Zollars: YRC On Road to Profit

The top executive of troubled trucking giant YRC Worldwide challenged investment analysts and predicted his company would be profitable again by the end of third quarter.

YRC Chairman, President and CEO William D. Zollars said the freight carrier’s operating loss in April was half that reported by some analysts. “It was $60 million-ish,” Zollars said May 19 at the Wolfe Research Global Transportation Conference in New York.

The nation’s largest less-than-truckload operator will be profitable again by the end of the third quarter, he predicted, claiming YRC Worldwide would have $130 million in earnings before taxes, interest, depreciation and amortization by that time, as required by covenants with its lenders.

Zollars challenged analysts’ assertion that YRC could run out of cash as early as early as the third quarter. “Cash burn will slow in May and June,” he said. “The second half should be cash flow positive.”

Zollars blamed the loss in April in part on “timing” in paying down debt, taxes and other payments, including severance payments.

“We are cutting infrastructure and taking people out,” Zollars said.

He said the company would have “no trouble” meeting its upcoming bank covenants. “The banks have been very supportive,” Zollars said a week after YRC Worldwide’s lenders waived a $45 million second quarter earnings requirement.

It was the second straight quarter YRC successfully negotiated new terms with its bank lenders to stave off violating its credit agreements.

YRC — an $8.9 billion company with several transport and logistics subsidiaries — lost $257.4 million in the first quarter, following a $974.4 million loss in 2008 and a $634.8 million loss in 2007.

Last week YRC said it will seek $1 billion from the U.S. Treasury Department’s Troubled Asset Relief Program to help the carrier fund an estimated $2 billion in annual Teamster union retirement payments over the next four years.

As of May 19, the company has not applied for TARP funds.

YRC accounts for about 23 percent of the LTL market. Its national LTL carriers — Roadway and Yellow Transportation — reported $5.7 billion in revenue in 2008. Those subsidiaries were merged in March and now operate simply as YRC.