Yellow Corporation · OTC:YELLQ
Yellow — YRC Worldwide — Investor Day (September 2016)
82 slides from Yellow's investor day presentation, Sep 20, 2016
Slide 1: YRC Worldwide Inc. Analyst Day
YRC Worldwide Inc. Analyst Day | September 21, 2016 Exhibit 99.1
Slide 2: Forward-looking Statements and Disclaimers
Forward-looking Statements and Disclaimers The information in this presentation is summary in nature and may not contain all information that is important to you. The Recipient acknowledges and agrees that (i) no representation or warranty regarding the material contained in this presentation is mad
Slide 3: Agenda
Agenda Welcome and Introduction Tony Carreño, Vice President – Investor Relations, YRC Worldwide Inc. CEO Discussion James Welch – Chief Executive Officer, YRC Worldwide Inc. Technology Overview Jason Ringgenberg – Senior Vice President, Chief Information Officer, YRC Freight Freight Pricing & Yield
Slide 4: James Welch, Chief Executive Officer
James Welch Chief Executive Officer YRC Worldwide Inc. Returned to the company as CEO in 2011 34-year veteran of the company and more than 36 years in the transportation and logistics industry President and CEO of Yellow Transportation from 2000 – 2007 President and CEO of Dynamex Inc. prior to retu
Slide 5: YRCW provides services under a portfolio of four operating companies
YRCW provides services under a portfolio of four operating companies Among these four companies, we have approximately 20 - 25% of the public carrier market by tonnage. We provide the broadest coverage and more service capability throughout North America than any competitor. To put it simply, custom
Slide 6: North American Coverage
North American Coverage In 2003, Yellow Transportation acquired Roadway Express. The two companies were integrated in 2009 and rebranded as YRC Freight in 2012. When customers need longer-haul LTL shipping solutions, YRC Freight is the expert For next-day and time-sensitive services, YRC regional ha
Slide 7: Competitive Strengths: People
Competitive Strengths ~32,000 highly experienced employees throughout North America Average tenure of union employees approximately 15 years Union employee turnover less than 10% Long-term relationships with more than 250,000 customers Experienced senior management with 150 combined years of operati
Slide 8: Competitive Strengths: People
Competitive Strengths Typical LTL driving distance contributes to stable workforce and low turnover YRCW drivers covered over 940 million miles in 2015 The equivalent of more than 168,000 round trips between New York and Los Angeles Active million mile drivers – accident-free through specific career
Slide 9: Competitive Strengths: Networks
Competitive Strengths NETWORKS Networks include 383 terminals
Slide 10: Competitive Strengths: Physical Assets
Competitive Strengths YRC Freight operates a large hub and spoke network Regional carriers operate direct loading and quick sort networks YRCW Totals 383 terminals ~21,000 doors ~15,000 tractors ~45,000 trailers Reinvesting in the business by replenishing the fleet through a combined approach of pur
Slide 11: Competitive Strengths: Generation-Skipping Technology
Competitive Strengths Implementing tools for continuous improvement in safety, efficiency, and productivity In-Cab Safety Technology – installation completed in 2016 and in service Dimensioners – in service Dock Supervisor Tablets – in service Pickup and Delivery Route Optimization Software – implem
Slide 12: Competitive Strengths
Competitive Strengths The result is award-winning customer service with a flexible supply chain that provides the broadest coverage throughout North America GENERATION-SKIPPING TECHNOLOGY PHYSICAL ASSETS NETWORKS PEOPLE
Slide 13: Jason Ringgenberg, Chief Information Officer
Jason Ringgenberg Senior Vice President and Chief Information Officer YRC Freight Joined the company as SVP and CIO in 2014 Responsible for managing YRCW’s information technology systems, resources, business model and infrastructure More than 20 years of experience with Accenture, including the posi
Slide 14: Technology Overview
Technology Overview Limited investment during restructuring provides opportunity GENERATION-SKIPPING TECHNOLOGY Without significant technology investments on the balance sheet, YRCW had an opportunity to set a new course for technology in 2014 after the refinancing was complete To take advantage of
Slide 15: Changing the Technology Investment Focus
Changing the Technology Investment Focus Directing technology funds to what matters most Visibility begin providing accurate, real time status and location information for the 4Ps (people, power, pups and pros) Profitability create technical solutions that enable the company to generate and maintain
