YRCW Provides Positive Outlook By: Zacks Equity Research July 13, 2010 | Comments: 0 Recommended this article (2) YRCW | CNW | ABFS Print Share
Trucking company, YRC Worldwide Inc. (YRCW) provided a positive outlook on its expected second quarter 2010 results, citing improving business conditions. The results will be reported on August 3, 2010. YRC expects second quarter adjusted EBITDA to be in a range of $35 million to $45 million, excluding the YRC Logistics segment, which will be reported as discontinued operations. Including losses from discontinued operations, EBITDA is expected to be in a range of $24 million to $36 million, which exceeds the $5 million covenant level required by its credit agreement. The company estimates to report a pre-tax profit of $45 million in the second quarter compared with a pre-tax loss of $53 million in the first quarter. The company’s reported cash and equivalents balance at the end of June totaled $142 million, up from $130 million at the end of March. YRC’s second quarter national and regional operations freight volume also rose 11.0% and 15.2%, respectively, from first-quarter levels. YRC expects to record an $83 million charge related to stock awards for employees it offered as part of a pay-cut plan compared with a $108 million charge recorded in the first quarter. YRC has been facing major challenges including sustaining liquidity, dilution of preferred stock, loss of customers and a weak LTL (“less than truckload”) market. The company is trying to deter total financial collapse in every possible way. YRC also completed its debt-for-equity exchange at the end of December 2009, which will likely be beneficial for the company. YRC faces stiff competition from FedEx Freight, Conway Inc. (CNW), Arkansas Best Corporation (ABFS), Old Dominion Freight Line and Expeditors International of Washington. Despite prudent moves to manage liquidity amid the recent deterioration in volumes and operating profitability, we believe YRC continues to consume cash for operations. In the near term, we believe YRC’s intermediate-term bankruptcy risks are considerably high.
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