YRC Worldwide Updates 2017 Financial Projections
The primary factors contributing to the update include:
- The occurrence of significant weather during the third quarter 2017;
- A shortage of revenue equipment;
- Higher than expected purchased transportation expense;
- Higher than anticipated maintenance expense;
- Higher than expected employee overtime; and
- Underperformance by one of the Regional operating companies.
"We are updating the financial projections now that we have a preliminary view of our third quarter 2017 results," said
"We have also been adversely impacted by higher than expected purchased transportation expense in the third quarter primarily attributable to a shortage of revenue equipment. The impact has been more acute as capacity has tightened more quickly than anticipated across the trucking sector. The shortage of revenue equipment has led to higher than expected local purchased transportation and short-term rental expense and an increase in maintenance expense on the existing fleet. The onboarding of new revenue equipment in 2017 has been weighted towards later in the year as the Company focused on successfully amending and extending the term loan. We expect to take delivery of more than 800 new tractors and 2,400 new trailers in fourth quarter 2017 and first quarter 2018 which we anticipate to help mitigate the increase in purchased transportation and maintenance expense.
"Finally, we recently named
For the three months ended
For full-year 2017, the Company continues to project consolidated operating revenue of approximately
Although the third quarter 2017 ended
Third Quarter 2017 Earnings Conference Call
The call will be webcast and can be accessed live or as a replay via YRC Worldwide's website www.yrcw.com.
Non-GAAP Financial Measures
In this Current Report on Form 8-K, the Company refers to certain financial measures that are not prepared in accordance with
- Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to fund restructuring professional fees, nonrecurring consulting fees, letter of credit fees, service interest or principal payments on our outstanding debt or lump sum payments to the Company's union employees required under the ratified Memorandum of Understanding;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will have
to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements;
- Equity-based compensation is an element of the Company's long-term incentive compensation package, although Adjusted EBITDA excludes employee equity-based compensation expense when presenting the Company's ongoing operating performance for a particular period; and
- Other companies in the Company's industry may calculate Adjusted EBITDA differently than it does, limiting its usefulness as a comparative measure.
Because of these limitations, the Company's non-GAAP measures, including Adjusted EBITDA, should not be considered a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on its GAAP results and using its non-GAAP measures as secondary measures.
The following table provides a reconciliation of approximate operating income to approximate Adjusted EBITDA for the three months ending
|Three Months Ended |
|Reconciliation of operating income to Adjusted EBITDA:|
|Depreciation and amortization||37,000|
|Losses on property disposals, net||1,000|
|Letter of credit expense||2,000|
|Permitted dispositions and other||-|
|Equity-based compensation expense||1,000|
The following table provides a reconciliation of
projected operating income to projected Adjusted EBITDA for the twelve months ending
|Twelve Months Ended |
|Reconciliation of operating income to Adjusted EBITDA:|
|Depreciation and amortization||150,000||150,000|
|Losses on property disposals, net||5,000||5,000|
|Letter of credit expense||7,000||7,000|
|Permitted dispositions and other||1,000||1,000|
|Restructuring professional fees||2,000||2,000|
|Equity-based compensation expense||6,000||6,000|
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as "will," "expect," "intend," "anticipate," "believe," "could," "would," "should," "may,"
"project," "forecast," "propose," "plan," "designed," "enable," and similar expressions which speak only as of the date the statement was made are intended to identify forward-looking statements. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Our future financial condition and results could differ materially from those predicted in such forward-looking statements because of a number of factors, including (without limitation): general economic factors; business risks and increasing costs associated with the transportation industry; competition and competitive pressure on pricing; the risk of
labor disruptions or stoppages; increasing pension expense and funding obligations; increasing costs relating to our self-insurance claims expenses; our ability to finance the maintenance, acquisition and replacement of revenue equipment and other necessary capital expenditures; our ability to comply and the cost of compliance with, or liability resulting from violation of, federal, state, local and foreign laws and regulations; impediments to our operations and business resulting from anti-terrorism measures; the impact of claims and litigation expense to which we are or may become exposed; failure to realize the expected benefits and costs savings from our performance and operational improvement initiatives; our ability to attract and retain qualified drivers and increasing costs of driver compensation; privacy breach or IT system disruption; risks of operating in foreign countries;
our dependence on key employees; seasonality; changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility; our ability to generate sufficient liquidity to satisfy our cash needs and future cash commitments, including (without limitation) our obligations related to our indebtedness and lease and pension funding requirements, and our ability to achieve increased cash flows through improvement in operations; limitations on our operations, our financing opportunities, potential strategic transactions, acquisitions or dispositions resulting from restrictive covenants in the documents governing our existing and future indebtedness; our failure to comply with the covenants in the documents governing our existing and future indebtedness; fluctuations in the price of our common
stock; dilution from future issuances of our common stock; our intention not to pay dividends on our common stock; that we have the ability to issue preferred stock that may adversely affect the rights of holders of our common stock; and other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the
Please visit our website at www.yrcw.com for more information.
News Provided by Acquire Media