Yellow Corporation

Stephanie D. Fisher - Vice President and Controller James L.

Welch - Chief Executive Officer and Director James G. Pierson - Chief Financial Officer and Executive Vice President Darren D.

Hawkins - President of YRC Freight

Thomas S. Albrecht - BB&T Capital Markets, Research Division Robert H.

Salmon - Deutsche Bank AG, Research Division Scott H. Group - Wolfe Research, LLC Arthur W.

Hatfield - Raymond James & Associates, Inc., Research Division David G. Ross - Stifel, Nicolaus & Company, Incorporated, Research Division Brad Delco

Thank you. Good afternoon, and thank you for joining us for the YRC Worldwide Fourth Quarter 2014 Earnings Call.

James Welch, Chief Executive Officer of YRC Worldwide; Jamie Pierson, CFO of YRC Worldwide; and Darren Hawkins, President of YRC Freight, will provide comments this afternoon. James, Jamie and Darren will be available to answer questions following our comments.

Now for our disclaimers. During this call, we 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 on this call, which are not historical facts, are subject to uncertainty and a number of risks. And thus, actual results may differ materially.

These include statements regarding the company's expectations, assumptions of future events and intentions on strategies regarding the future. The format of this call does not allow us to fully discuss all of those risk factors.

For a full discussion of the risk factors that could cause the results to differ, please refer to this afternoon's earnings release and our most recent SEC filings, including our Forms 10-K and 10-Q. Additionally, please see today's release for a reconciliation of operating income and loss to adjusted EBITDA and the reconciliation of adjusted EBITDA to net cash flow from operating activities and adjusted free cash flow deficit.

During this call, we may refer to the non-GAAP measure of adjusted EBITDA simply as EBITDA. I'll now turn the call over to James to provide comments on our fourth quarter results.

Thanks, Stephanie. We appreciate you taking the time to listen to our fourth quarter and year-end earnings call this afternoon.

I'll make a few comments, and then turn the call over to Jamie and Darren for their additional comments. 2014 was literally a tale of 2 halves.

At this time last year, we were battling terrible winter weather, while working diligently to refinance our debt and extend our labor agreement for another 5 years and, fortunately, we were successful on all accounts. Immediately thereafter, we worked on giving our networks back in cycle after coming out of the harsh winter.

Then, we regained our operating momentum as we moved through the second quarter and into the third quarter. And we carried that momentum through the fourth quarter and delivered positive year-over-year results when compared to the fourth quarter of 2013.

You might recall that during the third quarter earnings call, clearly noted that our #1 priority at each of the 4 operating companies was to improve overall pricing and yield. We executed on that priority well and improved the yield and freight mix.

Our sales force did an excellent job of positioning the capacity and value that we bring into the marketplace. For the full year of 2014, we improved operating income by 60% to $45.5 million over 2013 and mostly -- mostly due to yield and volume growth at both segments.

At YRCW, we generated approximately 65% of our adjusted EBITDA for the entire year of 2014 in the second half of the year, a true sign of operational progress. In the fourth quarter, YRCW improved operating income by $32.8 million, generating 32 -- $31.2 million of operating income versus an operating loss of $1.6 million in the fourth quarter of 2013.

YRC Freight experienced yield growth of 5.7% including fuel surcharge and 7.3% excluding fuel surcharge. These yield improvements obviously helped to drive operating income improvement.

YRC Freight's priority was to improve price over volume, and it will continue to make this a priority throughout 2015, along with a continued focus on improving operational efficiencies. Darren will elaborate on YRC Freight's progress later in the call.

The Regional carriers experienced yield growth of 3.5% including fuel surcharge and 4.8% excluding fuel surcharge. However, offsetting this positive yield growth was expense related to the increased frequency of liability and work complaints, which had a very negative impact on our overall fourth quarter results.

For 2015, yield improvement, operational efficiency and safety will continue to be a priority at all 3 Regional companies. So while our progress is notable in the second half of the year and in particular, in the fourth quarter of 2014, we have areas of our business that still must improve.

