YRC Worldwide shares plunge more than 20 percent
11/13/2013 10:40 PM
11/13/2013 10:40 PM
Wall Street hammered shares of YRC Worldwide Inc. Wednesday, prompting its top financial officer to offer up some contrition.
The Overland Park-based trucking company’s stock plunged 20.7 percent after management said in its third-quarter financial report after markets closed Tuesday that disruptions that began in May in its national freight operations had lingered through September.
Those problems contributed to a loss of $44.4 million in the third quarter, compared with a $3 million profit a year ago, Tuesday’s report showed.
“In the third quarter we lost,” said Jamie Pierson, chief financial officer. “I’ll put my tail between my legs and hopefully have a much better fourth quarter.”
The problems grew out of a May reorganization of the network of terminals YRC Freight uses to load and move customers’ shipments. There were fewer drivers than trucks in some locations, forcing the company to pay overtime for available hands and to hire local transportation to help clear freight-clogged terminals.
Some local shippers, who offer the most profitable business for YRC Freight, took their business elsewhere. Pierson said, “They’re the ones who can move their freight the quickest. The good news is they’re the ones who can bring their freight back the quickest.”
He repeated Tuesday’s message that YRC Freight’s operations had improved in October but added it takes time to return to normal.
The company’s stock, which traded above $35 in July, fell to $7.06 in early trading Wednesday before regaining some lost ground. Prices closed at $7.72, off $2.01 or 20.7 percent.
Markets had expected some bad news and outlooks darkened further when “YRC Freight’s president was fired September 20,” analyst Thomas Albrecht wrote in a note to clients of BB&T Capital Markets.
Albrecht said YRC Worldwide had gained some relief from details in its debt agreements with lenders. Lenders require the company to meet certain operational and financial targets but amended them to provide “significant debt covenant relief through 2014,” Albrecht wrote.
YRC, however, still needs to refinance more than $1 billion in debts due in the next two years. It is negotiating an extension of its contract with the Teamsters union to lock in concessions currently set to expire at the end of March 2015.
Albrecht remained favorable about the stock and the company’s future but expressed his optimism in a backhanded way.
“Lots of things are happening and need to happen, and we are not convinced failure is a given,” it said.