• ITVI.USA
    11,173.640
    -147.240
    -1.3%
  • OTRI.USA
    5.120
    0.130
    2.6%
  • OTVI.USA
    11,150.460
    -154.410
    -1.4%
  • TLT.USA
    2.560
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.020
    0.120
    6.3%
  • TSTOPVRPM.CHIATL
    1.590
    0.110
    7.4%
  • TSTOPVRPM.DALLAX
    1.380
    -0.030
    -2.1%
  • TSTOPVRPM.LAXDAL
    1.930
    0.070
    3.8%
  • TSTOPVRPM.PHLCHI
    1.140
    0.040
    3.6%
  • TSTOPVRPM.LAXSEA
    2.390
    0.030
    1.3%
  • WAIT.USA
    120.000
    -19.000
    -13.7%
  • ITVI.USA
    11,173.640
    -147.240
    -1.3%
  • OTRI.USA
    5.120
    0.130
    2.6%
  • OTVI.USA
    11,150.460
    -154.410
    -1.4%
  • TLT.USA
    2.560
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.020
    0.120
    6.3%
  • TSTOPVRPM.CHIATL
    1.590
    0.110
    7.4%
  • TSTOPVRPM.DALLAX
    1.380
    -0.030
    -2.1%
  • TSTOPVRPM.LAXDAL
    1.930
    0.070
    3.8%
  • TSTOPVRPM.PHLCHI
    1.140
    0.040
    3.6%
  • TSTOPVRPM.LAXSEA
    2.390
    0.030
    1.3%
  • WAIT.USA
    120.000
    -19.000
    -13.7%
News

YRC’s stock takes a hit as LTL benchmarks come up short relative to peers

Investors did not like what they heard about the earnings of LTL carrier YRC.

Although the company’s earnings were released Thursday and rose by the end of that day, YRC stock (NASDAQ: YRCW) plummeted Friday. Just before the close, on a day when broader market indexes were higher, YRC’s stock had declined 7.8% to $9.21.

In a very strong earnings period for trucking stocks, YRC reported second quarter net income of $14.4 million compared to $19 million in the corresponding quarter a year earlier. Most other companies reported significantly higher net income. Its EBITDA was up only $9.7 million to $100.8 million.

YRC’s consolidated operating ratio for the quarter worsened to 96.2 compared to 95.8, during a three months in which LTL company Old Dominion Freight had an OR less than 80 and the LTL division of XPO Logistics was in the low 80’s.

Total picked-up revenue per hundredweight excluding fuel surcharges, a key benchmark for measuring yield, was up to $22.17, a 2.9% increase. The overall measure of total weight/shipment in pounds rose 3.5% to 1,217 pounds, a 3.5% increase.

That yield benchmark brought this line of questioning on the call from Brad Delco, an analyst with Stephens Inc.

Delco, on the earnings call with analysts, asked YRC executives why YRC’s yield measurements were lagging other LTL providers. “Do you feel like you’re being aggressive enough with pricing?” he said, according to a transcript of the call provided by SeekingAlpha. “Right now, it seems like you have a lot bigger opportunity in this market than what you’re sort of realizing today,” he said.

In response, Thomas O’Connor, the president of YRC Freight, said second-quarter contract negotiations had averaged an increase of 7.2%, “and that continued into July.” Darren Hawkins, the company’s CEO, said YRC will continue to prioritize “yield over tonnage,” and that the contract negotiations—which he said is a “leading indicator’’—“don’t appear to have peaked as they continue to have that momentum.”

But one thing LTL carriers do not like to do is see truckload demand spill over into its market, because the economics of what makes truckload service profitable and what makes LTL service profitable are completely different. O’Connor says that is happening. “Growth in shipments over 10,000 pounds was especially strong in the second quarter, as the truckload market created opportunities for YRC Freight,” O’Connor said. “While the absolute number of truckload shipments handled remains a small percentage of our overall shipments, the much higher weight per shipment in excess of 14,000 pounds had a meaningful impact on the revenue metrics we report. While unfavorably impacting our overall revenue per hundredweight results, the increase in volume shipments had a positive impact on our tonnage and revenue per shipment statistics.”