Slide 16: Starting with Visibility
Starting with Visibility To operate better we must have better insight to decision making data GENERATION-SKIPPING TECHNOLOGY Kronos: time and attendance system used by YRCW, deployed in 2014 Tracks hourly employee time for payroll Provides real time information feeds to operational systems Allows l
Slide 17: Enabling Profitability Improvements
Enabling Profitability Improvements Profitability is a constant tech investment focus in good times and bad GENERATION-SKIPPING TECHNOLOGY HaulPlan from Optym: load plan creation and network optimization, coming in 2016 Creates optimal loading pattern for every origin / destination pair Allows Holla
Slide 18: Enabling Productivity Improvements
Enabling Productivity Improvements Core productivities must improve, year-over-year, to maintain competitiveness GENERATION-SKIPPING TECHNOLOGY Dock Tablets: mobile solution to better manage largest facilities at Holland and YRC Freight, deployed in 2015 Provides real time productivity insight throu
Slide 19: Pushing for the Right Share of the Market
Pushing for the Right Share of the Market Operating profitability and maintaining/growing volume must not be one or the other GENERATION-SKIPPING TECHNOLOGY Dimensional Freight Quote: credit card based shipping solution at YRC Freight, deployed in 2014 Enables shipper to receive quote without knowin
Slide 20: Controlling Risk & Maintaining Compliance
Controlling Risk & Maintaining Compliance Enhancing safety and reducing risk GENERATION-SKIPPING TECHNOLOGY In-Cab Safety: tools and assets to enhance safe driving, deployed in 2016 Provides alerts when unsafe situations arise Captures outward facing videos at YRCF for training and driver exoneratio
Slide 21: Brian Thompson, VP Pricing & Yield Management
Brian Thompson Vice President Pricing & Yield Management YRC Freight 16 years with the company Named VP of Pricing in 2011 Team is responsible for YRC Freight pricing and contract review Serves on the Marketing Advisory Board at the University of Missouri – Kansas City
Slide 22: Pricing Discipline + Investment
YRC Freight Pricing & Yield Management Pricing Discipline + Investment YRC Freight revenue per hundredweight excluding fuel surcharge up 9.5% in past two years +6.4% +2.9%
Slide 23: Dimensioning Technology
YRC Freight Pricing & Yield Management GENERATION-SKIPPING TECHNOLOGY Dimensioning Technology Shipment size and linehaul cost relationship Incomplete or inaccurate freight descriptions Regularly scheduled density studies Density-based pricing New account locations Dimensioning Statistics 52 measurin
Slide 24: Partnered with PROS for market-based pricing
YRC Freight Pricing & Yield Management GENERATION-SKIPPING TECHNOLOGY Partnered with PROS to transform to a market-based pricing approach What is PROS? Data science company specializing in maximizing the value of every sale Experienced in transportation, cargo, freight and logistics industries 30 ye
Slide 25: PROS Discount Guidance
PROS Discount Guidance Visibility to the rates similar shippers are willing to pay Customer-specific price guidance by geographic lane and service offering Overlay business rules (Growth vs Yield) Guidance recalculated frequently to stay relevant with market dynamics
Slide 26: Benefits with PROS
YRC Freight Pricing & Yield Management Benefits with PROS Gain more revenue from existing customers Identify and correct rates on “out of range” customers Increase share of wallet Reduce customer attrition Win new customers Increase speed to price Increase win ratio by pricing to the market Improve
Slide 27: Dimensional Freight Quote
Dimensional Freight Quote Web quoting application launched in late 2014 Designed for shipper’s ease of engagement No account setup required Quote based on shipment density, not National Motor Freight Classification All inclusive net rate; pay with credit card
Slide 28: Dimensional Freight Quote: Dynamic pricing
Dimensional Freight Quote Dynamic pricing Real-time control of prices Enables true yield management Great success with small shippers, 3PLs, and freight forwarders
Slide 29: Darren Hawkins, President YRC Freight
Darren Hawkins President YRC Freight Returned to the company in 2013 20 years with the company and more than 24 years in the national LTL industry in both operations and sales roles Former Senior VP of Sales at YRC Freight Former Director of Operations and Director of Sales at Con-Way Freight Serves
Slide 30: YRC Freight Overview
Year Founded 1924 Headquarters Overland Park, KS Employees ~20,000 Terminals 258 service facilities YRC Freight Overview
Slide 31: The more ways to get it where you need it
