YRC Worldwide Inc. (NASDAQ:YRCW) Files An 8-K Regulation FD Disclosure
Item7.01. Regulation FD Disclosure
On January24, 2017, YRC Worldwide Inc. (the Company) issued a
press release announcing that it has launched an amendment to its
Term Loan Credit Agreement (the Credit Agreement) to revise its
leverage ratio covenant from the first quarter of 2017 through
the fourth quarter of 2018. For the fourth quarter of 2016, the
Company also announced that it anticipates reporting consolidated
operating revenue of approximately $1.143billion to
$1.153billion, Adjusted EBITDA (defined as Consolidated EBITDA in
the Credit Agreement) of approximately $53million to $63million,
and consolidated operating income of approximately $10million to
$20million. For the year ended December31, 2016, it anticipates
reporting consolidated revenue of approximately $4.692billion to
$4.702billion, Adjusted EBITDA of approximately $293million to
$303million, and consolidated operating income of approximately
$119million to $129million. The Company also announced that it
purchased $40.5million of its term loan during the fourth quarter
of 2016. Further, the Company reported that at December31, 2016,
it had a debt balance of approximately $1.010billion and had cash
and cash equivalents and Managed Accessibility (as defined in the
Companys most recently filed periodic reports on Forms 10-K and
10-Q) under its asset based loan facility totaling $181.1million.
A copy of the press release is attached hereto as Exhibit 99.1
and incorporated by reference herein.
Cautionary Statement
The preliminary financial and operational information
included in this Item 7.01 and the attached news release reflects
managements estimate of results based on currently available
information. There can be no assurance that these estimates will
be realized, and estimates are subject to risks and
uncertainties, many of which are not within the Companys control.
Accordingly, you should not place undue reliance upon this
preliminary financial and operational information.
Non-GAAP Financial Measures
EBITDA is a non-GAAP measure that reflects the companys
earnings before interest, taxes, depreciation, and amortization
expense. Adjusted EBITDA (defined in our credit facilities as
Consolidated EBITDA) is a non-GAAP measure that reflects the
companys earnings before interest, taxes, depreciation, and
amortization expense, and further adjusted for letter of credit
fees, equity-based compensation expense, net gains or losses on
property disposals, restructuring professional fees, nonrecurring
consulting fees, expenses associated with certain lump sum
payments to our union employees and gains or losses from
permitted dispositions and discontinued operations, among other
items, as defined in the companys credit facilities.EBITDA and
Adjusted EBITDA are used for internal management purposes as a
financial measure that reflects the companys core operating
performance.In addition, management uses Adjusted EBITDA to
measure compliance with financial covenants in the companys
credit facilities and to pay certain executive bonus
compensation.However, these financial measures should not be
construed as better measurements than net income, as defined by
generally accepted accounting principles (GAAP).
EBITDA and Adjusted EBITDA have the following
limitations:
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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 fund restructuring professional fees, nonrecurring consulting fees, letter of credit fees, service interest or principal payments on our outstanding debt or fund our lump sum payments to our IBT employees required under the ratified Memorandum of Understanding; |
|
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, although Adjusted EBITDA excludes certain employee equity-based compensation expense when presenting our ongoing operating performance for a particular period; |
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Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, EBITDA and Adjusted EBITDA
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
EBITDA and Adjusted EBITDA as secondary measures. The company has
provided reconciliations of its non-GAAP measures, EBITDA and
Adjusted EBITDA, to GAAP net income (loss) and operating income
(loss) within the supplemental financial information in this
release.
The following table provides a reconciliation of Operating income
to Adjusted EBITDA for the estimated ranges presented above.
