Generates Significant Free Cash Flow and Reduces Total Debt

OVERLAND PARK, Kan., Oct. 23 -- YRC Worldwide Inc. today announced diluted earnings per share of $.63 for the third quarter of 2008, including a previously announced curtailment gain of $.84 per share and gains on property disposals of $.21 per share. The quarter also included charges of $.10 per share related to reorganization costs. In the third quarter of 2007, the company reported $.70 of diluted earnings per share.

YRC Worldwide generated $52.2 million of cash from operating activities during the quarter and, when taking into account the $40.4 million of cash inflow from net capital expenditures, third quarter free cash flow was $92.6 million. The company's leverage ratio of total debt to trailing twelve months earnings before interest, taxes, depreciation and amortization, or EBITDA, was 3.18 times against a limit of 3.75 times for the third quarter 2008. As of December 31, 2008, through the remaining term of the credit facilities, the leverage ratio limitation is 3.5 times. Total balance sheet debt was reduced by $11.4 million for the third quarter and $50.3 million since December 31, 2007.

"Throughout the third quarter, the operating environment progressively weakened resulting in lower than expected volumes and more competitive pricing," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "Although the economy slowed more than we expected during the quarter, we still generated solid free cash flow and paid down debt, in addition to removing significant cost from our business," Zollars added.

Key segment information for the third quarter 2008 included:

  • YRC National Transportation LTL revenue per hdwt up 6.3% from third quarter 2007 and LTL tonnage per day down 9.0%.
  • YRC Regional Transportation LTL revenue per hdwt up 5.3% from third quarter 2007 and LTL tonnage per day down 17.2%.

"We are focused on adapting to weaker economic conditions while still providing quality service to our customers. Although improved efficiencies and enhanced service are the key drivers of the Yellow and Roadway integration, the expected cash flows from additional facility sales and further reducing capital expenditures are incremental benefits that should significantly improve our liquidity," Zollars stated. "We also remain confident in our ability to deliver a run rate of at least $200 million of operating income improvement by the end of 2009 from the integration."

Due to the uncertainty in the economy, the company does not intend to provide specific earnings guidance for the fourth quarter. However, the company currently has the following expectations for the remainder of 2008:

  • Fourth quarter tax rate of around 36.5%, excluding any non-cash impairment charge.
  • Reduction in total debt by at least $100 million in the fourth quarter resulting in a reduction of more than $150 million for 2008.
  • Full year gross capital expenditures of between $150 to $175 million and full year proceeds from asset sales of at least $100 million resulting in net capital expenditures of $50 to $75 million.

"We plan to generate a healthy amount of cash flow in the fourth quarter and further strengthen our balance sheet by year end. With our current action plans, we expect to maintain a leverage ratio below 3.5 times," Zollars concluded.

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