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If the market does correct I wouldn't be surprised to see the $6's again. Having been in the market for 20 years I've seen so much wackiness that nothing surprises me. Longer term the turnaround will continue to gain strength and patient investors should be rewarded big time. The short term? Who the h*ll knows.
There was a big sell order on the ask on Friday of like 25,000 shares. That has dwindled down to 5,000 shares. Let's get through that and see if we can get some momentum.
Doesn't really matter longer term. After we get through the market consolidation/correction YRCW should head much higher.
Good luck everyone.
the market will wake up to the enormous operating leverage here.
no one on the street is calling for $3 EPS fully diluted (after conversions) but that's what i'm betting in 2014. and this is not even taking into account the reduced int expense from those conversions of $24 million annually ($3 EPS now or $1.20 EPS after conversions).
this is why i'm thinking this is one of the most undervalued stocks i've seen. this is FWLT (circa 2005) all over again.
I think you'll see a few impatient traders bailing here for a little bit longer. there were a lot of shares purchased in the high $8's and $9's and you know how those momentum guys work. If it doesn't go straight up after they buy they get antsy and bail within a day or two. I'd love to see the P & L on some of those "traders". gotta be ugly. anyone with a decent amount of patience on this should make out extremely well. nothing is a guarantee of course but this is one of the cheapest stocks I've seen in a long long time.
Yeah should be fun to watch how it all plays out. Very volatile stock but I see it going much higher within a couple of years. Not many people realize that they actually grew revenues 1.7% last year if you back out the truckload segment from the 2011 #'s (this segment was sold). and that is during a period when they only focused on cutting costs and getting rid of non-profitable customers (they have said numerous times that 2013 is a year of growth now that the restructuring is largely finished). in 2013 if they grow 3% the amount of leverage is astronomical. It would yield $150 MM in revenues and $100 Million in gross profits. A 4% topline growth # basically wipes out the annual interest expense. Think about that...4% growth and the annual interest expense is gone.
If they do 67% margins all year, which is what they averaged for the last 3 quarters of 2012, then they will be able to post some eye popping positive EPS numbers with just 2.5 to 3.5% growth. And yes that is AFTER including the $150 million in interest expenses.
The market is too focused on the pension obligations and debt when it should be focused on gross margins and trends in operating income. I don't expect Q1 to be that great but look out come Q2 or Q3.
positives market isn't factoring in:
*no major debt deadlines til late 2014
*positive EPS quarter coming very soon...possibly as soon as Q2 or Q3
*possible significant reductions in costs with proposed network rationalization
*economy appears to be strengthening, any upside to top line results in massive leverage
*p/s of 0.013 or 0.03 if you factor in share conversions (vs industry avg of 0.40 and 0.15 for ABFS (lowest in group))
*deal with MAEVA, turnaround specialist (http://www.sec.gov/Archives/edgar/data/716006/000071600613000003/yrcw-20121231xex1037.htm)
*pension reform in 2014 could result in positive outcome for YRCW (as hinted at on the BB&T presentation)
why should we?
I can think of a few...starting with huge increases in operating income and gross margins
well it is pretty clear that the takedown to the $5's was yet another one of those fakeouts to give the bigger players a chance to load up. I'm glad I had cash to take advantage of it.
I still believe they get to the $40's in 2014. Lots more to go. I see a +$1 EPS quarter in Q2 or Q3 of this year.
This is part of their network improvements...kind of like getting rid of a middle man. Will be interesting to see how they do in Q2/Q3 when their strongest quarters hit. Is the market ready for a +$1 EPS quarter?
Nice day so far. Lots more to go over the coming years.
maybe end of month. one step at a time...let's get above the highs from the day after earnings.
whoa whoa whoa! let's get above $8.25 first huh!? i think there is a good deal of supply to get through around this level because people that bought after earnings are itching to get out at even. hopefully we barrel through this today.
Anything is possible. If it trades at the industry avg p/s of 0.40 it would be worth $2 Billion. If you assume fully diluted shares of 20 million then that would be $100 / share. remember that the int expense would drop quite a bit if they do convert shares so while it is dilutive it would also increase EPS.
Back in 2006 it was worth around $3.5 billion to $4 billion on sales of around $9 billion (again, p/s of around 0.40). i think going forward the company will be better managed in terms of expenses but it will be penalized for higher debt levels. i think a p/s of 0.2 to 0.30 is reasonable within a few years.
let's give it a year and see how many analysts are hopping back on this turnaround story...when it's in the 40's.
my thoughts are this is the best turnaround i have seen in a while.
you guys are aware that these were surrendered and not sold to pay for state and federal withholding taxes, right? i think it's more telling that they decided not to sell all of the shares granted to them...
