UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2015
YRC Worldwide Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 0-12255 | 48-0948788 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
10990 Roe Avenue
Overland Park, Kansas 66211
(Address of principal executive office)(Zip Code)
(913) 696-6100
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
YRC Worldwide Inc. will deliver a presentation at the Deutsche Bank Leveraged Finance Conference (“Deutsche Bank Conference”) on Wednesday, September 30, 2015. A copy of the slide show presentation to be presented is attached hereto as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | YRC Worldwide Inc. Deutsche Conference Presentation | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| YRC WORLDWIDE INC. | ||
| By: | /s/ Stephanie D. Fisher | |
| Stephanie D. Fisher | ||
| Vice President and Controller | ||
Date: September 30, 2015
 YRC Worldwide Inc. Deutsche Bank Leveraged Finance Conference September 30, 2015 1 Exhibit 99.1 |
 Disclaimer Disclaimer 2 The information in this presentation is summary in nature and may not contain all information that is important to you. The
Recipient acknowledges and agrees that (i) no
representation or warranty regarding the material contained in this presentation is made by YRC Worldwide Inc. (the “Company” or “we”) or any of its affiliates and (ii) that the Company and its affiliates have no
obligation to update or supplement this presentation or
otherwise provide additional information. This presentation is for discussion and reference purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or other property. This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements relate to future events or future performance of the Company and include statements about the Company’s expectations or forecasts for future periods and events. Specific forward-looking
statements can be identified by the fact that they do not
relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or
“continue,” the negative of such terms or other comparable terminology. We disclaim any obligation to update those statements, except as applicable law may require us to do so, and we caution you not to
rely unduly on them. We have based those
forward-looking statements on our current expectations and assumptions about future events, and while our management considers those expectations and assumptions to be reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking
statements. Factors that might cause or contribute
to such differences include, but are not limited to, those we discuss in the “Risk Factors” section of our Annual Report on Form 10-K and in other reports we file with the Securities and Exchange Commission. This presentation includes the presentation of Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is not a measure
of financial performance in accordance with generally
accepted accounting principles and may exclude items that are significant in understanding and assessing our financial results. Therefore, this measure should not be considered in isolation or as an alternative to net income
from operations, cash flows from operations, earnings per
fully-diluted share or other measures of profitability, liquidity or performance under generally accepted accounting principles. You should be aware that this presentation of Adjusted EBITDA may not be comparable to similarly-titled
measures used by other companies. A reconciliation of this
measure to the most comparable measures presented in accordance with generally accepted accounting principles has been included in this presentation. |
 YRC Worldwide is one of the largest less-than-truckload (LTL) carriers in
North America and generates approximately $5B of revenue
by providing services under a portfolio of four
subsidiaries Approximately 24% of the public carrier market
share by tonnage Providing the broadest coverage and more
service capability throughout North America than any
competitor 3
Introduction |
  YRC Freight and Regional Transportation
YRC Freight and Regional Transportation
Formed by the combination of Yellow Transportation
and Roadway Express
– Roadway acquired in 2003 and integrated in 2009 Branded as YRC Freight in early 2012 Focused on longer-haul LTL shipping Three distinct carriers serving separate regions – Holland, Reddaway and New Penn – Well established brands with long histories Focused on next-day and time-sensitive services YRC Freight YRC Regional 4 YRC Freight Metric LTM revenue $3.2 billion LTM Adj. EBITDA $167 million # of Customers ~128,000 # of Terminals 259 Average Length of Haul 1,300 miles Average Weight 1,000 lbs Average Transit 3-4 days LTM revenue $1.8 billion LTM Adj. EBITDA $159 million # of Customers ~266,000 # of Terminals 125 Average Length of Haul 400 miles Average Weight 1,300 lbs Average Transit > 90% in 2 days or less YRC Regional Metric |
 Diversified Customer Base Diversified Customer Base Long-standing and stable relationships with a large, diversified base of customers
Customers range from Fortune 1000 global corporations to small,
privately-held businesses Top 5 customers account for
approximately 10% of total revenue Recognized by customers
as leading operator Recently received Walmart’s
“2014 National LTL Carrier of the Year” award for outstanding service • Received this award in 3 of the last 5 years Diversified Customer Base 5 |
 Largest LTL Operator in North America Market share stability 24% market share by tonnage (public LTL carriers only) YRC Freight and YRC Regional’s combined networks cover all 50 states, Puerto Rico, Canada and Mexico Broad footprint with service to over 250,000 customers Scale is important for an LTL operator given the capital intensity/requirement to build the large “hub and spoke” network infrastructure and the significant operating leverage associated with the business model’s fixed costs Historical market share by tonnage based upon publicly traded LTL carriers only.