First, we simply had too many injuries and accidents during the year, and our operating performance suffered as a result. We have intensive and specific initiatives in place at each operating company that are focused on improving safety results.

For example, we are increasing the frequency of the Smith System training for drivers. We have established safety committees at each of the terminals, and we are consistently conducting safety audits and safety trainings.

Additional communication with employees is also taking place at pre-shift meetings and at the time the driver dispatches as well. Second, improving productivity in 2015 will be important to further improving our operating results.

We hired and trained approximately 4,000 employees during 2014, and are providing more advanced training and support for current employees. We believe investing in our employees is key to ensuring they have the tools to drive the improvement we expect.

Third, as I mentioned earlier, our focus on yield, which began producing positive results in the third quarter of 2014, will continue in 2015. We are making investments in our yield management group to be certain we're being compensated for the capacity, service and value we bring to the marketplace.

As we move through 2015, we will monitor fuel prices, just like every other company in the [indiscernible] industry, to see whether the lower fuel prices translate into additional consumer spending and, therefore, increased freight volumes. If fuel prices remain at current levels, lower fuel surcharge revenue will most likely put some downward pressure on operating results.

If freight volumes increase due to additional consumer spending, we can continued -- we should continue to see capacity remain tight during the year and, certainly, the pricing environment should continue to remain favorable. So in summary, our company is continuing to improve our competitive position in the marketplace.

Our Regional carriers, holland, Reddaway and New Penn provide best-in-class service in the markets that they have been successively serving. And despite a setback in the fourth quarter due to additional liability claims and work comp expense, these carriers are in good shape for success in 2015, and they are led by extremely capable management teams.

As for YRC Freight, they were able to gain and then sustain solid momentum in the second half of 2014, and addressed the freight mix and pricing issues in a meaningful way, really, for the first time in many years. YRC Freight is working on several key initiatives that should make them more operationally efficient moving forward and, they too, have a solid management team committed to achieving better results.

In closing, I can say that our accomplishments in 2014 should provide a solid foundation to build on in 2015 and beyond. I'll now turn the call over to Jamie to review the stats for the quarter and year-end results.

Jamie?

Thanks, James, and good afternoon, everyone. For the fourth quarter of 2014, even though the Regionals segment had 4 fewer working days, we reported revenue of $1.2 billion, an increase of $10 million over 4Q '14 (sic) [4Q '13], largely due to top line growth at YRC Freight due to strong yield growth for the quarter, offset by slight decline in volume and tonnage.

Additionally, we reported consolidated operating income of $31.2 million, a $32.8 million increase when compared to the slight loss we reported in 4Q '13, and reported adjusted EBITDA of $77 million, an $18.2 million increase over the same quarter last year. In the fourth quarter of 2014, operating income included $5.8 million gain on asset disposals compared to a $300,000 gain on asset disposals in the same period of 2013.

For the year ended December 31, 2014, we reported revenue of $5.1 billion, an increase of $203 million over 2013, due to top line growth at both YRC Freight and the Regional carriers. The revenue growth at YRC Freight was largely due to strong yield growth experienced in the second half of the year, as our pricing strategies gained traction.

The increase in revenue for the Regional carriers was due to tonnage and pricing increases throughout the entire year. Additionally, we reported consolidated operating income of $45.5 million, a $17.1 million increase when compared to 2013, and adjusted EBITDA of $244.5 million, a slight decrease from the $254.9 million we reported in 2013.

Operating income in 2014 included an $11.9 million gain on asset disposals compared to a $2.2 million on asset disposals in 2013. For the year-over-year fourth quarter stats.

YRC Freight's tonnage per day was down 2.7% and regional tonnage per day was up 1%. YRC Freight's revenue per shipment including fuel surcharge was up by 5.8%, and revenue per hundredweight including surcharge was up 5.7% and its weight and per shipment was flat.

As James previously mentioned, excluding fuel surcharge, revenue per shipment was up 7.4% and revenue per hundredweight was up 7.3%. The Regional carriers' revenue per shipment including fuel surcharge increased 3.7%, which included an increase in their weight per shipment of 0.2% and an increase in their revenue per hundredweight including fuel surcharge of 3.5%.