CEO Darren Hawkins said when YRC encounters such demand, it is “proactively pushing back on these shipments through contract adjustments and dynamic volume pricing to accept the heavier shipments that are complementary to our networks and avoid those that are not through their higher volume rates.”

O’Connor said YRC is “confident that we are pricing the volume shipments appropriately.”

Scott Group of Wolfe Research noted on the call that the different paths that yield figures and the contract pricing discussed by Hawkins and O’Connor were taking, inquiring when the yield benchmarks would fall more in line with the contract pricing.

Hawkins said that already is occurring at the regional divisions of YRC. “I certainly look at the contract negotiations,” Hawkins said. He also noted the other benchmarks he looks at: revenue per shipment, revenue per hundredweight, and length of haul. At YRC Freight—the national company, as he called it—“those mixtures can cause that number to vary. But overall it’s translating into the improvement that we’re looking for.”

Hawkins also cited improved technology that has been implemented that gives the company “a better handle on what we’re moving inside our trailers., and that allows us to more accurately price it.” The data coming off that technology is showing more “consistency through the contract negotiations and that actual operating ratio aligning with where we projected it.” As a result, the pricing information the company is receiving, Hawkins said, “is as accurate as that at any time in my career.”

YRC consists of YRC Freight and the regional carriers. Hawkins said YRC had its fifth consecutive quarter of positive year-over-year increases in revenue per hundredweight. The regional carriers’ revenue per hundredweight benchmark excluding fuel was the highest in three years, he said. Their OR was the best in two years, Hawkins added.

