Letter sent by Jamie Pierson.... Posted on Teamsters Website
To: YRC Freight Employees, YRC Worldwide VPs and above
From: Jamie Pierson, Chief Financial Officer, YRC Worldwide
Subject: Responding to Noise in the Marketplace
The first quarter is drawing to an end and we have a lot to be proud of as we continue to focus on regaining our position as the North American LTL service leader. Our month-over-month service levels are improving and volumes are increasing as well. YRC Freight continues to improve, and the next step in network optimization will bring significant efficiencies. The Holland, Reddaway and New Penn teams are building on their success with continued progress.
Our customers are acknowledging our work and giving us a vote of confidence by sending more shipments our way. Just in the last few weeks, we had a major victory as our largest customer re-signed with us for three years. I had a chance to visit with their transportation team along with James Welch. We had a candid discussion with them about our business plan and our financials. This customer has what is one of the most sophisticated supply chains in the world. They once again chose our companies as their lead LTL partner. Thanks to all of you, this customer returned in a big way, and this is a big victory for all of us. Other large national accounts are rejoining, too, as our service has improved.
There will still be noise in the marketplace, and when we hear that noise, I want you not only to drown it out, but also to continue to prove them wrong. I want you to shout from the mountain tops that, not only are we still here, we are well on our way to regaining our leadership position in the LTL industry.
Yesterday Bloomberg News ran a story about our company that was filled with references from our 2009 filings with the SEC. The article also brought up that we recently disclosed a “going concern” opinion. We have disclosed going concern opinions in each of the previous two years, and guess what? After each opinion was issued, the sun came up and thousands of our drivers were dispatched to pick up tens of thousands of our customers’ shipments and transport them through our comprehensive LTL networks. No disruptions occurred then nor will they now. Let’s not be distracted by this as it was based on now-dated business plans by previous management that do not include our collective, intense focus on being the best LTL carrier in North America and our renewed focus on the roots and heritage of what we do every day.
This is our time and your company. You are already making a positive difference. I meet with our lenders on a regular basis, and they see our progress. James works continuously with the Board, and they’ve also learned of your commitment and have witnessed it firsthand by visiting service centers and meeting many of you. Most important, as I mentioned before, is the fact that our customers are acknowledging our positive momentum via returning their very valuable business to us.
Below are some talking points we put together for you to clarify the Bloomberg story. Please let us know what you are hearing in the marketplace. And if our competitors try to mislead our customers, be sure to tell the real story and do so with passion and pride.
Thank you for your hard work and dedication. -- Jamie
Talking Points, Bloomberg story
The Bloomberg article, released to the news wires Monday, March 19, contends that YRCW is “back on the brink” of financial distress. In the article, data provider CMA is quoted as saying that credit-fault swaps tied to the company imply an “87 percent chance of default.” The story also quotes an analyst from Moody’s Investors Service as saying there’s a “fairly high likelihood” that YRCW will be “in default or in a distressed situation” over the next year to 18 months.
In the article, Jamie Pierson, Chief Financial Officer-YRCW, vehemently disagreed with the dire outlook described by analysts. He pointed out that the current financial covenant package and corresponding forecast were set by a previous management team. He is quoted as saying the YRCW management team “fully anticipates resetting the covenants so that we will be in compliance the second quarter and beyond.”
Resetting covenants will require the approval of our credit facility lenders, who recently showed their support by approving amendments to our credit facilities to permit the going concern language in our 10-K.
The opinions expressed in the Bloomberg article do not change management’s view of the future one bit. We are pleased with our renewed focus on customer service and think we have established momentum for a successful turnaround.
Bloomberg chose to generate its story from past SEC filings, including information from 2009, while leaving out a critically important emphasis about the current direction of our company. We are now focused on our core North American LTL operations and there is a bright line of distinction between the company we once were and the new evolution of YRC Freight.
We are focused on service as never before, and our service is improving month over month. Business volumes are increasing, and customers are giving us a vote of confidence by returning more business to the new YRC Freight.
Here’s the most important thing to remember: We’ve seen this “noise” in the marketplace before. It will not affect our operations or our ability to provide uninterrupted transportation services to our valued customers.
After years of financial challenges, YRC Worldwide, and our brands--including the newly named YRC Freight--are now well positioned for long-term success in the LTL industry. Here are proof points in this regard:
We have worked through two previous “going concerns,” and we fully anticipated the latest going concern opinion.
We’ve received votes of confidence from our customers very recently, we have a business plan that’s working and perhaps most important, we have teams of employees dedicated to help us regain our leadership position in our core North American LTL business. We will not allow ourselves to be distracted by media reports and speculation.
Our service levels at YRC Freight are showing continuous improvement for the past five months.
We’ve increased market share at YRC Freight.
We ended third quarter 2011 with the best liquidity position since 2008 and ended 2011 within $2 million of that level. Assets not related to core North American LTL operations are being divested. We are positively comped on a year-over-year basis for each of the last four quarters.
We are moving forward with volume increases and month-over-month improvements in on-time service for our customers. That is being proved in our year-over-year positive EBIDTA increases (Earnings Before Interest, Depreciation, Taxes, Amortization).
Our liquidity position, combined with our positive, year-over-year operating results, has the company in the best position in years.
We have received very high levels of support from our lenders in our previous amendments, and there is no reason to think we won’t get the same enthusiastic support this time, either.
Winning Back Customers
Our precision focus on service is helping us win back customers.
To emphasize our customers’ confidence in us and the new management team, one of our largest customers just re-signed with us for another three years. We also just landed a significant new piece of business from another large, nationally recognized company that had been on the sidelines waiting for our service to improve.
Similarly, two other specialty retailers with national accounts have awarded the company large-scale shipments planned over a number of years. Combined, all this is yet another vote of confidence for our leadership team, our employees and our focus on being the best North American LTL carrier in the industry.
Our growth numbers speak for themselves and the bottom line. We are one of the largest LTL carriers when you combine the revenues of the four operating companies (YRC Freight, Holland, New Penn and Reddaway).
We have successfully locked down market-competitive labor costs for the next three years and we’ve extended maturities for our larger debt obligations. We also have a renewed sense of enthusiasm and dedication by our employees.