Market share by tonnage reflects Q2 2015 data.
6 Market Share by Tonnage (Public LTL Carriers Only) Historical Market Share |
 Highly Experienced Management 24 years of industry experience Prior to being named President of YRC Freight, Darren was senior vice president of sales for the company James Welch CEO Jamie Pierson CFO Scott Ware President, Holland 34 years of experience in the transportation and logistics industry Returned to the Company in mid 2011 to become CEO Acted as an advisor to the Company from early 2009 – November 2011 Joined YRCW as CFO in late 2011 27 years of industry experience Prior to being named President of Holland, Scott was vice president of operations and linehaul for the Company Don Foust President, New Penn 35 years of industry experience Recognized throughout his career for strong leadership, team building and outstanding results in sales and operations performance TJ O’Connor President, Reddaway 30 years of industry experience Prior to being named President of Reddaway in 2007, T.J. served as President and CEO of USF Bestway James Fry Vice President – General Counsel & Corporate Secretary 20 years of industry experience Prior to YRCW, James served as Executive Vice President, General Counsel, and Secretary for Swift Transportation Company Darren Hawkins President, YRC Freight 150 years of operating experience 7 |
 2003 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 Yellow acquired Roadway for $1.1 billion (debt financed) Included New Penn and Reimer Acquired USF for $1.3 billion (debt financed) Included Holland, Reddaway and Glen Moore Acquired 50% stake in JHJ Chinese logistics operation James Welch named CEO; New Board of Directors seated, including 2 IBT appointees Completed restructuring Closed former Roadway HQ De-centralized HoldCo structure Re-branded YRC Freight Divested non- core assets (Jiayu, excess real estate property auctions) Former CEO Zollars announced retirement CEO, CFO, COO, CAO and CMO depart in 2011 James Welch departed Divested Glen Moore (TL) Acquired 65% stake in Jiayu Yellow / Roadway Integration Refinancing Reduced outstanding debt by over $225M (including redemption of Series A Notes) Extended remaining maturities by 5 years Annual cash interest savings of $40M Amended and Extended Teamster contract to 2019 YRCW Timeline YRCW Timeline LTM Adjusted EBITDA improves $120M YoY to $327M Focus on operational improvement 8 YRCW market share declined ~15 points from 2007 to 2010 |
 2014 Refinancing & Turnaround Term Loan – retired on 2/13/14 ABL Term A – retired on 2/13/14 Capital Leases ABL Term B – retired on 2/13/14 CDA Note Series A Notes - $90.9M redeemed on 1/31/14 Remaining defeased on 2/12/14 Series B Notes - $51.8M converted to equity on 1/31/14 6% Convertible Senior Notes – retired on 1/31/14 Capital Leases New Term Loan CDA Note $1,361.3M $1,089.2M Pre-Refinancing (12/31/13) Today (6/30/15) Greatly simplified funded debt structure with maturities extended to 2019
Reduced cash interest payments by ~$40M per year
5% Convertible Notes
5% Convertible Notes
Series B Notes
Series A Notes
Post-Refinancing (3/31/14)
Capital Leases
New Term Loan
CDA Note
$1,221.0M
Number of Debt Facilities
9 $- $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 Confidential |
 Leverage Ratio Steady progress every year since 2010 YRCW is on much stronger footing as a result of reduced debt and increased earnings
This progress is being recognized by rating agencies as evidenced by the
S&P upgrade Note: Funded debt balances based on par
value 3.6x reduction
since 2010
10 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 2010 2011 2012 2013 2014 LTM 1Q15 LTM 2Q15 Funded Debt / Adjusted EBITDA |
 Confidential No Near-Term Maturities No Near-Term Maturities 4-Year Runway February 2014 Refinancing Series B Notes exchanged for equity in March 2015 February Term Loan, ABL March IBT (MOU) December CDA Significant extension of debt maturities provides longer runway to continue operational turnaround
