YRC reduces operating losses in Q1

YRC Worldwide Inc. yesterday reported a first-quarter operating loss of $48.8 million, narrowing a $68.4 million deficit from the same period a year ago. But while the less-than-truckload (LTL) carrier reported year-over-year tonnage and revenue gains, pricing doesn't seem to be where it needs to be to push the struggling company into the black.

Operating revenue in the quarter totaled $1.19 billion, a slight improvement from revenue of $1.12 billion in the 2011 quarter, the Overland Park, Kan.-based carrier said.

The company's long-haul LTL unit, recently renamed YRC Freight, reported a 3.5-percent increase in daily tonnage and a 9.8-percent gain in operating revenue. Revenue per hundredweight, the most widely used measure of yield improvement, rose 3.3 percent from the 2011 period, the company said. Company management, led by CEO James L. Welch and YRC Freight President Jeff Rogers, has made the recovery of the struggling long-haul unit a top priority.

YRC's regional unit, which has performed well despite the larger problems at the company, continued the pace in the first quarter. Daily tonnage rose 6.0 percent year over year, while operating revenue increased 9.8 percent and revenue per hundredweight gained 4.5 percent, YRC said. The regional unit is made up of U.S. carriers Holland, Reddaway, and New Penn and the Canadian company Reamer.

The company recorded a $23 million expense in the first quarter relating to its participation in the multi-employer pension plan with the Teamsters union.

"We are experiencing increased efficiencies at each of our operating companies," Welch said in a statement. "These year-over-year core operating improvements show promise and indicate we are on the right path."

YIELD CALLED UNIMPRESSIVE

David G. Ross, analyst for Stifel, Nicolaus & Co., said the yield increase at YRC Freight was unimpressive, noting that most of the rise came from higher fuel surcharges.

YRC Freight's customer mix is tilted toward larger accounts with the clout to beat back increases they find unacceptable. Rogers has said he's been trying to reduce the unit's dependence on corporate accounts. He noted, however, that he's seeing better success today than in recent years in convincing big customers of the need for higher rates.

"We believe YRC Freight needs significant rate increases soon from its customers before it can move toward sound financial footing and begin to replace its aging fleet," Ross said today in a research note.