Q1 2020 Earnings Call

Order 2020, earning call.

All participants will be in listen only mode. Please note. This event is being recorded.

I would now like to turn the conference over to Eric Berg, Vice President of a breadth of Investor Relations. Please go ahead.

Thank you operator, and good afternoon, everyone welcome to wire she worldwide first quarter toward Eutwenty <unk> earnings conference call.

Joining us on the call today are Darren Hawkins, Chief Executive Officer, Jamie Pierson, Chief Financial Officer.

During the call you may make some forward looking statements within the meaning of federal Securities law.

These forward looking statements and all other statements that might be made in this call, which are not historical facts are subject to uncertainties and a number of risks.

And therefore actual results may differ materially.

A form of this call does not allow us to fully discuss all of these risks.

For a full discussion of the risk factors that could cause the result to differ please refer to this afternoons earnings release and our most recent SEC filings, including our forms 10-K and 10-Q.

These items are also available on our website at wire CW Dot com.

Additionally, please see today's release for reconciliations of net income and adjusted EBITDA.

In conjunction with today's earnings release, we issued a presentation, which may be reference during the call. The presentation was filed an 8-K along with the earnings release and is available on our website.

Because it's a tremendous amount of uncertainty surrounding covert 19, and the rapidly changing environment, we are navigating.

We will not be taking questions on todays call. We appreciate your understanding.

And now I'll turn the call over to Darren.

Good afternoon, everyone and thanks for joining our first quarter 2020 earnings conference call.

Before getting into the business out of the call I'd like to start with a big Thank you.

All of wire Sea world glad to employees, who have answered the call every day since we first tired of this invisible enemy to keep this nation supply chain and the economy moving.

I don't know of a more patriotic industry, then trucking and that spirit has stood strong in Americas transportation networks.

As a result of the service and value that we bring to our customer supply chains, we have grown into the nation second largest LTL carrier and the nation's fifth largest trucking company.

Our 30000 employees perform a vital role and ensuring that the domestic supply chain is the safest secure asked and most advanced in the world.

There are work with over 200000 customers, including being a leading transportation provider for the department of Defense Energy Homeland Security and customs and border patrol, we have developed a deep understanding of and expertise and the importance of a secure and reliable supply chain.

During this crisis, our employees are delivering the vital supplies that are first responders and other essential workers need when they need it and where they need it including meal kits protective gear and equipment as a nation gets back to business all of our employees will continue to be there to help put him.

Erika on the road to recovery.

The department of Transportation Undersecretary Chiles leadership, along with the FMC essay have also gone above and beyond to support the nation's truckers during this crisis.

Specific to wire CW the year started out ahead of expectations and our results reflect that our transformation strategy was really gaining traction and continues to do so even with the sharp contraction starting in mid March we finished the quarter with higher operating income LT.

I am EBITDA liquidity and a lower operating ratio than the end of 29 team.

The operational optimization in our terminal footprint line haul networks and technology created efficiency for our company through greater terminal density and the reduction of line haul expanse, while protecting service to our customers.

As soon as we started seeing the fundamentals of the business start to change we established a covert 19 task force with the primary objective of protecting our employees, while also focusing on continuing to serve our customers, especially those frontline customers, who are vital suppliers to first responders and other.

Essential employees, and then finally preserving liquidity to weather the storm.

These liquidity actions included the elimination of incentive compensation for officers no merit increases further cessation of floral one k. match, furloughs layoffs and reductions to our discretionary capex among other controllable levers.

One of the more significant actions. We completed was the amendment of our term loan B Amendment accomplishes two fundamental stabilizing and corrective actions. One it provides covenant flexibility every quarter this year through and including the end of the year and to it pretty.

Serves liquidity through picking almost all of the cash interest payment that would have otherwise been undue.

And contrary to historical sequential liquidity trends when liquidity usually decreases in the first quarter relative to the fourth we actually built liquidity, while there were many distractions in the quarter our employees answered Americas call delivered the good continued to drive strategy and improve the opposite.

Operations on a year over year basis.

As I've been sharing for the last few quarters, our vision and strategy is to operate as one company with one network and five very proud brands that provide exceptional service to all of our customers.

I want to assure you that while we have been significantly challenged by this crisis. We will continue the operational optimization initiatives to drive asset utilization and equipment as well as properties, which we ended Q1 at 343 terminals combined with network mile.

The reduction through density aggregation this should lead us to be a more profitable company on the other side.

We'll come back at the end with some closing comments, but wed now like to hand, this over to Jamie who will share some more details on the quarter and plans we have in place for the future Jamie take it away.

Thank you Karen and good afternoon, everyone as usual I'll run through the result somewhere in with a little more color not only on the quarter itself, but other more topical non numerical non financial items as well.

For the first quarter of this year wires T. worldwide reported revenue of 1.15 billion down from 1.18 billion in 2019 in operating income a 28 million, which included $839.3 million net gain on property disposals.

Paired June operating loss of 31.7 million, which included a $1.6 million net loss on property, new property disposals, and one Q 19.

That's very adjusted EBITDA, We reported a 4 million dollar increase 30.1 million one Q 19 34.1 million this quarter.

Obviously, a better quarter this year over last year, you're going to lead to higher LTM results as well to that end, we just printed and adjusted LTM EBITDA.