Additionally, as previously noted, excluding fuel surcharge, their revenue per shipment was up 5% and their revenue per hundredweight was up by 4.8%. As for the results, for the fourth quarter of 2014, YRC Freight reported operating income of $24.5 million, nearly a $40 million improvement over the prior year, which translates into an operating ratio of 96.9% and an improvement of 510 basis points over last year's comparable quarter.

Further, Freight reported adjusted EBITDA of $44 million, a $26.6 million increase over the fourth quarter of 2013, primarily due to increases in base pricing and reduced local terminal purchase transportation, offset by lower productivity. Our Regionals segment reported operating income of $10.6 million, a decrease of $12.1 million from 4Q '13, and an operating ratio of 97.5%.

This decrease was largely due to 4 fewer working days and additional $12.2 million of expense related to our liability claims and work comp expense related to the increased frequency of claims. On adjusted EBITDA basis, the segment reported $33.2 million, which was a decrease of $7.5 million over 4Q '13.

In terms of liquidity, at the end of the fourth quarter, our cash and cash equivalents and amounts able to be drawn under our ABL facility remained relatively consistent at $198 million, down from $213 million at the end of the third quarter. In closing, I'd say a few things.

One, as we reported earlier today, we received a waiver from our ABL lenders to address the result of an incorrect interpretation of the data in which we need to deposit cash into the facility to meet some of our technical borrowing requirements. The waiver was effective yesterday, and we continue as business as usual under our credit facilities.

Two, we have been discussing for some that the reinvestment in our fleet in 2014 was in the form of operating leases. This will continue to be the case in 2015 as well.

All else being equal and on a year-over-year basis, these leases will pressure consolidated EBITDA margin by approximately 1%. In 2014, we purchased $69.2 million of total CapEx and leaves revenue equivalent with a capital value of another $72.4 million for a total CapEx equivalent of $141.6 million.

Third and, finally, the investments we have made in 2014 and the investments we're making today and plan to make throughout 2015 in dimensioners, dock cablets, safety and linehaul technology should continue to pay significant dividends going forward. This point, I'll turn the call over to Darren to discuss YRC Freight's results and their priorities for the balance of the year.

Thanks, Jamie, and good afternoon, everyone. I'm pleased to report continued and accelerating progress at YRC Freight during the fourth quarter as our investments in people, pricing discipline and operational processes contributed to the improved results.

Our sales efforts produced steady and consistent revenue growth in the fourth quarter, and we expect those efforts to continuously improve our business mix, pursue volume in the right lanes and grow profitable revenue in 2015. The performance interim at YRC Freight was driven by strong yield results and successful contract renewals, which more than offset declining fuel surcharge revenues experienced late in the quarter.

As a result of the decrease in diesel prices in the fourth quarter that we anticipate will continue into and throughout the year, YRC Freight will continue to pursue base-rate increases. Going forward, we will continue to place yield improvements above tonnage growth.

Operationally, our network remained in cycle and current during the fourth quarter while handling business peaks and holiday periods efficiently. Our efforts to recruit, hire and train drivers have been successful or ongoing and resulted in a reduction of local terminal purchase transportation costs, which significantly contributed to positive earnings in the fourth quarter.

In support of the yield and operational improvement strategy, we continued investing in technology as we completed the rollout of 42 dimensioning devices across our network and finalized the testing of dock tablets at our 2 largest distribution centers in Q4. The successful pilot for this new technology led to the implementation plan to provide tablets for all supervisory staff at our 23 distribution centers by the end of the third quarter.

The wireless dock tablets should improve the supervisor time efficiency as well as improving dock bills per hour, load average and quality. Additionally, we started updating and enhancing the capability of our linehaul management technology to provide greater visibility, prioritization and oversight of driver, power and trailer assets in the fourth quarter of 2014, and we'll have the install completed by the end of the second quarter of 2015.

