News Release Details

NASHVILLE, Tenn., Feb. 09, 2023 (GLOBE NEWSWIRE) -- Yellow Corporation (NASDAQ: YELL) reported results for the fourth quarter and year ended December 31, 2022.

Fourth quarter operating revenue was $1.200 billion and operating income was $40.3 million, which included a $28.2 million net gain on property disposals. In comparison, operating revenue in the fourth quarter of 2021 was $1.309 billion and operating income was $55.8 million.

Net loss for fourth quarter 2022 was $15.5 million, or $0.30 per share. This compares to a net loss of $44.7 million, or $0.88 per share, in the fourth quarter of 2021, which included a $54.9 million or $1.08 per share non-cash, non-operating settlement loss resulting from a Partial Pension Annuitization of the Company’s qualified non-union pension plans. Excluding the impact of the Partial Pension Annuitization, fourth quarter 2021 net income was $10.2 million, or $0.20 per share.

On a non-GAAP basis, the Company generated Adjusted EBITDA of $54.6 million in fourth quarter 2022 compared to $115.5 million in the prior-year comparable quarter (as detailed in the reconciliation below).

Operating revenue for full year 2022 was $5.245 billion and operating income was $197.8 million, which included a $38.0 million net gain on property disposals. This compares to full year 2021 operating revenue of $5.122 billion and operating income of $103.6 million.

Full year net income for 2022 was $21.8 million, or $0.42 per share, compared to a net loss in 2021 of $109.1 million, or $2.15 per share. Excluding the impact of the Partial Pension Annuitization, full year 2021 net loss was $54.2 million, or $1.07 per share.

Full year 2022 Adjusted EBITDA was $343.1 million compared to $306.0 million in 2021 (as detailed in the reconciliation below).

“In the fourth quarter, demand for LTL capacity decreased compared to the tight environment a year ago contributing to the decline in tonnage per workday,” said Darren Hawkins, chief executive officer. “The manufacturing sector’s strength began to waver, similar to the retail sector earlier in the year, pointing to a loss of economic momentum. In response, during the quarter we adjusted our workforce to align with the muted volume and we continued to closely manage the use of purchased transportation and other expenditures. Despite the near-term headwinds, the yield environment remains stable. We have stayed consistent with our strategy of improving the yield on the freight moving through Yellow’s network and for full year 2022, we reported the best operating income and operating ratio in 16 years.   

“Phase one of our network optimization that was successfully implemented in the western United States in September is operating as a super-regional carrier. For phase two we are working through a similar planning process as we did with phase one to ensure we have the best execution strategy for our customers, employees and shareholders. Phase two consists of legacy YRC Freight, Holland and New Penn terminals in the Midwest, Northeast and Southeast. Between these two phases approximately 90% of our network will be operating as a super-regional carrier. We expect to integrate the remaining 10% of the network in the central United States after we implement phase two. The network optimization is expected to improve asset utilization, enhance network efficiencies, lead to cost savings and create capacity without the need to add terminals.

“As we optimize the network, we plan to sell approximately 17 excess terminals that have overlapping service territories. We do not plan to sacrifice geographical service coverage or expect this to unfavorably impact customer service. In the fourth quarter we sold one of the excess terminals for approximately $31 million and the net proceeds were used to pay down a portion of the term loan. In early January, we also paid the outstanding $66 million balance of the CDA notes in compliance with the terms of the agreement. Reducing our outstanding debt by nearly $100 million is another important step on the path to refinancing and strengthening our capital structure,” concluded Hawkins.

Operational and Financial Update

• The operating ratio for fourth quarter 2022 was 96.6 compared to 95.7 in fourth quarter 2021.
  
  
• Including fuel surcharge, fourth quarter 2022 LTL revenue per hundredweight increased 21.1% and LTL revenue per shipment increased 17.8% compared to the same period in 2021. Excluding fuel surcharge, fourth quarter LTL revenue per hundredweight increased 12.4% and LTL revenue per shipment increased 9.3%.
  
  
• Fourth quarter 2022 LTL tonnage per workday decreased 25.1% when compared to fourth quarter 2021.
  
  
• During the fourth quarter 2021, the Company’s qualified non-union pension plans entered into a contract for a group annuity to transfer obligation to pay the remaining retirement benefits of approximately 3,700 plan participants to an insurance company (the “Partial Pension Annuitization”). The transfer included approximately $250 million in both plan obligations and plan assets. As a result of the Partial Pension Annuitization, the Company recorded a non-cash, non-operating settlement loss of $54.9 million, or $1.08 per share, reflecting the accelerated recognition of unamortized losses in these plans from the obligation that was settled.
  

Liquidity and Capital Expenditures Update

• The Company’s available liquidity, which is comprised of cash and cash equivalents and Managed Accessibility (as detailed in the supplemental information provided below) under its ABL facility, was $241.8 million as of December 31, 2022, compared to $358.8 million a year ago.
  
  
• The Company’s outstanding debt was $1.575 billion as of December 31, 2022, compared to $1.615 billion as of December 31, 2021.
  
  
• On January 3, 2023, the Company paid the remaining $66.0 million outstanding balance of its Contribution Deferral Agreement notes in compliance with the terms of the agreement.
  
  
• For full year 2022, cash provided by operating activities was $121.3 million compared to $10.2 million in 2021.
  
  
• In fourth quarter 2022, the Company invested $51.1 million in capital expenditures. This compares to $54.7 million in fourth quarter 2021. Full year 2022 capital expenditures were $191.8 million compared to $497.6 million in 2021.
  

Key Information – Fourth quarter 2022 compared to fourth quarter 2021

Key Information – Full year 2022 compared to full year 2021

      (a)   Percent change based on unrounded figures and not the rounded figures presented


Review of Financial Results

Yellow Corporation will host a conference call with the investment community today, Thursday, February 9, 2023, beginning at 4:30 p.m. ET.

