Long-struggling trucker YRC Worldwide Inc. reached an important threshold Friday by reporting its fourth consecutive quarter of operating profits, and investors noticed by sending the stock climbing 41 percent.
The Overland Park company is still losing money because it owes more in interest payments on debt and other non-operating expenses than it earns from hauling freight.
But making money hauling freight for 12 months running amounts to evidence that its steps to dig out from two corporate restructurings — essentially taken to avoid bankruptcy — are working.
YRC shares gained $3.19 and closed at $10.95.
“We had a nice improvement over the first quarter of 2012, and people are saying maybe there’s something there,” chief executive James Welch said.
It’s unlikely that long-term investors were lining up to buy shares. More likely, bidding came from investors who have been selling shares short, which is a bet that prices will decline. To unwind the short sale, the investors have to buy shares, helping to drive up the price.
YRC Worldwide still faces large pension liabilities and its debt burden, analyst David Ross at Stifel Nicolaus & Co. Inc. said, adding that the stock price is normally volatile.
The company’s better-than-expected first-quarter results couldn’t overcome those burdens, but they show the “continuous improvement” that management has promised, Ross said.
Welch said: “There’s a point where I think you do cross that threshold. We’re in that period where people are starting to believe our story a little more.”
YRC reported net losses of $24.5 million in the first quarter, equal to $2.93 a share, down from $85.5 million, or $12.40 a share, a year ago.
Its trucking operations, however, earned $9.9 million in what is typically a slow quarter and one that was battered this year by poor weather. Operations generated $48.8 million in losses in the quarter a year ago.
Last week, the company announced plans to reorganize its network of terminals and operations to better fit its levels of nationwide trucking business. It expects to save $25 million to $30 million a year in costs.
Welch said most of the changes should have happened when the company, under previous management, folded together its Yellow and Roadway operations.
The changes will close some terminals, reduce miles driven and eliminate about 250 jobs from among YRC’s union employees. But the plan gained approval from the International Brotherhood of Teamsters.
Welch, in the call with analysts, said union leaders and employees had “constructive attitudes” and labor relations were the best he had seen.
Revenue during the first quarter was down 2.7 percent from a year earlier at $1.16 billion. Part of the decline reflects YRC’s decision to drop some business that it considered unprofitable.
A stronger economy would boost business, Welch said, but it remains “choppy,” showing improvements one week and weakness the next.