We remain committed to the 4 foundational priorities of safety, service, efficiency and everyone sales, that are road map for continuous improvement at YRC Freight in 2015. Initiatives in each of these 4 foundational priorities include: from safety, additional field safety trainers that are made up of most experienced and safe drivers and the deployment of NCAP technologies started in our linehaul fleet that includes adaptive cruise control, stability control and lane departure warning.

For service, driver recruiting, hiring and training through military partnership, dock-to-drive programs and centralized driver-recruiting department. From an efficiency perspective, we have begun an initiative that includes all of our focus areas through direct engagement of our hourly employees who are closest to the operational performance of the company.

It involves over 100 experienced system managers who are working closely with terminal employees and a consulting firm in our distribution centers. These process-improvement teams are streamlining standard work that will eliminate waste in all facets of the office, dock and yard operations.

And everyone sells. The right price, right lanes through clear customer communication and pricing technology that drives network-beneficial tonnage and yield enhancement.

These focus areas will improve our value proposition and make YRC Freight more attractive to the overall marketplace. The gains we expect from these areas will support our growth initiatives around revenue quality, while lowering operating costs and driving improvement in our financial results during 2015.

While the timing and complexity of these initiatives vary, we expect steady progress throughout the year in all areas. YRC Freight will continue to provide safe and reliable transportation solutions that make a difference for our people, our customers and our communities.

We believe our team is well positioned to continue into 2015 the progress we made in the fourth quarter. With these comments, we are ready to take your questions.

I just wanted to rattle off a bunch of kind of questions to bring everything together. So on the larger gains at freight, was that mostly real estate?

Or are you actually able to realize gains on equipment despite the old age?

Yes, the vast majority of it's real estate, Tom. There's nothing there that is outside of the norm, very little on the equipment, if any.

Okay. And then, I know part of the OR slippage at Regional was the number of days was quite a bit fewer.

But it does seem like even before the fourth quarter that the improvement had stalled out there. Can you discuss 2 things: Why you believe it's stalled out?

And is it more centered in Holland than the other 2 companies?

Tom, this is James. Obviously, we won't commit to talk too much about each individual company, but I'll say what hurt the Regionals in the fourth quarter more than anything was the $12.2 million hit that they took with liability claims and work comp expense.

If you really add that back in, if we hadn't had some of the severity of accidents that we've had, they wouldn't have been that far off from last year in the fourth quarter. But they're very focused on their yield improvement.

Tonnage slowed down a bit there in the fourth quarter, as they got better with their yield. But I think we're set up good for 2015, and I'm not too worried about them right now.

Are you comfortable with the leadership in place?

I am comfortable with the leadership in place at all 3 of those companies. We have extremely talented management teams, and they're doing all of the things that we want them to do right now.

And how much of a BIPD and workers comp adjustment was there at Freight in the quarter? Was it a benefit or a bit of a small expense?

I'll let Jamie talk about that.

Yes, we don't give the detail, in terms of breaking it up between the 2, especially on a detailed-segment basis. What I would say, though, Tom, is I think James said it in his prepared remarks, is we had way too many accidents.

And if we want to focus just on YRC Freight and just on the quarter, very, very little, if anything, on a BIPD basis.

Okay. So I that -- a minute ago, I think James gave a $12.2 million figure.

I thought that was just a Regional reference and it sounded like that was...

It is. It's Regional referenced from.

And that was just quarter, right? That wasn't a whole year, right?

That was just for the quarter.

And was that a mix of BIPD and workers comp?

Yes.

Okay. But you won't give a comp?

So you gave it at Regional but you won't give it at Freight?

Yes, so the breakup of it, Tom, is really -- it's $10 million at BIPD and $2 million at work comp.

At the Regional.

At the Regionals.

But for YRC Freight, on a year-over-year basis, it's a nonevent.

Okay. That's kind of what I'm looking for, is just sort of a delta, a slight positive, negative or neutral.

So...

It's neutral.

All right. And then, on -- Jamie, and when you're talking about the leases and as you continue to invest in the fleet, I want to make sure I heard you correctly.

