluding fuel surcharge, fourth quarter LTL revenue per hundredweight increased by 12.4% and LTL revenue per shipment increased by 9.3%.
• In the fourth quarter of 2022 LTL tonnage per workday decreased by 25.1% when compared to the fourth quarter of 2021.
• During the fourth quarter of 2021, the Company’s qualified non-union pension plans entered into a contract for a group annuity to transfer the obligation to pay the remaining retirement benefits of approximately 3,700 plan participants to an insurance company (the “Partial Pension Annuitization”). The transfer included approximately $250 million in both plan obligations and plan assets. As a result of the Partial Pension Annuitization, the  Company recorded a non-cash, nonoperating settlement loss of $54.9 million, or $1.08 per share, reflecting the accelerated recognition of unamortized losses in these plans from the obligation that was settled.

Liquidity and Capital Expenditures Update

• The Company’s available liquidity, which is comprised of cash and cash equivalents and Managed Accessibility (as detailed in the supplemental information provided below) under its ABL facility, was $241.8 million as of December 31, 2022, compared to $358.8 million a year ago. 
• The Company’s outstanding debt was $1.575 billion as of December 31, 2022, compared to $1.615 billion as of December 31, 2021.
• On January 3, 2023, the Company paid the remaining $66.0 million outstanding balance of its Contribution Deferral Agreement notes in compliance with the terms of the agreement.
• For the full-year 2022, cash provided by operating activities was $121.3 million compared to $10.2 million in 2021.
• In the fourth quarter of 2022, the Company invested $51.1 million in capital expenditures. This compares to $54.7 million in the fourth quarter of 2021. Full-year 2022 capital expenditures were $191.8 million compared to $497.6 million in 2021.

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