YRC Worldwide Inc (YRCW)

[MagicCap]

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.