Take a look at how fwlt traded back in 04/05...I think we see a similar move here. Circumstances were similar there as was.
I don't know if you guys got a chance to listen to these two calls, done on the same day by Stephanie Fisher and Jeff Rogers...Fisher sounds kind of nervous...she was a last second fill-in for Jamie Pierson who was sick:
http://investors.yrcw.com/index.cfm
Anyway, some good stuff on there. On the BB&T presentation, on the 2nd or 3rd question the topic of debt and how they're going to repay it comes up. I found the discussion really interesting and it gives me confidence that these guys are getting things geared up for a nice 2013 and 2014. they are clear to say they are overleveraged but that they have some things in the works and they have breathing room to just focus on execution because there are no major debt deadlines looming. they also talked about pension reform and how even though they don't know what the impact will be they're pretty sure it will be at least neutral if not positive for them. this will happen in 2014/5.
i was also digging around more and saw they just did a deal with this company MAEVA, which is a company that specializes in turnarounds.
http://www.sec.gov/Archives/edgar/data/716006/000071600613000003/yrcw-20121231xex1037.htm
"As set forth more fully below, MAEVA will advise the Company with regard to one or more potential value enhancing events, transactions and/or strategic initiatives involving the Company." I wonder if this is what they were hinting at as far as some ways to reduce leverage in the near term. There was a portion of one of these calls...can't remember which one...that talked about some things they're looking at in terms of cutting costs on their long hauls, if memory serves me right. I have to listen again because I just remember making a mental note of it when I was listening and then I came across this and started putting 2 and 2 together...
anyway, the founder of this company is Harry J. Wilson who was involved in numerous turnaround / restructuring events including GM/Chrysler (he was on that auto task force thing back in 2009), Hostess, and he was involved in the restructuring of YRCW in 2011. here is his background:
http://www.teamster.org/sites/teamster.org/files/Wilson_Report_as_Filed_Redacted_(00216121)_c.PDF
i don't know what kind of value enhancing events they are considering but I also noticed when i looked at the insider buys/sells that Harry Wilson bought about 10,000 shares of the company on the open market back at the end of August:
http://finance.yahoo.com/q/it?s=YRCW+Insider+Transactions
this guy has had access to the company's books and specializes in turnarounds so i think it's at least a small vote of confidence.
YRCW posted +$4 million in free cash flow in q4. Not sure if you guys noticed that.
Keep in mind that pre-crisis when the company was horribly managed they were doing $200 to $300 Million in net income. Revenues were a good deal higher, but the company was losing money in several divisions that YRC has sold off since so a lot of those revenues were unprofitable. The company is now managed much better and I believe they will return to this level of profitability within 3 to 4 years. All they are focused on right now is getting everything in their operations run efficiently and putting systems in place to operate flawlessly. After everything is in place they will focus on profitable revenue growth and when that happens what do you think the market will value the stock at? Even if you include the fully diluted shares of 21 million shares, it could be worth $100 to $150 a share on earnings of $100 Million (i.e., $100 Million net income x 20 p/e = $2 Billion divided by 21 million shares = approx $100/share).
First things first, though, they should return to positive net income by Q2/Q3 and I think the stock will trade in the mid teens by then. So long as they continue to show improvement in operating ratios in both segments, Freight and Regional, the stock is a huge buy. Probably one of the best investments in the market right now. They have a lot of negatives, for sure. Debt is high, pension obligations are an issue. However, they have the next 2 years to return to profitability and continue to improve their freight division before their next big debt payments are due. They have stated in their 10k that they have plenty of liquidity for the foreseeable future so it just comes down to continuing to perform.
Doesn't seem silly to me. What seems silly is when someone keeps trying to bash it with fake rumors of dilution etc and not acknowledging major improvements in operatin performance
Hehe u still think its a different series a convert huh?
Insiders at YRCW surrendered 36,312 shares on Wednesday to "pay taxes or cover the cost of an option exercise". Does anyone know if this is sold on the open market? It may have been the reason for the most recent dip and if so I would have to imagine it bounces right back up.
it's all in the 10k.
Oh boy. I'd recommend looking into it a little harder
I'm pretty sure you're actually under the impression that because it's dated October it's not the same Series A Convertible bonds, right?
