Jeepstr723
TB Regular
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William Deluce
Thank you, Fayaz, the Canadian LTL business unit had solid results in the quarter as we have all come to expect obviously the financial results remained poor in the U.S. LTL business unit, but we continue to make positive progress. Impact in U.S. LTL business unit in the current quarter was the announced transition of our west coast operation to underlying relationship, this goes into effect next week. We expected a decline and shipments; however, we had a 300 shipment per day decline in June which was earlier than expected. We continue to focus on price and have had a 5% increase in yield year-over-year. We have also pushed out some business as we stand our ground on pricing increases as this is necessary and some loss of business due to this is expected.
As we have previously spoken, the focus has moved to pricing and sales. We have re-ramped the sale process and put technology in place to assist our sale folks when they’re out in the market place, this evolution and evaluation on the sales force has cost us to turnover just under 50% of our sale force, this is good as we now feel we have strong performers in place however they are new and it will take some time to be productive on the sales side. This was necessary for us to succeed. Dock hand held technology will be going in over the next three months as we roll out to the larger terminals and then to the smaller ones thereafter. In July we opened the new terminal in Lexington Kentucky. This is to give us the ability to build more density in our network without adding a lot of additional cost due to the reduction in P&D miles where previously this market as an example was served from Louisville. This is one example of our ability to build those shipments in volume density as we build additional terminal density in our core geography. We will look going on and we are working hard on moving U.S. towards profitability. With that I will turn the call back to the operator and respond to any of your questions.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Brad Delco from Stephens Inc, Brad please go ahead.
Unidentified Analyst
Hey guys, it is actually Ben on for Brad. So first, just looking at tonnage trends, can you give us some color on how tonnage trended throughout these month of the quarter ended July, and then given the easier comps or tonnage comps going forward, when do you expect tonnage to turn positive?
Fayaz Suleman
In terms of the tonnage, it went up, we had about, let’s look from here, April to March was up at 6%, May to April was up another 3% and then in June there was actually reduction that was because of the reduction in the West Coast business. In terms of easier comps, I mean we are looking out, as we are doing our forecast we are looking out at the quarters coming up, the months coming up, these guys are continuing to work hard, as we started, we turned over half our sales guys, and they are coming into a situation where we put some technology in place now for our sales guys, which will allow them just to get up to the speed and compete with others in our market place. They build out their relationships as they build on the relationships that are coming with them from the different organizations these sales guys have come from. We should expect to continue to see volumes growth and tonnage growth in the coming months or quarters. I mean, I cannot pinpoint for you exactly which market is going to turn positive, but we should continue to expect to see growth now, not at the last trade.
Unidentified Analyst
Okay and then on the SG&A line it look like SG&A line, it looks like SG&A decline, SG&A kind of outpaced or was closed to the decline in revenue. Can you give us some color on kind of the drivers around the decline in SG&A and why we ultimately see it come down by more given the revenue decline?
Fayaz Suleman
SG&A, I mean, which line are you referring to
Unidentified Analyst
The salaries and wages and benefits
Fayaz Suleman
The salaries and wages have benefit to us.
Brad Delco - Stephens Inc
Salaries and wages, okay…
Fayaz Suleman
Sorry, your question is why the decline, why it didn't declined more?
Unidentified Analyst
Why it didn't coming down it kind of commensurate with the revenue decline, what are some of the drivers there or the pieces there?
Fayaz Suleman
We are continuing to carry the costs of the West. In California there is the Warren Act we have to meet. And so we decided to do when we decide to move into wide relationship in the last is we did, we gave our full 60 days in the list and we also gave our customers 60 days notice. The reason was, two reasons really, the Warren Act number one two of that. And number two just when we’ve got this consistent service now we do want to go to our customers and just shut it down on pick up their shipments on Friday not to get up on Monday. So want to give them the right notice and treat them the right way. So we’re still carrying some of that less cost but the business is obviously down so that’s why.
Unidentified Analyst
Okay, that’s good color. And then on the balance sheet, can you kind of give us your current comfort level with the balance? And maybe speak to some of the leverage you can pull to shore up liquidity if that is ultimately necessary?
Fayaz Suleman
Sure. I mean, we’ve been comfortable with the balance sheet. There is still 41.2 million of cash o the balance sheet while we’re going to use some more cash here in the quarters to support the U.S., yeah, for sure, that’s going to happen. Obviously our goal is, and what we are working towards every day, is to limit that. But we still have an ABL we can use out there and we still have equity in our real estate if needed to and if I start thinking out there and how to raise some liquidity there is still some rolling stock we have that we could leverage if we ever had to.
So there is no lot’s of leverage we could pull if we get to that point. But today we feel comfortable that we should be able to continue to support the U.S. with the cash we have on our balance sheet and continue to invest in the technology, invest in the people and get this thing turned.