The more ways to get it where you need it when you need it freight company You have freight that needs to get somewhere quickly and reliably. We’ve got the network to make that happen, plus a newly expanded service portfolio featuring Accelerated, our new faster standard
Slide 32: Extensive North American network and Accelerated service
Our extensive North American network provides both regional and national LTL services Our new Accelerated service with weekend advantage keeps shipments moving over the weekend with more next day lanes than ever before. A side-by-side comparison (using Buffalo, NY as an example) shows just how far t
Slide 33: Consistency and Speed You Can Count On
Consistency and Speed You Can Count On YRC Freight has put a lot of time and attention into improving our speed and on-time percentage. The results of our investments speak for themselves. Our new Accelerated service (our faster Standard) and our Time-Critical service are at the heart of this effort
Slide 34: In Cab Safety Technology
In Cab Safety Technology Safety - Journey to One At YRC Freight, our uncompromised commitment to safety is foundational to everything we do. Our continued investment in technology, equipment and training is fundamental to protecting our employees, communities and customers
Slide 35: Scott Ware, President Holland
Scott Ware President Holland Named President in 2012 9 years with the company and more than 30 years of freight transportation experience Former Vice President of Operations and Linehaul at Holland Previously held various management roles with Con-Way Freight and Saia Inc. including operations and s
Slide 36: Holland Timeline
1929: Holland Motor Express formed 1984: Cooper family sold company to Australian-based transportation conglomerate TNT Limited; Holland Motor Express became TNT Holland Motor Express 1996: Having achieved its own identity as a leader in regional transportation and logistics, TNT Freightways changed
Slide 37: Holland Overview
Year Founded 1929 Headquarters Holland, MI Employees ~7,500 Terminals 53 service facilities Holland Overview
Slide 38: Holland Services
Holland, an industry-leader, is recognized for providing the most next-day service lanes in its geographical footprint Provides regional LTL transportation services throughout the Midwest and Southeastern United States Offers additional “regional” coverage to Ontario and Quebec and “inter-regional”
Slide 39: Holland Value Proposition
Holland Value Proposition (speed, reliability and quality) Holland Brand Value (87 years in the marketplace) Nimble organization – speed of communication, execution and decision-making across all functional areas Successful growth in corporate business with direct leadership from the Regional Sales
Slide 40: Holland Award-Winning Service
QUEST FOR QUALITY: Midwest/North Central LTL Regional Motor Carriers TOYOTA: 2015 LTL Logistics Partner of the Year WAL-MART: 2015 Regional Carrier of the Year WORLDWIDE EXPRESS: 2015 Midwest Regional Carrier of the Year UNISHIPPERS: 2015 Regional LTL Carrier Partner of the Year PARKER HANNIFIN: 201
Slide 41: Pickup and Delivery Handheld Units
Honeywell Dolphin CT50 Mobile Computer and Transportation Workflow Mobile Platform Pickup and Delivery Handheld Units Regulatory Compliance HOS/Elog, HazMat Sales Customer experience Pricing Costing intelligence Customer Service Statusing Invoicing Shipment info Finance IFTA Provides connectivity th
Slide 42: T.J. O'Connor, President Reddaway
T.J. O’Connor President Reddaway Named President in 2007 More than 34 years of industry experience Former President and CEO of USF Bestway Joined Roadway in 1982 and subsequently held various management positions
Slide 43: Reddaway Overview
Year Founded 1919 Headquarters Tualatin, OR Employees ~3,000 Terminals 50 service facilities Reddaway Overview
Slide 44: Reddaway: Best in the West
Most experienced operating company among the YRCW family – celebrating 97 years of service in 2016 More Next-Day lanes across the Golden State 16 service centers strategically located in California Reddaway is the “Best in the West”
Slide 45: Reddaway Recognized for Award-Winning Service
Recent Awards Toyota, 2015 LTL Provider of the Year (2nd year in a row) Unishippers Global Logistics, 2015 Regional LTL Carrier Partner of the Year Worldwide Express, 2015 Western Regional Carrier of the Year GlobalTranz, 2015 Carrier of the Year-Western Region (for the 5th time) Echo Global Logisti
Slide 46: Emphasis on Safety First
Emphasis on Safety First collision-free 3 million miler, Scott Bunn Over 100 years of combined safety experience in our new team lead by Bill Amos (Mike Kolb, Steve Beckwith, Todd Boldin, Larry Parker) “Be Safe, Be Great!”
