LTL tonnage is off for Yellow Corp., but it cut debt

Despite losses in the fourth quarter of 2022 and significantly lower LTL tonnage, Yellow Corp. reported some good news during its most recent earnings call.

It has reduced outstanding debt by nearly $100 million in the fourth quarter 2022 and January 2023.

“In Q4, we saw a notable drop in demand for LTL capacity as the economy continued to cool down,” Yellow Corp. CEO Darren Hawkins said during its Feb. 9 earnings call.

He noted that retailers had fully stocked inventories and that the manufacturing sector also began to slow down following several quarters of growth.

The company adjusted by reducing the size of its workforce to fit demand.

“We also benefited from a gain on the sale of an excess terminal no longer needed as a result of the efficiencies from phase one of our network transformation,” Hawkins added.

Yellow announced its network transformation in 2021. Dubbed One Yellow, the plan was to revamp its three legacy subsidiaries into one super-regional carrier. Through restructuring, Yellow’s historic brands – Reddaway, Holland and New Penn. When the transformation is complete, the operations will operate under the Yellow name.

Nashville, Tenn.-based Yellow Corp. implemented the first phase of its network optimization plan in September 2022, integrating 89 YRC Freight and Reddaway terminals.

The first phase of the network optimization in the western U.S. enables Yellow to make pickups and deliveries more efficient and timely, Hawkins said.

The second phase involved Yellow Corp.’s Eastern regional LTL carrier New Penn.

“Concerning the phase two network optimization in the eastern U.S., we are following the same contractual process as phase one. The phase two recommended changes have been mailed to the local unions, and we are in process of meeting with those unions to field any questions or concerns around the optimization. We plan to communicate externally when an implementation date is determined,” Hawkins said.

Hawkins said the progress in transforming the company has been remarkable.

“I’m very proud of our employees’ dedication and passion to meeting the needs of our customers and executing one of the largest network changes ever implemented by unionized LTL carrier,” Hawkins said.

Revenue in 2022 up from 2021

Full-year 2022 operating revenue was $5.24 billion compared to $5.12 billion in 2021, according to Dan Olivier, Yellow Corp. chief financial officer.

Operating income in 2022 was $197.8 million, which included a $38 million net gain on property disposals, Oliver said. This compares to an operating income of 103.6 million in 2021.

Year-over-year operating volume in the fourth quarter dropped 8.3%, largely because of lower volume, Oliver said. Strong yield performance and fuel surcharges offset the decrease, he said.

Including fuel surcharge, fourth quarter LTL revenue per hundredweight was up 21.1% and LTL revenue per shipment was up 17.8% compared to a year ago, he reported. Excluding fuel surcharge, LTL revenue per hundredweight was up 12.4% and LTL revenue per shipment was up 9.3%.

LTL tonnage per day in the fourth quarter was down 25.1% driven by a 23% decrease in LTL shipments per day and a 2.8% decrease in LTL weight per shipment.

January LTL tonnage per workday is expected to be down approximately 17% compared to last year, Yellow reported.

Charts showing fourth quarter and annual 2021 and 2022 comparisons are available here.

CARES Act, contribution deferral payments

Yellow also in December paid off the remaining $42.8 million due for the deferral of certain payroll taxes under provisions of its Coronavirus Aid, Relief and Economic Security Act loan. In July 2020, Yellow Corp. received funds through the CARES Act, which provided money to help businesses affected by the pandemic.

In addition, in early January the company paid the remaining $66 million due on its pension contribution deferral agreement notes that matured at the end of 2022. LL

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