Twelve Months Ended December 31, 2016
| (in thousands) | Low | High | ||||||
|
Reconciliation of operating income to Adjusted |
||||||||
|
Operating income |
$ | 119,000 | $ | 129,000 | ||||
|
Depreciation and amortization |
160,000 | 160,000 | ||||||
|
Gains on property disposals, net |
(14,000 | ) | (14,000 | ) | ||||
|
Letter of credit expense |
7,700 | 7,700 | ||||||
|
Permitted dispositions and other |
3,000 | 3,000 | ||||||
|
Amortization of ratification bonus |
4,600 | 4,600 | ||||||
|
Equity-based compensation expense |
7,300 | 7,300 | ||||||
|
Other nonoperating, net |
5,400 | 5,400 | ||||||
|
Adjusted EBITDA |
$ | 293,000 | $ | 303,000 | ||||
Three Months Ended December 31, 2016
| (in thousands) | Low | High | ||||||
|
Reconciliation of operating income to Adjusted |
||||||||
|
Operating income |
$ | 10,000 | $ | 20,000 | ||||
|
Depreciation and amortization |
40,000 | 40,000 | ||||||
|
Gains on property disposals, net |
(3,000 | ) | (3,000 | ) | ||||
|
Letter of credit expense |
1,700 | 1,700 | ||||||
|
Permitted dispositions and other |
1,200 | 1,200 | ||||||
|
Equity-based compensation expense |
1,300 | 1,300 | ||||||
|
Other nonoperating, net |
1,800 | 1,800 | ||||||
|
Adjusted EBITDA |
$ | 53,000 | $ | 63,000 | ||||
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. Words such as will, expect, intend,
anticipate, believe, could, would, should, may, project,
forecast, propose, plan, designed, enable, and similar
expressions which speak only as of the date the statement was
made are intended to identify forward-looking statements.
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. Our future financial condition
and results could differ materially from those predicted in such
forward-looking statements because of a number of factors,
including (without limitation): our level of indebtedness; our
ability to generate sufficient cash flows and liquidity to fund
operations and satisfy our cash needs and future cash
commitments, including (without limitation) our obligations
related to our indebtedness, cash interest and lease and pension
funding requirements; the impact of restrictive covenants in the
documents governing of existing and future indebtedness; our
failure to comply with the covenants in the documents governing
our existing and future indebtedness; our holding company
structure that makes us dependent on the ability of our
subsidiaries to distribute funds to us; the uncertainty in the
overall economy; business risks, including expense volatility,
including (without limitation) volatility due to changes in
purchased transportation service or pricing for purchased
transportation; competition and competitive pressure on pricing;
labor relations; our obligations to multi-employer health,
welfare and pension plans; our exposure to self-insurance claims
expense and higher insurance costs; our ability to finance the
maintenance, acquisition and replacement of revenue equipment and
other necessary capital expenditures; our ability to comply and
the cost of compliance with federal, state, local and foreign
laws and regulations, including (without limitation) laws and
regulations for the protection of employee safety and health, as
well as state and federal labor laws; the costs of complying with
environmental regulations and our exposure to liabilities for
violations of such laws; terrorist attack; the impact of claims
and litigation to which we are or may become exposed; the success
of our management team in continuing with its strategic plan and
operational and productivity initiatives; our ability to attract
and retain qualified drivers; our dependence on our information
technology systems in our network operations and the production
of accurate information, as well as the risk of system failure,
inadequacy or security breach; risks associated with doing
business in foreign countries; our dependence on the services of
key employees; inclement weather and seasonality; fuel shortages,
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;
volatility in the price of our common stock; the dilutive effects
of future issuances of our common stock; our intention not to pay
dividends; our ability to issue preferred 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.
| Item9.01. | Financial Statements and Exhibits. |
(d) Exhibits
|
Exhibit Number |
Description |
|
| 99.1 | Press Release dated January24, 2017 |
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About YRC Worldwide Inc. (NASDAQ:YRCW)
YRC Worldwide Inc. (YRC Worldwide) is a holding company that, through its subsidiaries and its interest in a Chinese joint venture, offers a range of transportation services. The Company has a less-than-truckload (LTL) networks in North America with local, regional, national and international capabilities. It offers supply chain solutions enabling customers to ship industrial, commercial and retail goods. The Company operates through two segments: YRC Freight and Regional Transportation. The Company’s YRC Freight segment is focused on business opportunities in national, regional and international markets. YRC Freight provides for the movement of industrial, commercial and retail goods. The Company’s Regional Transportation segment is a transportation service provider focused on business opportunities in the regional and next-day delivery markets. Regional Transportation comprises USF Holland Inc. (Holland), New Penn Motor Express, Inc. (New Penn) and USF Reddaway Inc. (Reddaway). YRC Worldwide Inc. (NASDAQ:YRCW) Recent Trading Information
YRC Worldwide Inc. (NASDAQ:YRCW) closed its last trading session up +1.08 at 14.79 with 535,449 shares trading hands.