Thank you, Fayaz, the Canadian LTL business unit had solid results in the quarter as we have all come to expect obviously the financial results remained poor in the U.S. LTL business unit, but we continue to make positive progress. Impact in U.S. LTL business unit in the current quarter was the announced transition of our west coast operation to underlying relationship, this goes into effect next week. We expected a decline and shipments; however, we had a 300 shipment per day decline in June which was earlier than expected. We continue to focus on price and have had a 5% increase in yield year-over-year. We have also pushed out some business as we stand our ground on pricing increases as this is necessary and some loss of business due to this is expected.
As we have previously spoken, the focus has moved to pricing and sales. We have re-ramped the sale process and put technology in place to assist our sale folks when they’re out in the market place, this evolution and evaluation on the sales force has cost us to turnover just under 50% of our sale force, this is good as we now feel we have strong performers in place however they are new and it will take some time to be productive on the sales side. This was necessary for us to succeed. Dock hand held technology will be going in over the next three months as we roll out to the larger terminals and then to the smaller ones thereafter. In July we opened the new terminal in Lexington Kentucky. This is to give us the ability to build more density in our network without adding a lot of additional cost due to the reduction in P&D miles where previously this market as an example was served from Louisville. This is one example of our ability to build those shipments in volume density as we build additional terminal density in our core geography. We will look going on and we are working hard on moving U.S. towards profitability. With that I will turn the call back to the operator and respond to any of your questions.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from Brad Delco from Stephens Inc, Brad please go ahead.
Unidentified Analyst
Hey guys, it is actually Ben on for Brad. So first, just looking at tonnage trends, can you give us some color on how tonnage trended throughout these month of the quarter ended July, and then given the easier comps or tonnage comps going forward, when do you expect tonnage to turn positive?
Fayaz Suleman
In terms of the tonnage, it went up, we had about, let’s look from here, April to March was up at 6%, May to April was up another 3% and then in June there was actually reduction that was because of the reduction in the West Coast business. In terms of easier comps, I mean we are looking out, as we are doing our forecast we are looking out at the quarters coming up, the months coming up, these guys are continuing to work hard, as we started, we turned over half our sales guys, and they are coming into a situation where we put some technology in place now for our sales guys, which will allow them just to get up to the speed and compete with others in our market place. They build out their relationships as they build on the relationships that are coming with them from the different organizations these sales guys have come from. We should expect to continue to see volumes growth and tonnage growth in the coming months or quarters. I mean, I cannot pinpoint for you exactly which market is going to turn positive, but we should continue to expect to see growth now, not at the last trade.
Unidentified Analyst
Okay and then on the SG&A line it look like SG&A line, it looks like SG&A decline, SG&A kind of outpaced or was closed to the decline in revenue. Can you give us some color on kind of the drivers around the decline in SG&A and why we ultimately see it come down by more given the revenue decline?
Fayaz Suleman
SG&A, I mean, which line are you referring to
Unidentified Analyst
The salaries and wages and benefits
Fayaz Suleman
The salaries and wages have benefit to us.
Brad Delco - Stephens Inc
Salaries and wages, okay…
Fayaz Suleman
Sorry, your question is why the decline, why it didn't declined more?
Unidentified Analyst
Why it didn't coming down it kind of commensurate with the revenue decline, what are some of the drivers there or the pieces there?
Fayaz Suleman
We are continuing to carry the costs of the West. In California there is the Warren Act we have to meet. And so we decided to do when we decide to move into wide relationship in the last is we did, we gave our full 60 days in the list and we also gave our customers 60 days notice. The reason was, two reasons really, the Warren Act number one two of that. And number two just when we’ve got this consistent service now we do want to go to our customers and just shut it down on pick up their shipments on Friday not to get up on Monday. So want to give them the right notice and treat them the right way. So we’re still carrying some of that less cost but the business is obviously down so that’s why.
Unidentified Analyst
Okay, that’s good color. And then on the balance sheet, can you kind of give us your current comfort level with the balance? And maybe speak to some of the leverage you can pull to shore up liquidity if that is ultimately necessary?
Fayaz Suleman
Sure. I mean, we’ve been comfortable with the balance sheet. There is still 41.2 million of cash o the balance sheet while we’re going to use some more cash here in the quarters to support the U.S., yeah, for sure, that’s going to happen. Obviously our goal is, and what we are working towards every day, is to limit that. But we still have an ABL we can use out there and we still have equity in our real estate if needed to and if I start thinking out there and how to raise some liquidity there is still some rolling stock we have that we could leverage if we ever had to.
So there is no lot’s of leverage we could pull if we get to that point. But today we feel comfortable that we should be able to continue to support the U.S. with the cash we have on our balance sheet and continue to invest in the technology, invest in the people and get this thing turned.