I think you said that the lease -- the growth in operating leases, going forward, could hurt the OR basically by 1 point or 100 basis points. But I assume you mean that in a static sense, that's before other efficiencies, pricing improvements.

You're just kind of talking static, right?

That's right. And it's not operating income, it's EBITDA.

But you're -- all else being equal, on a year-on-year basis, it's going to be about a 1-point headwind.

Okay. And then, on those figures that you gave for CapEx, was it $69.29 million in operating leases and $72.4 million of capital leases?

No.

I think it's $69 million -- give me one second, $69 million of CapEx and $72 million of capital leases.

No, of operating leases. Capital guidance.

I'm sorry, operating leases, yes. So it's $69.2 million CapEx, $72.4 million of operating leases, for a total of $141.6 million.

Okay. So cash CapEx on the first one.

Okay. And then, lastly, and then, I'll jump in the queue.

You've come a long way. Would you want to venture any thoughts on whether you can continue to profitability into the first quarter, if weather remains somewhat muted?

This is James. I'll just reiterate that yield is going to continue be our focus.

We've got good momentum. It's continued into January on the yield side.

Certainly, we are all about improving our safety performance. We know we've got to do better there because that did hurt our operating performances, especially at the regional companies.

We know we've got to continue to engage our employees to improve our productivities. And that we're going to keep picking away at this technology piece to make us do that things that we want to do from an efficiency and productivity and cost control standpoint.

So that's -- that's as good a guidance I'm going to give you for January and February and March.

James, I'm thinking about just the -- if you could talk a little bit about the morale at kind of the Regional companies? Because it feels like, at least in the fourth quarter, that they took their eye off the ball, given the elevated accidents severity as well as workers comp in the quarter.

And how you guys are looking to drive better engagement to achieve some of the productivity targets you guys have outlined in the past.

Rob, that's a good question and a good observation. It kind of goes back to where we were this time last year, plodding our way through that winter weather and the MOU and the uncertainty in the refinancing and all the things that we were doing.

And, yes, there's no doubt that we lost a little pep in our step from an employee engagement standpoint. And then, we all pretty much got smothered with volume in that second quarter.

So it's just been a continual process of trying to be sure that we're communicating and engaging our employees to do the right thing for our customers and our company and themselves. And we kind of got on a little bit of a bad streak with some injuries and some -- and several severe accidents.

So I don't think that there is a lack of employees trying to do the right thing. I think it's just been a little tougher time line to get things back to where we wanted it, for the reasons that I just outlined in the first half of the year.

And that kind of gets back to my comments that literally, 2014 was a year of 2 halves. But all 3 of the Regional companies are working diligently at employee engagement as is YRC Freight.

So I don't think we have a morale problem per se, but I think this has been a little more difficult to get the pace that we wanted back from that MOU time frame last year.

Okay. That color's helpful.

You guys have highlighted, I guess, the benefits from some tablets that you've been using at a couple DCs. Can you give us a sense of how that impacted yield at those facilities as well as your linehaul average or dock productivity, so we can potentially extrapolate kind of what the impact will be as you deploy this across the overall network?

Good afternoon, Rob, this is Darren. As I mentioned that pilot completed in the fourth quarter.

We're implementing those at the distribution centers between now and the third quarter of this year. The initial pilot certainly showed success in each of those categories.

So we believe going forward that they're going to have a positive effect in all of the categories that I mentioned. So that'll be an ongoing process over the next 2 quarters.

But in terms of magnitude on the yield side, did they add a point at those facilities, as you're kind of looking at the overall profit impact? Or is there any color you can provide me in terms of shipments or employees per shipment at those facilities or linehaul load average or something, so we can try and gauge the impact as we look out?

Well, we have an ongoing effort around yield, as was referenced by our fourth quarter results, and our technology investments always enhance operational performance. That's where we put our time and attention.

So from the dimensioners, the dock tablets, our safety initiatives in our linehaul technology, all of those technology investments will be a positive momentum for YRC Freight.

