YRC Worldwide Offloads Logistics Unit - Analyst Blog

YRC Worldwide Inc. (YRCW), a leading provider of truck transportation throughout the world, yesterday announced that it completed the divestment of the majority of YRC Logistics division to the private equity firm Austin Ventures.

Gross proceeds from the deal were $38.7 million. Out of this, YRCW received the initial proceeds of $33.6 million in cash. For the remaining $5.1 million of payment, $2.3 million is in escrow to cover the transferring ownership of foreign subsidiaries and $2.8 million is also in escrow for indemnification purposes. At the same time, YRCW will incur approximately $11 million of charges for closing this division.

Divestment of the Logistics unit is part of management’s strategy to improve the sagging liquidity condition. Just a year ago, the company almost went bankrupt due to the severe economic recession. Subsequently, YRCW took a series of measures that included sale of real estate, headcount and salary reduction and a debt-to-equity exchange in December 2009.

YRCW announced that it will continue to offer logistics services to its customers through a partnership with Austin Ventures. YRC Logistics will be renamed MIQ Logistics. Moreover, YRCW will retain its two China-based joint ventures for logistic services.

For its second quarter 2010 financial results, quarterly operating revenue was $1,119.1 million, down 2.9% year over year and also below the Zacks Consensus Estimate of $1,183 million. Furthermore, adjusted EPS (excluding one-time items) was at break-even per share, much better than the Zacks Consensus Estimate of a loss of 9 cents per share. This was mainly due to positive operating income reported by the regional companies.

Operating ratio in the second quarter 2010 improved to 95.7% compared to 124% in the prior-year quarter. Adjusted EBITDA was $39.9 million compared to a negative -$234 million in the year-ago quarter.