Yellow Corporation

First-quarter 2023 operating revenue was $1.16 billion, down from $1.26 billion in Q1 2022. Operating loss was $9.3 million versus operating income of $9.2 million a year ago, and adjusted EBITDA was $34.3 million versus $52 million. LTL revenue per hundredweight including fuel rose 4.4% year over year and excluding fuel rose 2.8%; LTL revenue per shipment rose 6% including fuel and 4.4% excluding fuel. LTL tonnage per day fell 12% year over year, driven by a 13.3% decline in shipments per day. Purchased transportation expense was 13.1% of revenue, down 160 basis points year over year. Capex was $29.6 million, total liquidity was $167.5 million, and total debt was $1.51 billion. For April, tonnage per workday was down about 16% year over year. For Q2, management said total revenue could still be slightly higher than Q1, fuel surcharge revenue should be moderately lower sequentially, and operating ratio should improve from Q1’s 100.8 but by less than the typical 300 to 400 basis points seasonally.

Darren Hawkins framed the quarter as broadly in line with expectations given a weak economy and the ongoing One Yellow transformation. He emphasized that Phase One has already improved service and customer experience, and that the company is working with the union on the best path to implement Phase Two, which covers about 70% of the network. His tone was confident but cautious: he repeatedly said One Yellow is essential to improve competitiveness, protect jobs, and create long-term value, while acknowledging the timing remains unresolved.

Dan Olivier focused on the mechanics of the quarter and the balance sheet. He highlighted $1.16 billion of revenue, $9.3 million of operating loss, $34.3 million of adjusted EBITDA, and 100.8 operating ratio, then noted that first-quarter liquidity was $167.5 million after paying the remaining $66 million CDA note balance in January. He also said Q1 generated positive operating cash flow for the first time in more than five years, capex was $29.6 million, and total union wage and benefits are expected to rise 4% to 5% in 2023, with the April 1 wage increase totaling $0.77 per hour and 1.925 cents per mile.

Analysts pressed for timing on Phase Two, with management saying the company is still working with the union and will announce an implementation date once it is determined; they also said the term loan and U.S. Treasury loans mature in June and September 2024, respectively, so they are actively evaluating options but want clarity on Phase Two first. On near-term trends, management said April tonnage was steady but weak year over year, Q2 seasonality should be below the historical 6% sequential increase in tonnage, and operating ratio should improve from Q1 but less than the normal seasonal pattern. They also estimated Q1 One Yellow-related implementation and support costs at about $4 million to $6 million.