Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
we'll be eagerly awaiting :)
Just traded more in the last minute than it did two days last week. Funny stuff.
that's what i'm saying.
YRCW still only trades at 0.06 price to sales (fully diluted). Look at its competitors whose values have gone up since this:
ABFS: 0.15
CNW: 0.34
ODFL: 1.50
SAIA: 0.58
SWFT: 0.59
WERN: 0.84
JBHT: 1.50
The average p/s is 0.79 or 13 times YRCW's valuation, assuming all convertible notes convert into common stock. The lowest one is ABFS which is still valued at 150% of YRCW's valuation.
that's what i'm saying.
YRCW still only trades at 0.06 price to sales (fully diluted). Look at its competitors whose values have gone up since this:
ABFS: 0.15
CNW: 0.34
ODFL: 1.50
SAIA: 0.58
SWFT: 0.59
WERN: 0.84
JBHT: 1.50
The average p/s is 0.79 or 13 times YRCW's valuation, assuming all convertible notes convert into common stock. The lowest one is ABFS which is still valued at 150% of YRCW's valuation.
Crazy thing is it still only trades at 0.06 price to sales (fully diluted). Look at its competitors whose values have gone up since this:
http://static.cdn-seekingalpha.com/uploads/2013/2/21/167303-13614377149590497-Jonathan-Verenger.jpg
FWLT from 2005 is a good parallel. Similar scenario with lots of debt, big convertible notes, negative equity, FWLT had outstanding asbestos liabilities in the billions (like the pension liab with YRCW). It went from $4 to $80 in a span of about 30 months.
The overriding factor, though, in both cases: a huge improvement in operating income, then net income, then restructuring debt.
Good luck. All I care is $40 in 2014. By then I will be able to retire like a fat cat.
well make sure you let us know either way :) We're waiting with bated breath.
hey to each his own. we have all seen our share of sharp pullbacks with this stock before going higher so who's to say you won't make a little money.
i still see this at $30+ in 2014, despite my frustrations with the stock from time to time.
Positive EPS coming by Q3. Could do some eye popping numbers in that quarter with the network improvements in effect.
"Like Lazarus arisen from the dead, the one-time corpse known as YRC Worldwide Inc. was out in force at last month's NASSTRAC annual meeting in Orlando, Fla. The less-than-truckload (LTL) carrier's exhibition booth was abuzz with activity, with CEO James L. Welch smiling and glad-handing shippers and third-party logistics service providers."
http://www.dcvelocity.com/articles/20130501-a-tale-of-two-truckers/
Good interview with CEO James Welch...sounds like continual improvement.
http://www.logisticsmgmt.com/article/qa_yrc_worldwide_ceo_james_welch
another stellar move down today.
i'm just kidding by the way. though mentally i checked out a while ago!
Good luck everyone. I'm out!
Semantics...I was referring to $5.99!
It's only $1 away. That could happen in one day knowing this POS
I'm over this POS stock. I understand the market is tanking and all but the selling pressure is just relentless.
Another stellar day. WTF.
anyone listen to the abf hearing?
http://www.tdu.org/news/abf-v-ibt-yrc-hearing
Refinancing Debt in Future:
Expect something similar to this to happen to YRCW in 2014...after they have reported several quarters in a row of positive EPS:
http://finance.yahoo.com/news/susser-holdings-refinance-senior-notes-202900418.html
As I mentioned before, just the convertible notes alone, when converted, will boost EPS by over $1.00 fully diluted (using 22 million shares). For each 1% lower interest rate they get on their remaining debt ($1.1 billion after excluding convertible notes) they will boost EPS by $0.50.
I could easily paint a picture over the next 3 years where they convert all notes, return to profitability and slowly repay debt, refinance their remaining debt and generate in excess of $5 EPS. All based on marginal growth (i.e., 2 to 5%) on the top line.
Bob coming in with his monthly rant!
Let's keep in mind, though, it's still a POS!
when it was under a dollar it was worth a lot more than it is today due to reverse splits. this is right around the cheapest its ever been, despite showing nice trends in operating income and gross margins.
It's priced at less than 0.03 times sales based on fully diluted shares. The average company in the industry trades at 0.40. I think some of those risks are priced in and then some.