Operational Execution 11 Redeemed Series A Notes in August 2014 2014 2015 2016 2017 2018 2019 2020 |
 $9.75 $10.26 $9.40 $9.60 $9.80 $10.00 $10.20 $10.40 2Q14 2Q15 Regional Revenue per cwt (x-FSC) $19.45 $20.70 $18.50 $19.00 $19.50 $20.00 $20.50 $21.00 2Q14 2Q15 YRCF Revenue per cwt (x-FSC) $143 $152 $135 $140 $145 $150 $155 2Q14 2Q15 Regional Revenue per Shipment (x-FSC) $228 $250 $210 $220 $230 $240 $250 $260 2Q14 2Q15 YRCF Revenue per Shipment (x-FSC) YOY Revenue per Shipment and Revenue per cwt YOY Revenue per Shipment and Revenue per cwt Note: Percent change calculation based on unrounded figures and not the rounded figures presented
12 +6.4% +9.8% +6.5% +5.2% Both segments experiencing positive pricing growth driven by a focused effort on improving yield and further supported by a favorable industry pricing environment |
 YOY Volume YOY Volume YoY decrease at YRCF due to shift away from minimum charge and lighter shipments and toward higher yielding business YOY decrease at the Regionals is primarily due to efforts to better manage capacity and service performance Note: Percent change calculation based on unrounded figures and not the rounded figures presented
13 -9.1% -6.2% -4.7% -3.5% 48.35 43.95 35.00 40.00 45.00 50.00 2Q14 2Q15 44.91 42.82 35.00 40.00 45.00 50.00 2Q14 2Q15 28.29 26.53 25.00 27.00 29.00 2Q14 2Q15 32.86 31.71 26.00 28.00 30.00 32.00 34.00 2Q14 2Q15 YRC Freight Shipments per Day Regional Shipments per Day YRC Freight Tonnage per Day Regional Tonnage per Day |
 $147.0 $159.2 $140.0 $145.0 $150.0 $155.0 $160.0 $165.0 2Q14 2Q15 Regional LTM Adjusted EBITDA $59.4 $167.2 $.0 $50.0 $100.0 $150.0 $200.0 2Q14 2Q15 YRCF LTM Adjusted EBITDA $21.5 $53.1 $.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 2Q14 2Q15 YRCF 2Q Adjusted EBITDA $42.1 $56.6 $.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 2Q14 2Q15 Regional 2Q Adjusted EBITDA Segment Adjusted EBITDA Segment Adjusted EBITDA ($ in millions) 14 YRC Freight improvement driven by increased yield, partially offset by lower volume and lower productivity
Regional performance driven by increased yield, partially offset
by decreased volumes, lower productivity and higher
equipment lease costs Note: Percent change calculation
based on unrounded figures and not the rounded figures presented +147.0% +181.4% +34.4% +8.3% |
 4.1% 6.6% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2Q14 2Q15 LTM Adjusted EBITDA Margin $206.5 $326.8 $.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2Q14 2Q15 LTM Adjusted EBITDA $63.0 $109.4 $.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 2Q14 2Q15 2Q Adjusted EBITDA Consolidated (YRCW) Adjusted EBITDA Consolidated (YRCW) Adjusted EBITDA ($ in millions) 15 Improved EBITDA and margin growth due to yield growth and strong base pricing environment,
partially offset by lower volume, lower productivity, and higher
equipment lease costs Highest LTM EBITDA since
2008 Note: Percent change calculation based on unrounded
figures and not the rounded figures presented
+$46.4M
+120.3M
+250bps
4.8% 8.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2Q14 2Q15 2Q Adjusted EBITDA Margin +390bps |
 12.4% 8.3% 4.5% 2.2% 2.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Industry ex YRCW YRC Regional YRC Freight LTM 2Q15 EBITDA Margin Opportunity for EBITDA Margin Growth & Further Deleveraging Opportunity for EBITDA Margin Growth & Further Deleveraging Significant opportunity for both segments to achieve margin improvements – Assuming current market performance of an OR of 91 to 93, the long-term EBITDA margin segment goals are as follows: YRCF = 7.2% (equivalent to an OR of 95 – 96) Regional = 10.5% (equivalent to an OR of 93 – 94) Note: For comparison purposes, EBITDA for all companies is defined as Operating Income, excluding gains or losses from property
sales, plus Depreciation and Amortization. EBITDA used to calculate EBITDA margin for YRCW above differs from the credit agreement definition of Consolidated Adjusted EBITDA.