A live audio webcast of the conference call and presentation slides will be available on Yellow Corporation’s website www.myyellow.com. A replay of the webcast will also be available at www.myyellow.com.

Non-GAAP Financial Measures

EBITDA is a non-GAAP measure that reflects the company’s earnings before interest, taxes, depreciation, and amortization expense. Adjusted EBITDA is a non-GAAP measure that reflects EBITDA, and further adjusts for letter of credit fees, equity-based compensation expense, net gains or losses on property disposals, restructuring charges, transaction costs related to issuances of debt, non-recurring consulting fees, non-cash impairment charges and the gains or losses from permitted dispositions, discontinued operations, and certain non-cash expenses, charges and losses (provided that if any of such non-cash expenses, charges or losses represents an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period will be subtracted from Adjusted EBITDA in such future period to the extent paid). Adjusted EBITDA as used herein is defined as Consolidated EBITDA in our UST Credit Agreements and Term Loan Agreement (collectively, the “TL Agreements”). EBITDA and Adjusted EBITDA are used for internal management purposes as a financial measure that reflects the company’s core operating performance. In addition, management uses Adjusted EBITDA to measure compliance with financial covenants in our TL Agreements and to determine certain incentive compensation. We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors and other users as these measures represent key supplemental information our management uses to compare and evaluate our core underlying business results, particularly in light of our leverage position and the capital-intensive nature of our business. Further, EBITDA is a measure that is commonly used by other companies in our industry and provides a comparison for investors to evaluate the performance of the companies in the industry. Additionally, Adjusted EBITDA helps investors to understand how the company is tracking against our financial covenants in our TL Agreements.

EBITDA and Adjusted EBITDA have the following limitations:

• EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt;
  
  
• Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt, letter of credit expenses, restructuring charges, transaction costs related to debt, non-cash charges, charges or losses (subject to the conditions above), or nonrecurring consulting fees, among other items;
  
  
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
  
  
• Equity-based compensation is an element of our long-term incentive compensation program for certain employees, although Adjusted EBITDA excludes employee equity-based compensation expense when presenting our ongoing operating performance for a particular period; and
  
  
• Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
  

Because of these limitations, our non-GAAP measures should not be considered a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP measures as secondary measures. The company has provided reconciliations of its non-GAAP measures to GAAP net income (loss) within the supplemental financial information in this release.

Cautionary Note on Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements include those preceded by, followed by or characterized by words such as “will,” “expect,” “intend,” “anticipate,” “believe,” “could,” “should,” “may,” “project,” “forecast,” “propose,” “plan,” “designed,” “estimate,” “enable,” and similar expressions which speak only as of the date the statement was made. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Readers are cautioned not to place undue reliance on any forward-looking statements. Our future financial condition and results could differ materially from those predicted in such forward-looking statements because of a number of business, financial and liquidity, and common stock related factors, including (without limitation) the impact of compliance with Executive Order 14042 and any Federal Occupational Safety and Health Administration requirements, each as applicable, regarding mandatory COVID-19 vaccinations and testing of non-vaccinated employees, respectively; our ability to attract and retain qualified drivers and increasing costs of driver compensation; the risk of labor disruptions or stoppages, if our relationship with our employees and unions were to deteriorate; general economic factors, including (without limitation) impacts of COVID-19 and customer demand in the retail and manufacturing sectors; the widespread outbreak of an illness or any other communicable disease, including the effects of pandemics comparable to COVID-19, or any other public health crisis, as well as regulatory measures implemented in response to such events; interruptions to our computer and information technology systems and sophisticated cyber-attacks; business risks and increasing costs associated with the transportation industry, including increasing equipment, operational and technology costs and disruption from natural disasters, and impediments to our operations and business resulting from anti-terrorism measures; competition and competitive pressure on pricing; changes in pension expense and funding obligations, subject to interest rate volatility; increasing costs relating to our self-insurance claims expenses; our ability to comply and the cost of compliance with, or liability resulting from violation of, federal, state, local and foreign laws and regulations, including (without limitation) labor laws and laws and regulations regarding the environment and climate change initiatives; the impact of claims and litigation expense to which we are or may become exposed; that we may not realize the expected benefits and costs savings from our performance and operational improvement initiatives; a significant privacy breach or IT system disruption; our dependence on key employees; our ability to finance the maintenance, acquisition and replacement of revenue equipment and other necessary capital expenditures; seasonality and the impact of weather; shortages of fuel and changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility; risks of operating in foreign countries; our failure to comply with the covenants in the documents governing our existing and future indebtedness; our ability to generate sufficient liquidity to satisfy our indebtedness and cash interest payment obligations, lease obligations and pension funding obligations; fluctuations in the price of our common stock; dilution from future issuances of our common stock; we are not permitted to pay dividends on our common stock in the foreseeable future; that we have the ability to issue preferred stock that may adversely affect the rights of holders of our common stock; and other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the SEC, including those described under “Risk Factors” in our annual report on Form 10-K and quarterly reports on Form 10-Q.

About Yellow Corporation

Yellow operates one of the largest, most comprehensive logistics and less-than-truckload (LTL) networks in North America, providing customers with regional, national, and international shipping services throughout. Backed by a team of over 30,000 transportation professionals, Yellow’s flexible supply chain solutions and best-in-class expertise ensure the safe, timely delivery of industrial, commercial, and retail goods for customers of all sizes. Yellow’s principal office is in Nashville, Tenn., and is the holding company for a portfolio of LTL brands including Holland, New Penn, Reddaway, and YRC Freight, as well as the logistics company Yellow Logistics.

Please visit our website at www.myyellow.com for more information.

Source: Yellow Corporation