Freightmaster1
TB Legend
- Credits
- 605
Darren Hawkins
Thank you, Bri and good morning everyone. Thanks for joining our second quarter earnings call. I believe we have successfully reset the runway in 2019 to provide the foundation for our multiyear strategy. The ratification of our labor agreement, which occurred in the middle of Q2, was our number one priority for 2019. However, the timing of the labor agreement delayed operational benefits, which combined with the April 1 effective date for wage and vacation benefits, costs us several 100 basis points of financial performance.
These results are not unexpected and reflect customer hesitation, while waiting for a fully ratified labor agreement along with muted demand. Fortunately, the customer concern was removed with the announcement of the ratified five-year labor agreement, and now we have a clean runway to execute our strategic plan. The transformation pain experienced in Q2 paves the way for the $60 million to $80 million of margin expansion expected in 2020.
Concerning 2019, transportation market conditions have been softer, suggesting that the U.S. economy and the freight economy are not entirely in sync. Transportation volumes appear to be more sluggish as company supply chains were faced with tariffs, and other situations that forced them to overstock inventory. I am encouraged by the July tonnage trends, while still negative when compared to prior year, the trends are moving in the right direction.
We have been very methodical in our approach to stabilize our company over the last several years as the Moody's upgrade recently highlighted. Cost reductions are well underway with a current annualized run rate of $25 million for those initiated in Q2 through headcount reductions and back office consolidations. In a family of companies, it always makes sense to have operational and customer engagement coordination. We will continue to move rapidly with consolidation efforts to be more efficient with our equipments, our facilities and our people.
As we look beyond Q2, our path forward is clear. We are focused on rapid deployment of our multiyear strategic plan to truly demonstrate the profitable earnings power of the company. The first step in that plan was the labor contract and the implementation of the operational flexibilities. With that hurdle out of the way, and a clear five-year runway, the next steps are network optimization, capital structure changes, continued capital investments and customer growth.
Network optimization is basically driving full utilization of our property and freight density footprint across our asset based companies. Make no mistake, there is power in having four asset brands in the marketplace, as each brings unique value to our customers with three best-in-class regional LTL companies and then the size, scope and endless capabilities of YRC Freight to go anywhere in North America.
As at any holding company, YRCW will be intentional in expanding revenue across the individual brands, but also in achieving the efficiencies available by having the companies work in closer coordination. We have identified approximately 25 service centers for consolidation by the end of December 2019, bringing our projected service centers to approximately 360 by the end of the year. And we believe this just scratches the surface. The disposition of these owned and leased properties in the near term are expected to generate additional cash proceeds of approximately $25 million by early 2020.
As this opportunity is repeated throughout our network, we will build density by reducing miles, gain efficiencies with our equipment, while also reducing our burden on continued capital investment needs and improve our service to customers. The potential of rapidly benefiting from network, equipment and resource efficiencies, at the same time, we are expanding our customer value proposition is an exciting opportunity for YRCW.
The next important step in our long-term strategic plan is the pursuit of new financing alternatives to replace our existing term-loan to provide less restrictive covenants, reduce interest rates and extended maturity. Concerning growth, taking great care of the customer is always at the top of the list. Creating simplified engagement for customers and an increased service offering are a critical part of our strategic focus on customer growth and engagement.
We recently announced the addition of Jason Bergman as Chief Customer Officer, and a restructuring of our sales group from four distinct sales teams to a consolidated enterprise sales organization. This allows customers to buy regional, national and brokerage services from a single point of contact at YRCW, while introducing existing customers to additional operating companies that they are not currently doing business with. I'm proud of the team at HNRY Logistics as they continue to see double-digit revenue growth, even in a tough environment. HNRY Logistics is the perfect complement to the LTL competency of Holland, New Penn, Reddaway and YRC Freight.