Darren, this is Jamie. Isn't it fair to say that it's not going to be as much on yield as it's going to be on load average.

It's going to be on dock productivity, it's going to be on claims. It's going to be getting the supervisors out of their offices and on the dock.

It helps drive those improvements operationally.

Absolutely, and also had a positive impact on employee engagement.

So wondering if you can help us try and understand the impact of fuel a little bit. Maybe Jamie, if you have some perspective on how much it may have helped, if it did, in the fourth quarter on a net basis.

And then, I know you talked about that it could be a headwind in '15. Is there any way to help us kind of figure out the magnitude of what the headwind could be?

I'm guessing it's less now with the change in the surcharge, but I think there's just a lot of questions about how big of an issue it could be.

Yes. No, Scott, we look -- we look at prices more holistically than individually.

So we don't break it apart so much in terms of yield and fuel surcharge. We look at the value we bring our customers, and we want to be compensated for that at the right levels.

So if anything, if fuel comes down, I think that's going to let us lean into the base rate increases a little bit more. To the extent that -- and you read the same trade rags I do.

To the extent that it -- it adds another $65 billion in the consumer's pocket, there's a possibility that we actually could see some capacity continue to be constrained, which, I think, James -- he even said it in his prepared remarks, may even help the base rate environment as well.

Okay. And was there any -- do you have a number on what like the lag benefit was in the fourth quarter?

No. It's -- we reset it on a weekly basis.

We don't look at it in terms of either giving guidance or the way we manage the business. We're much, much of more long-term investors than that.

Okay. Just in terms of the cash and CapEx -- so in terms of -- the $142 million total last year, any guidance for this year in terms of what you're planning to spend?

No, No CapEx guidance. But I would think that we're going to continue to do what we did last year.

We're going to continue to actually -- what I can almost say double down on our technology investments. We're going to get the new safety in-cab technologies.

I think Darren kind of through what that's going to do for us, and we're just going to continue at this pace. We know we've got to catch up, Scott, and were on a march to do so.

Okay, and just last question. Jamie, what's the plan in terms of working capital and starting to have that go in the right direction again?

Do you think that could be a source of cash in '15 or...?

I think we do a very good job of managing our balance sheet. Certainly, better today than we did 3 years ago.

I haven't looked at it probably in the last 3 or 4 weeks, but our DSO is probably second best in the entire industry. Considering we're one of probably the most levered companies in the space, I think that's about as good as it going to get.

In terms of opportunity, that clip coupons off of the balance sheet, I see our ability to improve our safety, to decrease our LCs [ph] and free up some liquidity via the ABL is probably a more practical route to get some cash off of the balance sheet.

Most of my questions have been answered. But I was curious if you could give us a breakdown of the working days by quarter for Freight and Regional.

For 2014 or 2015?

'15.

I don't have that right now, but I can give that to you off-line.

We could follow up on that. Other than that, I'm good for today.

James or Darren could you talk about the change of ops that was recently announced and how that's going to impact the network and then the cost structure, maybe via a benefits productivity in margins in '15?

Yes. It's much ado about nothing.

It's just a very small change. It looked big when it was sent out because of the number of locals that is impacted.

But it's part of that MOU flexibility that we achieved to go in and look at zip codes that really don't have much density that we're driving a lot of miles towards -- to either pickup or deliver freight. So it's just a very small change, less than 0.25 of 1% of the freight volume at the YRC Freight.

So it's really like nothing. So it's just a very small or amount of change.

And there's no moves. There's no layoffs.

There's no nothing involved in it.

And as you look at the network now running in -- more in-cycle as us say, are there opportunities this year to do another, bigger change of network operations that would have a meaningful impact?

I'll make a comment -- a couple of comments, Dave, and I'll let Darren jump in. But -- yes, we're going to always try to tinker with the network, whether it's changing load patterns or freight flows or trying to maximize our density here and there.

But there's nothing on the books that certainly I'm aware of that would be of a large magnitude. But -- yes, we're going to rely on some of these new technology that we're developing, from a linehaul-planning perspective, to help us do a better job of loading more directs and really smoothing out our freight flow where we can and using different modes for the labor contract that we have, whether that's rail, and/or over-the-road purchase transportation.

