YRC Worldwide reports second quarter 2020 results

YRC Worldwide Inc. reported results for the second quarter ended June 30, 2020. Operating revenue was $1.015 billion and operating loss was $4.6 million, which included a $6.0 million net gain on property disposals. In comparison, operating revenue in the second quarter of 2019 was $1.273 billion and operating income was $14.3 million, which included a $6.2 million net gain on property disposals.

Net Loss for second quarter 2020 was $37.1 million, or $1.09 per share, compared to net loss of $23.6 million, or $0.71 per share, in second quarter 2019. 

On July 7th, the Company successfully secured a loan with the United States Department of Treasury (the “UST”) for up to $700 million (the “UST Loan”) under the CARES Act. The significant terms of which are as follows:
In addition to the securing the UST Loan, the Company amended its existing term loan to, among other things, eliminate its Adjusted EBITDA covenant until December 31, 2021, at which time the covenant will require at least $100 million of LTM Adjusted EBITDA, and the covenant will incrementally increase to a requirement of at least $200 million LTM Adjusted EBITDA on June 30, 2022. The company was also able to decrease the amended interest rate on the existing term loan down to the previous LIBOR + 7.5% (with a floor of 1.0%). As a condition of the aforementioned amendments, the Company agreed to a minimum “Liquidity” requirement of $125 million.

• Tranche A of up to $300 million to satisfy previously deferred short-term contractual obligations such as healthcare payments and some lease obligations with the remaining amount going to fund an increase in liquidity. 
• Tranche B of up to $400 million to reinvest back into the business via purchases of tractors and trailers.
• The UST Loan is non-amortizing, bears an interest rate of the Eurodollar (floor of 1.0%) + 3.5% and matures in September 2024. The Company issued UST approximately 30% of its outstanding shares on a post-transaction basis as a condition of the financing.

Finally, the Company was also able to significantly extend the maturity on its Asset Based Loan (the “ABL”) from June 2021 to January 2024.

“It is a new day at YRC Worldwide,” said Darren Hawkins, Chief Executive Officer. “During this pandemic and historically difficult economic backdrop, we were able to secure financing that not only took care of our employees’ healthcare coverage but also will allow us to significantly upgrade the condition, age and efficiency of our rolling stock. We were also able to gain additional covenant relief and maturity extension of our other substantive debt instruments simultaneously,” said Darren Hawkins, Chief Executive Officer.

“On an operational basis, for the quarter, volumes declined year-over-year. However, after bottoming out in April, volumes have steadily improved through the quarter with rate of improvement slowing since late June.  I would like to say the worst is behind us, but this virus and the spread thereof is too unpredictable. To that end, when we started to feel the impact of the economic slow down and subsequent decline in our volumes, we took immediate and swift action to build liquidity which allowed us to improve our cash position and end the quarter to just over $300 million in liquidity.”

“With the UST Loan secured and our largest maturities pushed out to 2024, we now have the unique ability to focus on and accelerate our Enterprise Transformation strategy that we began implementing last year. Our goal is to improve our customers’ experience while operating as one company, with one network and five incredibly proud and distinguished brands, Hawkins continued.

“In closing, I want to thank all of YRC’s employees across North America who continue to perform essential work to keep America rolling and the nation’s supply chain open during these challenging times. We continue to prioritize the health and safety of our employees above all while focusing on exceeding our customers’ expectations every single day on every single shipment,” concluded Hawkins.

Second Quarter 2020 Financial Update
Second Quarter 2020 Operational Update
Liquidity Update (as of June 30, 2020)

• Revenue decreased by $257.2 million to $1.015 billion compared to revenue of $1.273 billion in second quarter of 2019.
• Net loss increased by $13.5 million to $37.1 million compared to a net loss of $23.6 million in second quarter 2019.
• On a non-GAAP basis, the Company generated consolidated Adjusted EBITDA of $37.9 million, a $29.4 million decrease compared to $67.3 million in the prior year comparable quarter (as detailed in the reconciliation below). Last twelve month (LTM) consolidated Adjusted EBITDA was $183.1 million compared to $259.1 million in 2019 (as detailed in the reconciliation below).

• LTL revenue per hundredweight including fuel surcharge decreased 5.7%; however, weight per shipment increased 1.4% resulting in a LTL revenue per shipment decrease of 4.4% when compared to the same period in 2019.  Excluding fuel surcharge, LTL revenue per hundredweight was down 2.6% and LTL revenue per shipment was down 1.2%.
• LTL tonnage per day decreased 14.8% when compared to 2Q19.
• The consolidated operating ratio for the quarter was 100.5 compared to 98.9 in 2Q19.

• The Company’s outstanding debt was $909.8 million, an increase of $44.8 million compared to $865.0 million as of June 30, 2019.
• For the six months ended June 30, 2020, cash provided by operating activities was $213.6 million compared to cash used of $29.5 million for the six months ended June 30, 2019.
• The Company’s available liquidity as calculated under our credit facilities in place before July 7, 2020, which was comprised of cash and cash equivalents and Managed Accessibility (as detailed in the supplemental information provided below) under its ABL facility, was $302.6 million.