Inclosing, the core of our business is taking great care of the customer, understanding what they want, then delivering it where and when the customer directs. We will always have a truck ready to go, a team of people behind it and the latest technology to make it simple and easy.
https://seekingalpha.com/article/42...-results-earnings-call-transcript?part=single
Thank you, Bri and good morning everyone. Thanks for joining our second quarter earnings call. I believe we have successfully reset the runway in 2019 to provide the foundation for our multiyear strategy. The ratification of our labor agreement, which occurred in the middle of Q2, was our number one priority for 2019. However, the timing of the labor agreement delayed operational benefits, which combined with the April 1 effective date for wage and vacation benefits, costs us several 100 basis points of financial performance.
These results are not unexpected and reflect customer hesitation, while waiting for a fully ratified labor agreement along with muted demand. Fortunately, the customer concern was removed with the announcement of the ratified five-year labor agreement, and now we have a clean runway to execute our strategic plan. The transformation pain experienced in Q2 paves the way for the $60 million to $80 million of margin expansion expected in 2020.
Concerning 2019, transportation market conditions have been softer, suggesting that the U.S. economy and the freight economy are not entirely in sync. Transportation volumes appear to be more sluggish as company supply chains were faced with tariffs, and other situations that forced them to overstock inventory. I am encouraged by the July tonnage trends, while still negative when compared to prior year, the trends are moving in the right direction.
We have been very methodical in our approach to stabilize our company over the last several years as the Moody's upgrade recently highlighted. Cost reductions are well underway with a current annualized run rate of $25 million for those initiated in Q2 through headcount reductions and back office consolidations. In a family of companies, it always makes sense to have operational and customer engagement coordination. We will continue to move rapidly with consolidation efforts to be more efficient with our equipments, our facilities and our people.
As we look beyond Q2, our path forward is clear. We are focused on rapid deployment of our multiyear strategic plan to truly demonstrate the profitable earnings power of the company. The first step in that plan was the labor contract and the implementation of the operational flexibilities. With that hurdle out of the way, and a clear five-year runway, the next steps are network optimization, capital structure changes, continued capital investments and customer growth.
Network optimization is basically driving full utilization of our property and freight density footprint across our asset based companies. Make no mistake, there is power in having four asset brands in the marketplace, as each brings unique value to our customers with three best-in-class regional LTL companies and then the size, scope and endless capabilities of YRC Freight to go anywhere in North America.
As at any holding company, YRCW will be intentional in expanding revenue across the individual brands, but also in achieving the efficiencies available by having the companies work in closer coordination. We have identified approximately 25 service centers for consolidation by the end of December 2019, bringing our projected service centers to approximately 360 by the end of the year. And we believe this just scratches the surface. The disposition of these owned and leased properties in the near term are expected to generate additional cash proceeds of approximately $25 million by early 2020.
As this opportunity is repeated throughout our network, we will build density by reducing miles, gain efficiencies with our equipment, while also reducing our burden on continued capital investment needs and improve our service to customers. The potential of rapidly benefiting from network, equipment and resource efficiencies, at the same time, we are expanding our customer value proposition is an exciting opportunity for YRCW.
The next important step in our long-term strategic plan is the pursuit of new financing alternatives to replace our existing term-loan to provide less restrictive covenants, reduce interest rates and extended maturity. Concerning growth, taking great care of the customer is always at the top of the list. Creating simplified engagement for customers and an increased service offering are a critical part of our strategic focus on customer growth and engagement.
We recently announced the addition of Jason Bergman as Chief Customer Officer, and a restructuring of our sales group from four distinct sales teams to a consolidated enterprise sales organization. This allows customers to buy regional, national and brokerage services from a single point of contact at YRCW, while introducing existing customers to additional operating companies that they are not currently doing business with. I'm proud of the team at HNRY Logistics as they continue to see double-digit revenue growth, even in a tough environment. HNRY Logistics is the perfect complement to the LTL competency of Holland, New Penn, Reddaway and YRC Freight.
Inclosing, the core of our business is taking great care of the customer, understanding what they want, then delivering it where and when the customer directs. We will always have a truck ready to go, a team of people behind it and the latest technology to make it simple and easy.
https://seekingalpha.com/article/42...-results-earnings-call-transcript?part=single
:! It did. I never got a nickel but they paid in the grievances. I know they did.