10.5% 7.2% LTM 2Q15 YRC Freight YRC Regional Revenue $ 3,171.3 $ 1,813.9 EBITDA 151.6 146.3 (Gains) / losses on property sales (8.4) 3.6 EBITDA less (gains) / losses on property sales $ 143.2
$
149.9 EBITDA margin, less (gains) / losses on property
sales 4.5%
8.3% 16 |
 Re-investment in the Business Re-investment in the Business 17 After several years of curtailing investment in the business, capital spending has resumed Fleet replenishment through operating leases beginning in 2013 Increased leasing activity due to greater financing options resulting from the Company’s improved financial condition Acquired 44 dimensioners since 2014. Dimensioning technology is used to better cost, price and plan freight loading and flow For the LTM 2Q15, the CapEx Equivalent (CapEx plus the Capital Value of Leases) was 4.2% of revenue. This brings the Company more in line with historical industry standards 0.4% 1.5% 1.5% 2.8% 2.8% 3.5% 4.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2010 2011 2012 2013 2014 LTM 1Q15 LTM 2Q15 CapEx Equivalent - as a % Revenue $19 $72 $66 $67 $69 $79 $87 $8 $70 $72 $100 $126 $19 $72 $75 $137 $142 $179 $213 $- $50 $100 $150 $200 $250 2010 2011 2012 2013 2014 LTM 1Q15 LTM 2Q15 CapEx Equivalent CapEx Capital Value of Leases |
 Re-investment in the Business Re-investment in the Business 18 YRCW’s goal is to more aggressively replenish the fleet through a combined approach of purchasing and leasing new tractors and trailers Further roll-out of dimensioning technology Retrofitting existing fleet with in-cab collision avoidance systems to enhance safety Tablets for dock supervisors to more efficiently manage dock operations Implemented Kronos workforce management technology Logistical planning technology to improve network efficiencies |
 LTL Demand Fundamentals Remain Favorable LTL Demand Fundamentals Remain Favorable Based on market research, LTL freight volumes are highly correlated with IPI Although IPI has been somewhat flat in 2015 partially due to severe weather in 1Q15, strengthening labor market and loosening credit is expected to bolster consumer spending which augers well for manufacturing growth According to the American Trucking Association (ATA), demand as measured by LTL tonnage continues to outstrip LTL supply (size of driver fleets) The ATA forecasts shortages of 35,000 to 40,000 drivers in coming years due to retirees outstripping new drivers 19 Source: American Trucking Association 70 75 80 85 90 95 100 105 110 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTL Tonnage Index vs. Industrial Production Index ATA LTL Tonnage Index IPI 70 75 80 85 90 95 100 105 110 115 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTL Supply vs. Demand Trucks Tonnage |