But -- Darren, you want to jump in with any thoughts?

Yes, absolutely. Our linehaul technology will allow us to create density and reduce miles without doing any changes to the network.

We certainly continuously look at our network footprint and evaluate if there's any improvements that we can make. But I'm happy with the way the network is running right now and with the volume that's in the network, and we've got room to expand.

So there's nothing in the short term on that subject.

And then when you look at the network, at least in linehaul there, Darren, as you think about load factor versus service, the old idea of holding a longer haul shipment for density, but -- it may have a negative impact on service. In this pricing environment, where people are willing to pay more, but then might want service, is there a trade-off you have to make, where you're going to run with may be a little bit less load factor sometimes for need of better service standard to get a higher price?

Certainly, we have different levels of service that the customer can engage, and that has a direct impact on how we put the loading cycle through. We do have our reloading cycles planned to create that density so that our load average is complementary to the network and also that meets our transit times.

And in the fourth quarter, as I mentioned, our service was consistent and reliable. I'm happy with that.

But certainly, if customers choose some of our premium services, we've got different options that we engage. For example, to deliver a shipment from the East Coast to the West Coast over the weekend, where they can avoid airfreight charges.

And then, last question is Jamie, on the equipment side, as you exited 2014, you talked about the $140 million or so of new equipment that was brought on. Where did the average the age sit of the fleet versus the end of 2013?

Yes, we still don't give that out in terms of the age, Dave. But we -- I look at it more in terms of miles than I do in terms of calendar age.

And kind of go back to what we've done in the past about turning the fleet on its head and kind of ranking it from the most utilized to least utilized, and we sold the most utilized. So it's probably not as bad as most people think, and we're going to continue to reinvest in it.

We've got some -- I think we said in the last call, we're going to roll about 600 new tractors over the next 6 months, and we're continuing on that pace. We're in line with everybody else at this point.

First one, I just wanted to see if you could give us some detail in kind of -- terms of your end-market exposure, and maybe how that may differ between the Regional companies and Freight.

Well, certainly, from a Regional standpoint, those 3 companies are very well set within the markets they've been serving for many, many years. In fact, Reddaway just celebrated their 95th year in business last year.

We don't see expanding the footprints of either of those 3 companies. We like the position that we're in.

We like what they're doing. When you really think about Freight and what we're trying to do there from the array of the services that we provide from 2-day to 5-day to premium plus services to o-net.

I mean, you name it -- they've got a big array of services that they provide. But yes, I think it's just a matter, Brad, of us continuing to execute on the fundamentals and doing the things that we sorely needed to do.

And like I said in my prepared comments, this is really the first time in years that YRC Freight has been able to stick to its goal getting of getting its freight mix right and really going hard after some needed yield increases, and we have some more work to do there. But really, everything is pretty much set with how we're going to market and what we're trying to at all 4 operating companies.

And now, it's all just a matter of continuing to improve our execution.

Gotcha, and appreciate the color. But I guess, in terms -- and I apologize, I wasn't very clear.

In terms of what percentage of your customer base you think is more sort of retail versus more industrial exposure. And does it differ much between the Freight and the Regional companies?

Yes, we typically don't get into discussing our segments by channel. But just know that we've got focus on all those and all the ones that we're participating in.

And, yes, we're just not going to get into what percentage is retail and manufacturing.

Actually, we're probably one of the most diversified carriers in the United States, if not, North America. We ship-to-market.

If you think about where some of the regional companies are located and then, the national YRC Freight's national overlay, we're about as diversified as they come.

Got you. And then, Jamie, I did kind of want to ask a question on the P&L.

The operating expense and supplies line, that was down about $29 million year-over-year. Is that just fuel?

Or is there more items that were -- that you saw some deflationary, maybe pricing or cost, in that line item?

There was one other one in there, Brad, and that was professional services that we did not incur in the fourth quarter of 2014 versus '13. It's a pretty, relatively clean quarter from where we were 1 year ago.

