YRC Worldwide’s liquidity should be sufficient to see it through 2010 and into 2011, absent a “downturn in industry or company fundamentals,” said Jon A. Langenfeld, a trucking analyst with investment banking research firm R.W. Baird & Co.
“YRC has available liquidity totaling $343 million, comprised of $98 million in cash, $160 million in conditional access to its revolver reserve and roughly $85 million in federal tax refunds,” Langenfeld said today in a note to investors.
“Though we expect quarterly operating losses to persist throughout 2010, we believe YRC Worldwide has enough access to liquidity to remain a going concern,” he said. He expects YRC’s bankers to continue to help through any crises.
Langenfeld’s statement underscores that the nation’s largest trucking company has reached a turning point in its long battle to fend off bankruptcy. For more than a year, investment analysts have assumed a bankruptcy reorganization at YRC Worldwide was a foregone conclusion, and that it would run out of operating cash.
That’s no longer an immediate threat, despite significant cash flow out the door in 2009. The company went through two-thirds of its cash in 2009, with a negative cash flow of $73 million in the third quarter and $69 million in the fourth quarter.
But Langenfeld expects that “cash burn” to moderate in 2010, estimating it will fall to 14 million in the first quarter, and that YRC Worldwide will have about $250 million or more in liquidity throughout the year.
YRC Worldwide still has plenty of challenges, starting with payment on $45 million in unsecured notes that bondholders refused to tender in its debt-for-equity swap. Further down the line are deferred debt interest payments and pension obligations.
But YRC Worldwide’s survival now rests on its ability “to stem market share losses, temper cash burn and return its core businesses to profitability,” Langenfeld said.
Contact William B. Cassidy at firstname.lastname@example.org