 YRCW – Investment Thesis YRCW – Investment Thesis Strong Industry Position Simplified & Stable Capital Structure Diversified Business Model National Footprint / Tremendous Asset Base Experienced Management Team Turnaround Still Has Legs Via Margin Expansion Re-investment Back into the Business 20 |
 Appendix 21 |
 EBITDA Reconciliation – Consolidated EBITDA Reconciliation – Consolidated 22 (a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in
Adjusted EBITDA under our Term Loan Agreement. YRCW
Consolidated 2Q15
2Q14 LTM 2Q15 LTM 2Q14 Reconciliation of net loss to adjusted EBITDA: Net income (loss) 26.0 $
(4.9)
$
11.8
$
(119.0)
$
Interest expense, net
27.9 31.6 115.0 172.4 Income tax expense (benefit) 2.3 (7.9)
(0.4)
(43.4)
Depreciation and amortization
41.3 41.0 164.5 167.2 EBITDA 97.5 59.8 290.9 177.2 Adjustments for debt covenants: Losses (gain) on property disposals, net (0.7) (6.5)
(5.0)
(5.3)
Letter of credit expense
2.2 2.1 9.2 23.5 Restructuring professional fees - -
3.1
10.2
Nonrecurring consulting fees
3.0 -
5.9
-
Permitted dispositions and other
0.1
-
1.9
2.1
Equity based compensation expense
3.2 2.5 8.9 10.9 Amortization of ratification bonus 4.6 5.2 20.2 5.2 (Gain) loss on extinguishment of debt
-
-
0.6 (11.2)
Other, net (a)
(0.5)
(0.1)
(8.9)
(6.0)
Adjusted EBITDA
109.4
$
63.0 $
326.8
$
206.5
$
Revenue
1,258.4
$
1,317.6
$
4,985.1
$
4,988.9
$
Adjusted EBITDA Margin
8.7% 4.8% 6.6% 4.1% |
 EBITDA Reconciliation – Segment EBITDA Reconciliation – Segment 23 (b) As required under our Term Loan, other nonoperating, net, shown above does not include the impact of non-cash foreign
currency gains or losses. YRC Freight segment
2Q15 2Q14 1H15 1H14 LTM 2Q15 LTM 2Q14 Reconciliation of operating income (loss) to adjusted EBITDA: Operating income (loss) 22.5 $ (0.3) $
22.7 $ (32.8) $ 56.0 $ (57.9) $ Depreciation and amortization 23.3 24.9 47.2 49.6 95.6 102.8 EBITDA 45.8 24.6 69.9 16.8 151.6 44.9 Adjustments for debt covenants: (Gains) loss on property disposals, net 0.8 (6.7) 0.6 (6.9) (8.4) (6.4) Letter of credit expense 1.5 1.4 3.0 5.0 6.3 16.2 Nonrecurring consulting fees 3.0 - 5.9 - 5.9 - Amortization of ratification bonus 3.0 3.3 6.3 3.3 13.0 3.3 Other nonoperating, net (b) (1.0) (1.1) (0.5) (0.4) (1.2) 1.4 Adjusted EBITDA 53.1 $ 21.5 $ 85.2 $ 17.8 $ 167.2 $ 59.4 $ Regional Transportation segment 2Q15 2Q14 1H15 1H14 LTM 2Q15 LTM 2Q14 Reconciliation of operating income to adjusted EBITDA: Operating income 37.7 $ 23.2 $ 42.3 $ 31.1 $ 77.3 $ 73.8 $ Depreciation and amortization 18.1 16.2 35.8 32.6 69.0 64.6 EBITDA 55.8 39.4 78.1 63.7 146.3 138.4 Adjustments for debt covenants: Losses on property disposals, net (1.3) 0.2 0.2 0.6 3.6 1.1 Letter of credit expense 0.5 0.6 1.0 1.8 2.1 5.6 Amortization of ratification bonus 1.6 1.9 3.5 1.9 7.2 1.9 Adjusted EBITDA 56.6 $ 42.1 $ 82.8 $ 68.0 $ 159.2 $ 147.0 $ |