Okay. And then maybe -- great, great.

Thanks for that color. And then, lastly, can you just sort of remind me what's your wage inflation looks like for '15 and '16, and when that goes into effect?

Nothing in '15. And then, the timing in '16, I'll get back to you on the specific amounts, Brad.

But it's not that much. I think I've got it in my mind, but I don't want to lead you astray so, I'll follow back up with you.

If you could walk us through kind of how the yield net of fuel progressed throughout the quarter. And any color in terms of how that's trended thus far in January, to the extent you're willing to comment, relative to how that performed in December.

I can tell you, Rob, this is James, that the momentum that we created in the third and fourth quarter continues into January. I don't have the revenue or the yield excluding fuel surcharge by month in the quarter.

I've got it by fuel surcharge being included, but I don't know if you guys...

Yes, what I would say -- and if you look at the difference between the 2, YRC Freight being up 5.8% on a revenue per shipment basis. Including fuel surcharge, weight was flat and then, revenue per hundredweight increasing 7.3% -- I mean, 7.4% without -- I'm sorry, excluding fuel surcharge, 7.4%, including -- 5.8%.

I would just take that and apply that to the same numbers that we have in the press release. We're not going to continue to break it up too many different ways.

But if you look at in the press release, we'll give you -- we gave you the monthly numbers in there, and I would just mirror that.

Okay. And then, Jamie, as a point of clarification, for the 1 percentage point EBITDA margin headwind from the shift toward operating leases in 2015, are you excluding any sort of benefits from lower maintenance expense and improved fuel efficiency in that equation?

Or is that incorporated in the 1-point headwind that you see?

No. That's a great question.

That's excluding. We're just talking straight up holding, everything else constant lease expense.

Okay. And then are you -- could you give us a bit of color in terms of what your expectations are on those 2 fronts?

And what that would mean for the EBITDA margin?

I would say it's better. I'm not going to say it's going to offset the lease expense.

It'd be a smaller number. But we fully intend to take advantage of, not only the better aerodynamics, the better fuel mileage that we get from that and better maintenance, but also, the better safety part of that equation.

So there is going to be a little bit of leasing headwind, but there's going to -- certainly going to be some offsetting expenses. It was a very good question.

Just a couple of follow-ups. So what was the approximate change in that professional services fee, Jamie, that you mentioned?

Yes, I'm here. I'm sorry, Tom.

In terms of the professional services fee, it was about $3 million or $4 million. Better in the fourth quarter of '14 than '13, to be clear.

Yes, right. A lot lower amount.

So when I look at that operating supplies and expense line, 1 year ago, it was about 23% of revenues. I'd calculated that it was about 16% fuel and 7% maintenance.

How close is that?

We're not going to break it down, Tom. I'm not sure if anyone else does in this space.

But at this point, we're not going to get into that level of detail.

Okay. I -- really, all I'm trying to accomplish by asking that question is, I'm just trying to think about the drop in fuel.

It just seems like because you have an older fleet, the drop in fuel probably is a little bit more of a positive for you. Sometimes, people want to interpret that you're benefiting more from surcharges, but I think my perspective is you might benefit a little bit more from the absolute drop in the fuel price than some of your peers.

And I don't know if you want to comment on that or not.

Tom, I don't want to comment on behalf of our peers. I'm not really sure how their rate structure is different from ours.

I think it's pretty consistent across the industry, and it's an incredibly efficient market, as you know.

Right. Right.

And then, lastly, given what you shared about CapEx, it was a little bit different, the fact that you were willing to talk about what you did. Would you expect '15 to be similar or greater?

Yes, I think it'd be pretty -- all else being equal in what we know now, probably not too dissimilar. I think I said earlier, we're going to continue to reinvest in all areas of the business, especially in the revenue equipment on the technology side of the house as well.

All right, thanks, Mike. That concludes our call for today.

Thanks, everyone for joining us. Please contact me with any follow-up questions you may have.

I'll turn the call back over to you.