214.6 million their first quarter of 2020 up from that 210.6 million at the ended the year.

Before jumping into the stat I wanted to remind everyone that as we mentioned last quarter, we're going to start going to a single segment reporting structure, which if you really think about it means one company.

Our consolidation to one really driven by an important change that actually started last year and that change was to bring our independent operating company together as one.

One company one net work in one management team all rowing in the same direction.

The creation of one is the foundation of our future, where we will leverage the power of our national and regional networks to provide faster and more reliable service to our customers.

No.

Without further Ado here, we go with one segment Slash company reporting.

For the first quarter. This year, our consolidated LTL tonnage per day was down 3% compared to last year's comparable period.

The decrease in tonnage is led by 6.7 per cent decrease in LTL shipments per day, offset by 3.9% increase in weight per shipment.

On the pricing side.

Year over year, LTM revenue per hundredweight, including fuel surcharge was down 4.2% in LTL per hundred weight, excluding fuel surcharge was down 4%.

However, given that fairly sizable increase in weight per shipment a more jemaine pricing marker. This quarter is probably revenue per shipment.

The year over year change in LTL revenue per shipment, including fuel surcharge was down only 40 bips.

Excluding fuel surcharge it was essentially flat.

And since we're not gonna do today this quarter I thought I would go ahead and share some of our monthly changes in LTL volume and I'm, even getting share with you our preliminary results from April as well.

Compared to last year January was down 5.3%.

February was down 2.4%.

March was down 11.3% and preliminarily April was down 23.9%.

It is very important to note the weekly trends within both March and April and May shelter at home orders were issued across the nation.

Equally is important is that based on our most recent three to four weeks actual experience volumes appeared to have stabilized and with the state lifting those orders. We're hopeful that we will begin to see some positive sequential move in the coming weeks not months.

As for investment back into the business during the quarter. We only spent 12.4 million on capital expenditures as Capex is one of the discretionary spend adamant that we curtailed during the quarter.

Additionally, we entered into new leases for revenue equipment with a capital value equivalent of 700 grant for a total of 13.1 million or 1.1% of operating revenue.

Turning to cash in ABL availability, historically speaking liquidity typically decreases in that first quarter of most years as working capital get squeezed as the usual quarter in seasonal surge consumes cash as we provide services that have a longer payment cycle, then does our pay to our employees.

And our vendors to help us apply those services.

It also just happens to be wanted to slower seasonal quarters of the year. However, this year given in liquidity preservation action that daring referenced in his opening remarks I am pleased to say that during this quarter, our total liquidity actually increased.

<unk> increased almost $40 million from 80.4 million to ended the year 218 million at the ended the first quarter.

The increase in liquidity was aided by that 25.2 million, we retain from property sales, but still positive during the toughest quarter of the year.

For information relating to our liquidity and Kevin compliant over the next 12 months ended challenges, we pay Android you charge in Q, including the discussion on liquidity risks and uncertainties in the risk factors included therein.

I will not repeat what Dan already covered but we'll add that we are actively in simultaneously balancing the safety of our employee.

Service to our customers.

And our liquidity and I tried to it goes without saying that liquidity into preservation. There continues to consume a fair amount of our time at the moment.

The good news Jefferies every one of the industry has their hands full with a lot of competing priorities. At this time, we have more experience managing through tough times than anyone else in this space.

As I mentioned earlier, Oh, you've seen volume declines moderate stabilized in the last three to four weeks and while no. One knows just one along the economic impacts of this global pandemic labs, we will continue to put our employees first.

We'll continue providing the same level of service and the value. We have to act 90 years, and we will continue to preserve liquidity the bet that we can.

Now as always I will leave you with a couple of parting thoughts.

One.

As we entered 2020, we're ahead of our plans and ahead of last year's performing.

Too as far as the waived adjusted EBITDA Covenant my posting approximately 215 million in in the LTM period, we would've handily beat the minimum required 200 million.

And.

Not only would we have beat it equally if not more importantly, we would have actually built liquidity in the quarter.

Everyone knows I don't want Moreover, less but typically the skills above 100 million again, it's certainly heading into right direction.

Three the degradation in volumes appeared to stabilize as we moved into the last couple of weeks of April in that first week of me down approximately 20% plus or minus.

For.

We did what we said we're going to do in continuing our enterprise transformational efforts.

And our using this low and activity to accelerate that transformation.

It's also important to note what we're not doing we're not slowing our investment in technology, we remain committed to using technology to drive change and performance.

And finally I'm not certain what shape. This recovery will take capital you lower you'd be or an l., there's something in between but I'm certain that we are a vital link in the nation supply chain and stand ready to do our apart industry recovery.

In closing I simply want to say thinks freestanding biased during these most difficult times.

I'll now turn the call back over here for some closing comments.

Thank you Jamie no doubt every company every individual for that matter has had to make significant changes to operate and our new world.

Why or see the idea is no stranger to adversity and although this is more than any of us ever imagine that the beginning we will see a through.

Thanks again, everyone for joining us today, please contact Eric with any additional questions that you may have this concludes our call and operator I'm turning the call back to you.

Thank you. This conference has now concluded. Thank you for attending today's presentation you may now that.

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