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YRC Worldwide Expects Positive Results In Q2, Plans Reverse Stock Split - Update

Tuesday, Transportation services company YRC Worldwide Inc. (YRCW) said it expects improvement in results for the second quarter as it continued to experience sequential growth and better efficiencies resulting from lower expenses. Additionally, the company said that it expects a reverse stock split within the next few months. The company's stock is currently down by more than 13%.

The Overland Park, Kansas-based company said it expects positive adjusted EBITDA in the second quarter with positive regional transportation segment operating income during the quarter. The company recorded an adjusted loss before interest taxes, depreciation and amortization of $21 million for February compared to $27 million in January. In March, adjusted loss before taxes, depreciation and amortization was $5 million and in April reported break even adjusted EBITDA.

The company reiterated that it expects real estate sales for 2010 to be in the range of $25 million to $50 million with sale and financing leasebacks of up to $50 million, primarily in the second half of the year. It expects gross capital expenditures of approximately $50 million for the year and continues to expect interest expense in the range of $40 million to $45 million per quarter, with cash interest of $10 million to $12 million per quarter. The effective income tax rate for the year is expected to be 2%.

Further, the company said it expects a reverse stock split within the next few months with the split ratio ranging from 1:25 to 1:5.

YRC which came close to bankruptcy after reporting loss in consecutive quarters said that it has reduced selling, general and administrative expenses, successfully scaled headcounts, implemented process improvements and streamlined the organization. The total headcount at the end of the first quarter was 33 thousand, compared with 49 thousand at the end of the year-ago quarter.

The company said that the senate HELP committee hearing on multi-employer pension plans is set for May 27. The plan which helps finance retirements for approximately 1 million workers and retirees in the trucking industry negatively impact the results of companies like YRC which were compelled to fund the retirement of not only their own workers but also of those employed by bankrupt competitors.

Additionally, YRC reported that effective May 11, the board elected Marnie Gordon, Beverly Goulet, Mark Holliday, John Lamar, Eugene Davis, Dennis Foster and William Trubeck to fill the vacancies left by resigning directors.

YRC's cash maturities of $844 million at March 31 consist of $72 million notes, including new 6% notes of $50 million and remaining 5% and 3.375% notes of $22 million; $155 million pension debt; and $617 million lender debt, which includes $388 million in revolving debt, $111 million in term Loan and $118 million in ABS. Letters of credit obligations amount to $524 million. It said that non-cash maturity obligation related to sale/leaseback debt per GAAP balance sheet of $320 million is satisfied by transfer of title to underlying real estate at the inception of the initial sale and leaseback transaction.

On May 4, the company reported that its net loss for the first quarter widened year-over-year mainly due to a 29% fall in national, regional and logistics segment revenues. Total tonnage and shipments declined across all segments during the quarter. First quarter net loss slightly widened to $274.13 million from $273.78 million a year ago. On a per share basis, loss was narrower at $0.53, compared with a loss of $4.61 in the prior year. Excluding a previously announced charge of $0.20 per share for union employee equity-based awards, loss per share was $0.33. The company had also added that the current year's loss per share was lower due to significant increase in share count during the latest quarter.

Operating revenues declined 29.2% to $1.06 billion from $1.50 billion in the year-ago quarter.

In the preceding fourth quarter of 2009, the company reported a pre-tax profit, compared with a loss in the prior year period, reflecting lower operating expenses and a gain on debt redemption that more than offset a decline in revenue. Pre-tax income was $49.80 million, compared with a pre-tax loss of $353.28 million in the previous year. The company said that it was providing pre-tax earnings details since it was completing income tax provision. The quarter saw operating revenue decline drastically to $1.14 billion from $1.93 billion in the previous year.

YRCW is currently trading at $0.29, down $0.05 or 13.64%, on a volume of 48 million shares on the Nasdaq.

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