{"@context":"http:\/\/schema.org","@type":"NewsArticle","dateCreated":"2018-08-03T20:05:43-04:00","datePublished":"2018-08-03T20:05:43-04:00","dateModified":"2019-03-25T21:06:27-04:00","headline":"YRC’s stock takes a hit as LTL benchmarks come up short relative to peers","name":"YRC’s stock takes a hit as LTL benchmarks come up short relative to peers","keywords":[],"url":"https:\/\/www.freightwaves.com\/news\/yrc-second-quarter-earnings","description":"Investors did not like what they heard about the earnings of LTL carrier YRC.Although the company\u2019s earnings were released Thursday and rose by the end of that day, YRC stock (NASDAQ: YRCW) plummeted","copyrightYear":"2018","articleSection":"News","articleBody":"\n \n\n Investors did not like what they heard about the earnings of LTL carrier YRC.Although the company\u2019s earnings were released Thursday and rose by the end of that day, YRC stock (NASDAQ: YRCW) plummeted Friday. Just before the close, on a day when broader market indexes were higher, YRC\u2019s stock had declined 7.8% to $9.21.In a very strong earnings period for trucking stocks, YRC reported second quarter net income of $14.4 million compared to $19 million in the corresponding quarter a year earlier. Most other companies reported significantly higher net income. Its EBITDA was up only $9.7 million to $100.8 million.YRC\u2019s consolidated operating ratio for the quarter worsened to 96.2 compared to 95.8, during a three months in which LTL company Old Dominion Freight had an OR less than 80 and the LTL division of XPO Logistics was in the low 80\u2019s.Total picked-up revenue per hundredweight excluding fuel surcharges, a key benchmark for measuring yield, was up to $22.17, a 2.9% increase. The overall measure of total weight\/shipment in pounds rose 3.5% to 1,217 pounds, a 3.5% increase.\n \n \n \n\nThat yield benchmark brought this line of questioning on the call from Brad Delco, an analyst with Stephens Inc.Delco, on the earnings call with analysts, asked YRC executives why YRC\u2019s yield measurements were lagging other LTL providers. \u201cDo you feel like you\u2019re being aggressive enough with pricing?\u201d he said, according to a transcript of the call provided by SeekingAlpha. \u201cRight now, it seems like you have a lot bigger opportunity in this market than what you\u2019re sort of realizing today,\u201d he said.In response, Thomas O\u2019Connor, the president of YRC Freight, said second-quarter contract negotiations had averaged an increase of 7.2%, \u201cand that continued into July.\u201d Darren Hawkins, the company\u2019s CEO, said YRC will continue to prioritize \u201cyield over tonnage,\u201d and that the contract negotiations\u2014which he said is a \u201cleading indicator\u2019\u2019\u2014\u201cdon\u2019t appear to have peaked as they continue to have that momentum.\u201dBut one thing LTL carriers do not like to do is see truckload demand spill over into its market, because the economics of what makes truckload service profitable and what makes LTL service profitable are completely different. O\u2019Connor says that is happening. \u201cGrowth in shipments over 10,000 pounds was especially strong in the second quarter, as the truckload market created opportunities for YRC Freight,\u201d O\u2019Connor said. \u201cWhile the absolute number of truckload shipments handled remains a small percentage of our overall shipments, the much higher weight per shipment in excess of 14,000 pounds had a meaningful impact on the revenue metrics we report. While unfavorably impacting our overall revenue per hundredweight results, the increase in volume shipments had a positive impact on our tonnage and revenue per shipment statistics.\u201dCEO Darren Hawkins said when YRC encounters such demand, it is \u201cproactively pushing back on these shipments through contract adjustments and dynamic volume pricing to accept the heavier shipments that are complementary to our networks and avoid those that are not through their higher volume rates.\u201dO\u2019Connor said YRC is \u201cconfident that we are pricing the volume shipments appropriately.\u201dScott Group of Wolfe Research noted on the call that the different paths that yield figures and the contract pricing discussed by Hawkins and O\u2019Connor were taking, inquiring when the yield benchmarks would fall more in line with the contract pricing.\n \n Hawkins said that already is occurring at the regional divisions of YRC. \u201cI certainly look at the contract negotiations,\u201d Hawkins said. He also noted the other benchmarks he looks at: revenue per shipment, revenue per hundredweight, and length of haul. At YRC Freight\u2014the national company, as he called it\u2014\u201cthose mixtures can cause that number to vary. But overall it\u2019s translating into the improvement that we\u2019re looking for.\u201dHawkins also cited improved technology that has been implemented that gives the company \u201ca better handle on what we\u2019re moving inside our trailers., and that allows us to more accurately price it.\u201d The data coming off that technology is showing more \u201cconsistency through the contract negotiations and that actual operating ratio aligning with where we projected it.\u201d As a result, the pricing information the company is receiving, Hawkins said, \u201cis as accurate as that at any time in my career.\u201dYRC consists of YRC Freight and the regional carriers. Hawkins said YRC had its fifth consecutive quarter of positive year-over-year increases in revenue per hundredweight. The regional carriers\u2019 revenue per hundredweight benchmark excluding fuel was the highest in three years, he said. Their OR was the best in two years, Hawkins added. \n\n\t\n\n\n","publisher":{"@id":"#Publisher","@type":"Organization","name":"FreightWaves","logo":{"@type":"ImageObject","url":"https:\/\/www.freightwaves.com\/wp-content\/uploads\/2019\/03\/FW-LOGO2018-Color@5x.png"},"sameAs":["https:\/\/feeds.feedburner.com\/Freightwaves","https:\/\/www.facebook.com\/freightwaves","https:\/\/twitter.com\/freightwaves","https:\/\/www.linkedin.com\/company\/freightwaves","https:\/\/www.youtube.com\/channel\/UC36dglNLPZNKuSp30JVP5yg\/videos","https:\/\/www.instagram.com\/freightwaves\/"]},"sourceOrganization":{"@id":"#Publisher"},"copyrightHolder":{"@id":"#Publisher"},"mainEntityOfPage":{"@type":"WebPage","@id":"https:\/\/www.freightwaves.com\/news\/yrc-second-quarter-earnings","breadcrumb":{"@id":"#Breadcrumb"}},"author":{"@type":"Person","name":"John Kingston","url":"https:\/\/www.freightwaves.com\/news\/author\/johnkingston"},"image":{"@type":"ImageObject","url":"https:\/\/www.freightwaves.com\/wp-content\/uploads\/2018\/08\/YRCFTruck_2-1.jpg","width":1536,"height":1024}}
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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.
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