Slide 47: Automation of Accessorial Charges
Automation of Accessorial Charges Forward-Looking Radar New CT50 / Honeywell P&D driver application allows for real time annotating of accessorial services
Slide 48: Weights and Research
Weights and Research Forward-Looking Radar Lane-Departure Warning Ceiling Mounted Cubiscan Dimensioning Equipment Increased shipment characteristic data Improved pricing and yield decisions Upgraded Forklift Scale Fleet Avery FLI425 Upgrading Terminal Wireless Network Motorola AP-7522-67040
Slide 49: In-Cab Safety Technology – New Units
In-Cab Safety Technology – New Units Lane-Departure Warning Automatic Transmission Blind-Spot Warning Forward-Looking Radar
Slide 50: A proud legacy built on service, growth, cost management and safety
A proud legacy built on service, growth, cost management and safety
Slide 51: Don Foust, President New Penn
Don Foust President New Penn Named President in 2014 2 years with the company and more than 35 years of freight transportation experience Former Division Vice President of Roadrunner Transportation Diversified experience in short haul, long haul and asset light transportation models
Slide 52: New Penn Overview
Year Founded 1931 Headquarters Lebanon, PA Employees ~2,000 Terminals 22 service facilities New Penn Overview
Slide 53: New Penn Overview
New Penn Overview Service throughout the Northeast, Greater Toronto area, Quebec, and Puerto Rico Market leader in morning delivery service in the Northeast Partnership service capabilities throughout the lower 48 states and Alaska Celebrating our 85th anniversary....and our second year of reenginee
Slide 54: Sales – 2016 & Beyond
Imbalances / Focus Areas Lane Selling Target freight moving into the key states Stabilize monthly, quarterly volume patterns Volume Quotes Sales Channels / Revenue Opportunities Corporate/3PL – Growth Local Channel – Harvesting Profitable Segments Growth – Intense focus on shipments to partners and
Slide 55: People and Operations
People / Communication / Leadership Regional Vice President group realigned with Sales and Operations Upgraded talent Rightsizing field operations team both salaried and hourly employees P&L management education for all field operations Communications for all employees to drive key initiatives as we
Slide 56: Operations – Load Average Initiative
Helps minimize impact of out of balanced lanes Reduces empty trips through load reductions Addressing our over-length charges for freight over 12’ to create higher yield Through July 2016, averaging a year-over-year improvement of 18% Operations – Load Average Initiative
Slide 57: Technology
Technology will be the pillar of the organization that will enable each functional area to achieve its goals Themes for remainder of 2016 and 2017 Implement IT Steering Committee to ensure alignment of IT priorities and strategy to those of the organization Shed non-core process enhancement and supp
Slide 58: Our Keys to Success
Safety MobilEye SmithSystem Proactive, increased communication Employee Engagement / Morale Training for all associates in all departments Increased transparency for all associates Increased engagement by management Sales Address lane imbalances Grow Corporate / 3PL; harvest local markets Diversify
Slide 59: Jamie Pierson, Chief Financial Officer
Jamie Pierson Executive Vice President and Chief Financial Officer YRC Worldwide Inc. Named CFO in 2011 Acted as an advisor to the company from 2009 – 2011 as Managing Director with Alvarez & Marsal North America Responsible for the areas of corporate finance, treasury, cash management, accounting,
Slide 60: Reinvesting in the Business
Reinvesting in the Business After several years of curtailing investment in the business, capital spending has resumed Fleet replenishment through operating leases beginning in 2013 Increased leasing activity due to greater financing options resulting from the Company’s improved financial condition
Slide 61: Reinvesting in the Business – Technology & Other CapEx
Reinvesting in the Business – Technology & Other CapEx In 2014 and 2015, the investments in technology CapEx nearly doubled the previous year’s investment Recent Technology & Other CapEx investments include Dimensioners(a) Mobileye and Lytx in-cab safety technology(a) Pickup and deliver handheld uni
Slide 62: Simplified Capital Structure
Term Loan ABL Term A Capital Leases ABL Term B CDA Note Series A Notes Series B Notes 6% Convertible Senior Notes Capital Leases New Term Loan CDA Note $1,361.3M $1,060.8M Pre-Refinancing (12/31/13) Today (6/30/16) 5% Convertible Notes 5% Convertible Notes Series B Notes Series A Notes Post-Refinanc
Slide 63: No Near-Term Maturities
No Near-Term Maturities Significant extension of debt maturities provides runway to continue operational transformation February 2014 Refinancing February Term Loan March IBT (MOU) December CDA Focused on Operational Execution Runway Option to extend maturity from February 13, 2019 to June 28, 2021,