By the way you can't find a single analyst calling for $9 million in profits (excluding make whole premiums on conv notes (one time expenses) for q3 and you definitely can't find anyone calling for fully diluted eps of $3 in 2014. Everyone is focused on the negatives and past management problems. I like being alone when it comes to investments
Here are my estimates for 2014:
Q1 2013:
Revenues: $1,273 Million (+5.0%)
Gross Profit: $840
Expenses: $808
Operating Income: $32
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $32
Net Income (Loss): $(0) Million
Diluted EPS: $(0.03)
Q2 2013:
Revenues: $1,357 Million (+6.0%)
Gross Profit: $912
Expenses: $862
Operating Income: $50
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $21 Million
Diluted EPS: $1.00
Q3 2013:
Revenues: $1,357 Million (+6.0%)
Gross Profit: $919
Expenses: $863
Operating Income: $56
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $27 Million
Diluted EPS: $1.30
Q4 2013:
Revenues: $1,289 Million (+6.0%)
Gross Profit: $863
Expenses: $818
Operating Income: $45
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $16 Million
Diluted EPS: $0.75
Some Assumptions:
*Network improvements are approved and are in full effect in 2014. Improvements yield $6 million per quarter in cost savings.
*Conversions reduce int expense by $3 Million in Q1 2014, then $6 million per quarter thereafter as they are fully converted.
*Margins are 66% in Q1, 67.25% in Q2, 67.7% in Q3, and 67.0% in Q4
*Expenses as % of revenue are the same as they were in Q4 2012.
*Assumption is all convertible notes have converted in calculation of EPS. Therefore, I'm using 21 million shares outstanding.
*My top line growth estimates of 5.9% for the year are below street estimates of 10% for conservative reasons.
*I'm not taking into account possible debt refinancing resulting in lower interest expense which would happen if they can return to sustained profitability. This could reduce interest expense by at least 10% (i.e., $0.60+ EPS boost)
Here are my estimates for 2013:
Q1 2013:
Revenues: $1,212 Million (+1.5%)
Gross Profit: $794
Expenses: $782
Operating Income: $12
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $35
Net Income (Loss): $(23) Million
Diluted EPS: $(1.09)
Q2 2013:
Revenues: $1,280 Million (+2.3%)
Gross Profit: $858
Expenses: $824
Operating Income: $34
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $35
Net Income (Loss): $(1) Million
Diluted EPS: $(0.01)
Q3 2013:
Revenues: $1,280 Million (+3.5%)
Gross Profit: $864
Expenses: $820
Operating Income: $44
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $35
Net Income (Loss): $9 Million
Diluted EPS: $0.45
Q4 2013:
Revenues: $1,216 Million (+4.0%)
Gross Profit: $810
Expenses: $772
Operating Income: $38
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $32
Net Income (Loss): $6 Million
Diluted EPS: $0.27
Some Assumptions:
*Network improvements are approved and going into partial effect in Q2 then full effect in Q3/4. Improvements yield $6 million per quarter in cost savings
*Conversions reduce int expense by $3 Million in Q4 2013.
*Margins are 65.5% in Q1, 67% in Q2, 67.5% in Q3, and 66.6% in Q4
*Expenses as % of revenue are slightly higher than they were in Q4 2012.
*Assumption is all convertible notes have converted in calculation of EPS. Therefore, I'm using 21 million shares outstanding.
Re-read my post. Those were q3 estimates
There are convertibles that will come on the market in July...the series A convertibles. The series B are converting right now. This is keeping a lid on things but I suspect when Q2 and Q3 results are reported a good chunk of those people converting their notes won't be selling.
Last year they showed $151 million in interest expense, but $11 million of that was related to the interest on the convertible notes. Per the 10-k: "Upon conversion, during the year ended December 31, 2012, we recorded $10.6 million of additional interest expense representing the $5.1 million make whole premium and $5.5 million of accelerated amortization of the discount on Series B Notes converted."
So total interest is $140 million. Again, $24 million of that is related to the convertible notes. So $116 million after they convert or $29 million per quarter. In Q3 they did $30 million in operating income. So they were basically break even.
Now look at what just 4% higher revenues do:
$50 million increase on top line
$33 million gross profit (using 67% margins...same as PY)
$31 million in expense
$2 million in profit (or $0.10 EPS, fully diluted)
Now consider the network changes they proposed, if they get approved:
$25 to $30 million or $6 to $7 million per quarter
Add these up:
$2 + ($6 to $7) = $8 to $9 million for Q3.
BOTTOM LINE:
Use 21 million diluted shares and you get $0.40 to $0.45 EPS
(keep in mind they're still cutting costs and improving margins so there is upside potential there over time. and analysts are expecting 10% growth in 2014...if those happen it could translate into much better numbers in 2014).
I'm thinking $3+ EPS in 2013, fully diluted. It all depends on what the multiple is that people are willing to pay if it gets there. My guess is if it hits this level then $30 to $50 by the end of next year.
