Yellow | Losses Continue; Company Plans to Sell $103mm in New Shares - Don't Buy Them

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Losses Continue; Company Plans to Sell $103mm in New Shares - Don't Buy Them
Stifel Nicolaus Transportation & Logistics Research
See attachment for details and important disclosures and certifications.
* YRC Worldwide continued to burn cash and lose market share (see Exhibit 1) in 1Q10, and while the economy and freight markets have been improving, we do not believe the magnitude of the recovery will be enough to bail out YRC.

* 1Q10 summary - YRC National tonnage losses led the LTL industry, and YRC is no longer the largest player in the LTL market (it's FedEx). YRC Regional reported better-than-expected volumes, though still below industry average. Yields rose slightly sequentially due to rising fuel surcharges through 1Q10. YRC Logistics continued to lose money.

* Customers are not returning in any significant form, if at all. Actually, since management continues to cut headcount with volumes improving seasonally, we believe there has been a negative impact on service (fewer bodies to service more freight).

* YRC announced it plans to issue new shares of stock to prevent running out of cash in 2010. Interestingly, because they would be unlikely to get any buyers in a traditional equity offering, YRC is taking advantage of its penny-stock status and high trading volume to issue new shares in at-the-market (ATM) transactions, which are likely to dilute current equity holders by ~20%.

* What else can YRC do to stop the bleeding and/or raise cash? It would not surprise us if the company tries to sell more pieces of its YRC Logistics division to raise cash (or shuts some or all of it down altogether to avoid further losses). Further real estate sales are expected. Even as YRC Regional looks to be getting closer to breakeven, we do not believe YRC will be able to sell this division due to the union contracts and pension overhang.

* We are reiterating our Sell rating on the shares, as we fail to see how YRC generates ~$600mm in incremental cash flow in 2011 to pay for all of its returning expenses and deferred obligations coming due next year. Most likely, we believe management will attempt to again kick the can down the road (i.e., ask the banks to take triple in 2012 instead of double in 2011), but how long is the road, and how heavy is the can? In our opinion, YRCW is not investable (until the reverse stock split could create another short opportunity).
See attachment for details and important disclosures and certifications.

read it all here
http://www.truckingboards.com/bb/index.php?page=page519

Stock recommendations and comments presented on Truckingboards.com are solely those of the analysts and experts quoted. They do not represent the opinions of Truckingboards.com on whether to buy, sell or hold shares of a particular stock.
 
Glad I don't work there anymore. I spent 10 years watching CF die slowly. People are catching on to the smoke and mirrors and managements bag of tricks is starting to run out. I learned to read between the lines at CF.
 
Anyone talk to a salesperson lately ? I't ain't pretty as they can entice the customers but then we have service failures....

It appears to be too late but SERVICE is the key.

Pick up and Deliver on time.

Now that is a problem when you are laying off people.

Of course when you layoff and don't service customers then you don't need as many people because those customers don't use you anymore.

But then you layoff more because the customer base is shrinking and you don't service those remaining customers so they quit using you then you have to layoff more to support those declining numbers.

I suppose we will be OK when we are down to one driver in each terminal.
 
Most P&D Drivers have met the pissed off customers. And many inside the building have met them to when they get the angry phone calls or customer pickups or deliveries to the terminals (because we didn't show up) and some don't seem to understand that these people are just walking away from us never to return. I find it revealing that the first paragraph in the report below highlights 'service failure' (layoffs according to someone doing the 'numbers') as the root cause, and continued root cause of the companies downward spiral.........Of course over the last year we have seen David Ross and others ask Zollars and other YRC Execs about the 'service issues' but they never gave them a straight answer.


* Customers are not returning in any significant form, if at all. Actually, since management continues to headcount with volumes we believe there has been a negative impact on service (fewer bodies to service more freight).
 
I started with yellow in 1991. My first day driving, I travelled less than 4 miles from first delivery to last. When I emptied out, I was 300 feet from another driver who also emptied out. How could others compete with the efficiency created by the large volume? Fast forward ahead 20 years and see how the same company(?) is downsizing to profitability? Not long ago a political party said it isn't the debt, it is the deficit per year, as long as it is only 20% of gdp it isn't an issue. Next administration is dealing with too much debt during a depression. YRC says as long as losses per quarter aren't much compared to revenue, it isn't an issue. Eventually the debt will effect them.
 
When the YRCW business model is examined it is painfully clear that FAILURE is the only possible result. Cost is the deciding factor, NOT service, in ALL decisions.
 
[ Customers are not returning in any significant form, if at all. Actually, since management continues to cut headcount with volumes improving seasonally, we believe there has been a negative impact on service (fewer bodies to service more freight).]

What I have been saying for a year
You cant let the freight sit and keep people at home "if "the work is there.
We seem to be on the program " lay people off 1st of month when busy" then #'s force you to bring people back "middle of month" when it's slow.
Come on not hard to fig out work people when freight is here lay off when slow.
Take care of the customers and the rest will work it's self out.
 
[quote author=albag link=topic=79943.msg828102#msg828102 date=1273346428]
When the YRCW business model is examined it is painfully clear that FAILURE is the only possible result. Cost is the deciding factor, NOT service, in ALL decisions.
[/quote]Yeah, but none of us are going to be holding "Si Se Puede" signs up and work for nothing, either. Rates can be adjusted higher if and when the price of fuel begins to raise.
 
By EVERY measure on YRCW's PDF of operating results for YRC, the operation is down 1/3. It is NOT costing YRC more $ to move more freight, it is costing YRC more $ to move LESS freight! I DON'T believe that type of operation can be sustained much longer. And John, I am not even considering how $bill is going to pay the defered pension $$$$$$$$$! :chairshot:
 
[quote author=albag link=topic=79943.msg828149#msg828149 date=1273360170]
By EVERY measure on YRCW's PDF of operating results for YRC, the operation is down 1/3. It is NOT costing YRC more $ to move more freight, it is costing YRC more $ to move LESS freight! I DON'T believe that type of operation can be sustained much longer. And John, I am not even considering how $bill is going to pay the defered pension $$$$$$$$$! :chairshot:
[/quote]Well with the money wasted on a COO, and dumping 200 mill on company stock could have been used or saved towards the pension. $ Bill hasn't stopped his spending spree, and he will probably ask for another 5% cut in salary from everyone again, to help bail him out, again. Has anything really changed since the merger?
 
Stifel Nicolaus Transportation & Logistics Research knows something JPM doesn't?
images
 
well ain't STIFEL- NICOLAUS the same one said that YRC was going out last year. ain't no way fedex are big then yrc in LTL.
 
[quote author=mem-bo link=topic=79943.msg828691#msg828691 date=1273532334]
well ain't STIFEL- NICOLAUS the same one said that YRC was going out last year. ain't no way fedex are big then yrc in LTL.
[/quote]YRC doesn't have and provide the intermodal service customers, and their technology is about 20 years behind. The only thing that has changed is the employee salaries, since the merger. Instead of wasting money on a COO, YRC should of used that money for hiring a consultant group to rebuild or restructure the company back into making a profit. Can't solve all the companies problems internally.
 
[quote author=mem-bo link=topic=79943.msg828691#msg828691 date=1273532334]
well ain't STIFEL- NICOLAUS the same one said that YRC was going out last year. ain't no way fedex are big then yrc in LTL.
[/quote]yes they are .
 
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