Slide 64: Leverage Ratio
Leverage Ratio Adjusted EBITDA CAGR 20.3% 2011 – 2015 Growing into capital structure Continue to de-risk the balance sheet Note: Funded debt balances based on par value Steady progress every year since 2011 Funded Debt to Adjusted EBITDA ratio down 5.2 turns YRCW Adjusted EBITDA Millions $150 $250 $
Slide 65: Credit Facility Covenants
Credit Facility Covenants YRCW’s credit ratings as of June 30, 2016: Standard & Poor’s corporate family rating is B- with a Stable outlook Moody’s corporate family rating is B3 with a Stable outlook 3.32x LTM as of 2Q16
Slide 66: Cash Flow
Cash Flow Steadily improving cash flows while simultaneously increasing reinvestment back into the Company Millions Millions (a) Free cash flow = operating cash flow less acquisitions of property and equipment net of disposals
Slide 67: Opportunity for EBITDA Margin Growth & Further Deleveraging
Opportunity for EBITDA Margin Growth & Further Deleveraging Assuming current market performance of an OR of 91 to 93, the long-term EBITDA margin segment goals are as follows: YRCF = 7.6% (equivalent to an OR of 95 – 96) Regional = 10.5% (equivalent to an OR of 93 – 94) Significant opportunity for b
Slide 68: Plan to Achieve Margin Segment Goals
Plan to Achieve Margin Segment Goals Include 1 4 Volume and Yield Growth Economic Growth Continued market price rationalization 2 5 3 Focusing on Safety 6 In-cab safety equipment installation in existing fleet substantially complete SMITH system training, peer safety trainers and the expansion of dr
Slide 69: Multi-Employer Pension Plans Contingent Liability
Multi-Employer Pension Plans Contingent Liability Employees covered by collective bargaining agreements Required contributions anticipated to be an average of $1.75(a) per hour in 2016 2016 cash contributions to be approximately $90 million(a) Expense included in EBITDA Contributions are made to 32
Slide 70: Single-Employer Pension Plans
Single-Employer Pension Plans Certain employees not covered by collective bargaining agreements Plans closed to new participants effective January 1, 2004 with benefit accrual for active employees frozen effective July 1, 2008 Future funding requirements primarily driven by benefits paid, actuarial
Slide 71: Forward Looking Considerations
Forward Looking Considerations 1 Plan to continue investing back into the business through combined purchasing and leasing to enhance shareholder value 2 No material long-term debt / facility maturities until 1Q19 3 International Brotherhood of Teamsters memorandum of understanding (MOU) in place th
Slide 72: Justin Hall, Chief Customer Officer
Justin Hall Chief Customer Officer YRC Worldwide Inc. Joined the company in 2016 Responsible for designing and deploying technology, logistics and innovative transportation solutions to enhance the customer experience and create growth opportunities Former President of Logistics Planning Services
Slide 73: Embracing Change – Commitment to Customer Experience
Embracing Change – Commitment to Customer Experience Customer Retention & Growth Focused Onboarding Cross-functional Pods 3PL / Forwarder Collaboration Value-add Technology Premium Services E-Commerce Logistics Helping our customers adapt to market shifts Evaluating our strategy Customer Asset Manag
Slide 74: James Welch Closing Comments
James Welch Closing Comments
Slide 75: How we will move freight, our company and your investment forward
HOW WE WILL MOVE FREIGHT, OUR COMPANY AND YOUR INVESTMENT FORWARD Strong Industry Position Diversified Business Model Experienced Leadership Team Simplified & Stable Capital Structure Turnaround Still Has Legs Via Margin Expansion Reinvestment Back Into the Business National Footprint / Tremendous A
Slide 76: Q&A Session
Q&A Session
Slide 77: Appendix
APPENDIX
Slide 78: 2Q 2016 Financial and Operational Update
2Q 2016 Financial and Operational Update 1 4 5 3 6 Continued reinvesting in the business in Added new Accelerated service at YRC Freight Allows customers’ non-guaranteed shipments to reach their destinations 1 – 2 days faster than standard transit times 2 Executing strategy of prioritizing freight m
Slide 79: EBITDA Reconciliation - Consolidated
(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in Adjusted EBITDA EBITDA Reconciliation - Consolidated ($ in millions)
Slide 80: EBITDA Reconciliation - Segment
(a) As required under our Term Loan, other nonoperating, net, shown above does not include the impact of non-cash foreign currency gains or losses EBITDA Reconciliation - Segment ($ in millions)
Slide 81: Free Cash Flow Reconciliation - Consolidated
Free Cash Flow Reconciliation - Consolidated ($ in millions)
Slide 82: Investor Relations
INVESTOR RELATIONS NASDAQ: YRCW www.yrcw.com COMPANY CONTACT: Tony Carreño Vice President – Investor Relations (913) 696-6108 tony.carreno@yrcw.com