My estimates don't take into account the potential positive impact from renegotiated loans if they can put up a couple of profitable quarters. That will definitely happen and Rogers mentioned it in the BB&T presentation. The amount of leverage in this company relative to the market cap, even with all of the convertible notes taken into account, is crazy. Fully diluted right now the company is worth about $140 million. On sales of $4.9 billion. That's a price to sales of 0.029. It doesn't take much revenue growth to make a significant impact on the bottom line.
like I said, the convertible notes are actually a good thing longer term. They will lower interest expense by $24 million annually. So even though the share count goes up about 12-13 million from here (from 9 million to 21-22 million), EPS goes up over $2.00 from lower interest expense. That's huge.
Today is a prime example of what I'm referring to when I say it's trading like a POS.
well it certainly has been trading like a POS! that takes nothing away from it being ridiculously cheap.
Some investors get scared off by the dilution factor from convertible notes. The dilution factor is an issue and there have been conversions (just read the "Conversions" section on the 10k). This is diluting the stock. However, I don't think it's all negative. There is $24 million in annual interest expense tied to these convertible notes that will go away, which would improve earnings by over $1 per share (fully diluted). That's huge and something people should definitely keep in mind.
And the conversions will provide enough liquidity to allow larger investors to get in. If they can get back to breakeven or better by Q2 or Q3 institutions will have better comfort with the stock and with the conversions occurring the stock should rise because the earnings boost will offset the dilution. It will just take time.
Any way you slice it though the stock looks incredibly cheap on a fully diluted share count. They will have about 21 million shares after all conversions. That means the company is worth about $130 million right now fully diluted. I've posted before that I think they can do $0.40 to $0.50 EPS by Q3 after factoring in some conversions (i.e., lower interest expense) and some reductions in their network expenses. There is no way the market is pricing this in.
If you take the full benefit of lower interest expenses from conversions and lower costs from the network improvements into account and adjust for modest top line growth of 4-5% (analysts are projecting 10%) and margins of 67%, you could easily project $3 EPS, fully diluted, for 2014. What do you think the stock would trade for then? It certainly won't be $7 per share.
This isn't the work of shorts. It's the work of convertible notes.
So much for support. There is no limit to the number of sellers on this
Wow what a POS.
Looks like the joke is on us for not selling. I'm assuming people are converting the notes and selling the shares. That's the only reason why every buy is met with 3 times as many sells because the fundamentals of the business continue to improve.
it's probably too early to say that. lets get back into the $8's first ok?
Everyone needs to listen to this presentation:
http://wsw.com/webcast/bbt24/yrcw/
A little less than 28 minutes in Jeff Rogers was asked about margin expansion and profitable customer mix. He said he doesn't see any reason why they don't return to historical averages. If I look at the 10ks from 2005/4 they were operating at a 6 to 7% operating margin. With all of the cuts in overhead expenses and proposed line haul / network cuts, I bet they can at least achieve this in the next year or so. That would result in $300 million in operating income on $5 billion in sales. Back out $150 million in interest expenses and you have $150 million in Net Income. on a fully diluted share count of 21 million shares (assuming 13 million shares convert at $14 and $34, respectively) that's over $7.00 EPS. Slap a 12 p/e on that and you get $85/share.
Let's look at it this way though...from the top down and using 2012 numbers as a guide:
SALES:
$4.86 billion in sales in 2012 x 3% growth
=$5.01 billion
GROSS MARGINS:
margins were 67% avg for Q2 to Q4 2012. Let's use that:
$5.01 * 0.67 = $3.354 billion operating income
EXPENSES:
SG&A expenses went down from 59% of revenues in Q1 to 56.2% in Q4. Let's assume they average 55.7% in 2013.
Dep Exp went down from 4.1% of revenues in Q1 to an average of 3.69% in Q2-Q4. Let's assume they stay at 3.69% in 2013.
Other expenses went down from 6.37% of revenues in Q1 to 4.02% in Q4. Let's assume they go down to 3.82% in 2013.
If I add up all expenses I get 63.21%. 63.21% of $5.01 billion results total expenses of $3.164 billion.
NET INCOME (LOSS):
Take gross income less total expenses and you get $189 million. Interest expense in 2012 was $151 million. Back that out and you get $38 million in net profit in 2013. On a current share count of roughly 8 million shares that results in EPS of $4.80. On a fully diluted basis that yields EPS of $1.85 (although with $24 million less in interest expense (as a result of the convertible bonds being converted and therefore resulting in lower interest expense) it would then boost EPS by over $1.20 to bring the total to around $3.00).
END RESULT:
Either way I'm getting to $3 to $7.00 in EPS in 2013 / 2014. On a fully diluted basis. Anyone think this is priced into the stock at $7.90?
Not looking so hot now...you could get your wish.