Take a look at the description on your link in Table II:
http://files.shareholder.com/downloads/YRCW/0x0xS1209191-11-51413/716006/filing.pdf
Let me know what type of security it is. Sure looks like the Series A Convertible Notes huh?
From 10k:
""On July 22, 2011, we issued $140.0 million in aggregate principal of our Series A Convertible Senior Secured Notes ("Series A Notes") that bear interest at a stated rate of 10% per year and mature on March 31, 2015. Interest is payable on a semiannual basis in arrears only in-kind through the issuance of additional Series A Notes. As of December 31, 2012 and 2011, there was $161.2 million and $146.3 million in aggregate principal amount of Series A Notes outstanding, after giving effect to the payment in-kind of interest on the Series A Notes.
The Series A Notes are convertible into our common stock beginning July 22, 2013. After such time, subject to certain limitations on conversion and issuance of shares, holders may convert any outstanding Series A Notes into shares of our common stock at the conversion price per share of approximately $34.0059 and a conversion rate of 29.4067 common shares per $1,000 of the Series A Notes. See "Conversions" section below for additional details regarding conversions on our Series A Notes."
We believe that our results of operations and available funds pursuant to our ABL Facility will provide sufficient liquidity to fund our operations and meet our covenants for the foreseeable future, including the next twelve months.
Our ability to satisfy our liquidity needs beyond 2013 is dependent on a number of factors, some of which are outside of our control. These factors include:
•
we must continue to achieve improvements in our operating results which rely upon pricing and shipping volumes;
•
we must continue to comply with covenants and other terms of our credit facilities so as to have access to the borrowings available to us under them;
•
we must secure suitable lease financing arrangements for deferred replacement of revenue equipment;
•
we must continue to implement and realize cost saving measures to match our costs with business levels in a manner that does not harm operations and our productivity and efficiency initiatives must be successful;
•
we must be able to generate operating cash flows that are sufficient to meet the minimum cash balance requirement under our credit facilities, cash requirements for pension contributions to our single and multi employer pension funds, cash interest and principal payments on our funded debt, payments on our equipment leases, letter of credit fees under our credit facilities and for capital expenditures or additional lease payments for new revenue equipment; and
•
we must restructure or refinance our debt obligations prior to scheduled maturities in 2014 and 2015.
Not really coinciding with what hardasset is saying about "debt-for-equity conversions coming up in a few more months"
"This is already baked into the cake."
Clarify how it's already baked into the cake. Seriously, I'm curious what you're looking at.
"They have to renegotiate the debt to stop the conversions."
I believe the conversions don't come into play until $14 and $34, respectively. A far cry from $6.
"I think the report should mention another round of debt-for-equity conversions coming up in a few more months. "
That would make sense if they had debt due in the next few months. Nice try though. They will return to a net profit by Q2 of this year and be able to refinance their debt at significantly lower interest rates. The market is turning a blind eye to this turnaround but it won't be this way forever.
Man the market just never wants to reward the company for their turnaround efforts. It's really unbelievable. But it will make for a lot of excitement come Q2/Q3 when they return to net profits. I was in NLS for a while around $2 and saw the turnaround first hand...for months and months the market wouldn't reward shareholders and and pop was sold off and then some. Well now I'm having the last laugh as the stock is an absolute freight train.
I think the move up in YRCW is going to be even more impressive.
New institutional holders on YRCW:
http://www.sec.gov/Archives/edgar/data/716006/000119312513055926/d486208dsc13ga.htm
I've been buying shares in the $6.6 to $6.8 range. This turnaround story is really taking hold here. Very pleasantly surprised by the Q4 results given a historically weak quarter and negative impacts from Sandy. They're basically right around break even including int expenses and excluding one time stuff on what is normally a very weak quarter. I'm looking for another loss next qtr but I bet in Q2 or Q3 when they are in a strong quarter they will do $2 EPS per quarter. At $6 do you think the market is pricing this in?
you can't just keep using that parallel as a reason for investing in KMAG. seriously, based on fundamentals how can you see this supporting a price of greater than $0.01?
Equity Dropped quite a bit. Any ideas why? Do they have any covenants on equity?
smoke_em - again, just curious how you arrive at a target price of $0.10. can you send me the math on that? again, i'm not busting your ballz just curious what you're seeing.
what are your EPS / multiple estimates to get there? seriously i'm curious.
the only reason i brought up the trading halt which occurred back several months ago is because that hurts investors psychology and in my opinion would cap the upside.
i like this company just don't see how you get to the insane upside you're expecting.
smoke_em - how do you get to that price target? i just don't see it based on the current numbers being reported.