YRC Worldwide Inc (YRCW)

[sludgehound]

2nd Update, CEO comments

2nd UPDATE: YRC Worldwide 3Q Loss Widens On Derivatives Impacts

Last update: 11/4/2011 12:50:15 PM

--Reverse split expected to win approval

--New CEO giving regional units more autonomy

--CEO Sees progress but not satisfied yet

(Updates beginning in third paragraph with CEO interview, additional detail and stock activity.)

By Bob Sechler
Of DOW JONES NEWSWIRES

YRC Worldwide Inc. (YRCW) reported third-quarter increases in revenue and freight volume Friday, but the struggling trucking company said its loss widened sharply on higher operating costs and a big charge stemming from a change in the fair-value of convertible debt in the wake of its recent financial restructuring.

Meanwhile, YRC executives said the company is aiming to conduct a reverse stock split by mid December to boost its share price--trading recently around 5 cents--above $1 and head off delisting by the Nasdaq stock market. Under the reverse split, YRC said it will exchange up to 300 shares for one, although the precise formula hasn't been set yet.

The Overland Park, Kan., company plans to hold a shareholder vote on the reverse split at its annual meeting Nov. 30. The measure is expected to win approval easily, however, after the number of YRC outstanding common shares ballooned to 1.9 billion, from 48 million, upon the conversion of preferred shares in September.

YRC reported a third-quarter loss of $119.8 million Friday, compared with a year-earlier loss of $61.7 million. On a per-share basis, which includes the impact of preferred shares as well as the big jump in shares outstanding following the recent restructuring, the loss narrowed to 51 cents from $1.33. The latest period included charges of $79 million related to a change in the fair-value of convertible debt.

Revenue increased 13% to $841.6 million, while overall operating expenses were up by a similar amount.

Analysts polled by Thomson Reuters most recently forecast a loss of 36 cents on revenue of $1.28 billion.

Debt-laden YRC has been attempting to fend off bankruptcy since late 2009, and new Chief Executive James Welch--who retired in early 2007 as head of the company's Yellow Transportation unit--was brought on board in July after the company closed its latest restructured considered key to its survival.

Welch noted Friday that he recently completed his 100th day at the helm and has been pleased with the progress so far. But "we still have much to do, no doubt, and I'm not at all satisfied" with it, he said.

Among other efforts, he has been working to streamline YRC's management structure to allow its regional transportation units--Holland, Reddaway and New Penn--to operate more autonomously and "let them do what they do best." Welch left YRC at a time when it was consolidating operations under its main holding company, and he indicated in an interview Friday that he thinks the strategy was a mistake.

"How has it worked over the last three to four years? Not very good," he said.

Welch described the overall economy as lukewarm, but said he expects YRC's fourth-quarter freight volume to rise compared to the year-ago period.

Third-quarter tonnage per day was up 4.2% in YRC's national division, compared to the year-ago period, and 5.6% in its regional division.

"The company is just improving its ability to compete, and it's kind of recovering from this whole restructuring process," Welch said. Overall, however, "I kind of see the economy going sideways--not deteriorating but not improving significantly," he said.

Revenue from the national segment rose 12% helping its operating loss narrow. The regional business saw revenue growth of 14% helping boost operating earnings 25%. Both segments benefited from improved rates, as well as the higher volumes.

Shares closed Thursday at 6 cents. Through Thursday's close, the stock is down 98% this year. YRC's stock plunged in September after shareholders at a special meeting approved a measure substantially increasing the number of common shares available for trading as part of the company's financial restructuring.

YRC had described bankruptcy as likely its only option without the recent financial restructuring.

-By Bob Sechler, Dow Jones Newswires; 512-258-1690; [e-mail]

--Tess Stynes contributed to this report.

(END) Dow Jones Newswires

November 04, 2011 12:50 ET (16:50 GMT)