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

David G. Ross - Stifel, Nicolaus & Company, Incorporated, Research Division Scott H.

Group - Wolfe Research, LLC Arthur W. Hatfield - Raymond James & Associates, Inc., Research Division Robert H.

Salmon - Deutsche Bank AG, Research Division Thomas S. Albrecht - BB&T Capital Markets, Research Division

Thank you, Kelly, and good afternoon, everyone. Thank you for joining us for the YRC Worldwide First Quarter 2015 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 fact are subject to uncertainty and a number of risks, and thus, actual results may differ materially. This includes 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 reconciliation of net loss to adjusted EBITDA on a consolidated basis and operating income and loss to adjusted EBITDA on a segment basis. During this call, we may refer to our non-GAAP measure of adjusted EBITDA simply as EBITDA.

I'll now turn the call over to James to provide comments on our first quarter results.

Thanks, Stephanie, and thanks to all for joining our first quarter call. Despite yet another challenging winter, I'm pleased with the progress we continue to make in arguably the most difficult quarter of the year.

Overall, our first quarter results are much improved from a year ago thanks primarily to a fundamentally improving YRC Freight performance. As we discussed during our 2014 third and fourth quarter conference calls, improving our yield and freight mix has been our #1 priority.

We have been on a methodical march at all 4 operating companies to make adjustments and, at times, difficult decisions to improve yield and our freight mix. No doubt, we have traded volume for yield, but we are comfortable with the plan that we're executing and will remain committed to that end.

Improving the first quarter adjusted EBITDA at YRCW from $23 million to $59 million validates our strategy. The YRC Freight operating ratio improved 430 basis points year-over-year.

And as Darren will discuss, YRC Freight made a strategic decision to exit from smaller shipments, which in turn, caused weight and revenue per shipment to increase. And while there may be a slight negative impact on efficiencies based on this decision, it is absolutely the right thing to do as freight characteristics with heavier shipments with higher revenue per shipment should improve profitability.

To that point, we like the bottom line improvement that we're seeing at YRC Freight with EBITDA improving over $35 million from a negative $3.7 million loss -- from a negative $3.7 million in Q1 '14 to a positive $32.1 million in Q1 of '15. The Regional carriers also made some strategic freight decisions during the first quarter, which drove the revenue per shipment and weight per shipment up as well on a year-over-year basis.

However, their operating ratio deteriorated 70 basis points year-over-year due to an additional $7.7 million of expense primarily related to adverse development of prior year liability and workers' compensation claims. Additionally, one of our Regional carriers was severely impacted by the difficult winter weather in the Northeast during the quarter.

Despite the 2 items that I just mentioned and having 2.5 less working days, the Regional carriers' adjusted EBITDA was basically flat on a year-over-year basis at $26 million. Moving forward, we have hired and will continue to hire and train employees and provide advanced coaching and support at all levels for our new and current employees.

From our terminal managers to our frontline supervisors, to our dock, P&D and linehaul drivers, we believe investing in our employees is key to our collective success. We will also continue to execute our strategy of improving yield and freight mix at all 4 operating companies.

Improving productivities will equally be important to build on our current operating momentum and results. We will confidently sell the value, scale of coverage and service that YRCW brings to the market place, whether it is in our long-haul business at YRC Freight or the 1- and 2-day business at Holland, Reddaway and New Penn.

In addition to concentrating on yield, safety continues to be front and center for everything we do. We spent thousands of hours in the first quarter across the 4 operating companies training and communicating with all employees that working safe is a condition of employment and that we expect everyone to work safe and go home safe every day.

We have previously discussed our need to reinvest in the business. And to that end, we leased approximately 225 tractors and 600 trailers in the first quarter.

And we will take on additional equipment as the year progresses. In our drive to be the safest carrier on the road, all of our new tractors will have the latest safety technology.

And by the end of 2015, to the extent that it is practical to do so, we intend to install aftermarket NCAP safety technology in most if not substantially all of our existing fleet as well. The first quarter also saw the implementation of our linehaul-planning technology at YRC Freight, which will assist with more efficient freight movement.

To wrap up my comments, over the last several years, YRCW has transitioned to several different phases. When this management team came on board, we were definitely in the survival mode.

Over time, we moved the company into a stabilized environment and certainly had to go through some well-publicized peaks and valleys to get there. Now we are transitioning to a state of profitability as we have increased LTM EBITDA by approximately $60 million to $280 million.

However, we know there is more opportunity. And while our 33,000 employees have worked through some difficult times, they understand what we need to do in order to continue our current pace of improvement.

So I thank our employees for staying in the course as I believe we have better days ahead of us. With these comments, I'll now turn the call over to Jamie.

Thanks, James, and good afternoon, everyone. For the first quarter of 2015, we reported revenue of $1.19 billion, down from $1.21 billion in 1Q '14 largely due to the decline of fuel surcharge revenue at both segments and a strategic volume decrease at YRC Freight as they placed yield and profitability growth over market share or tonnage growth.

At the regional level, both tonnage and pricing increased on a per-day basis quarter-over-quarter, but there were 2.5 fewer working days in 1Q '15 versus 1Q '14 adding to the overall decline. In terms of consolidated operating income, it increased $36.1 million from a loss of $32.4 million in 1Q '14 to income of $3.7 million.

And in the same vein, adjusted EBITDA increased $35.9 million to end the quarter at $58.8 million. In 1Q '15, operating income included a $1.3 million loss on asset disposal compared to a $200,000 loss on asset disposals in the same period of 2014.

For the year-over-year first quarter stats, YRC Freight's tonnage per day was down 4.1%, but revenue per shipment, including fuel surcharge, was up. On a monthly basis, tonnage per day decreased 0.8% in January, 5% in February and 6.7% in March.

On the contrary, revenue per shipment excluding fuel surcharge was up by 3.8%, and revenue per hundredweight, including fuel surcharge, was up 2.6% and weight per shipment was up 1.3%. If you excluded fuel surcharge, revenue per shipment was up 9.6% and revenue per hundredweight was up 8.2%.

The Regional carriers grew both tonnage and pricing on a per-day basis. Tonnage per day increased 1.9%, which was comprised of an 8.5% increase in January and decreases of 0.7% in February and 1.4% in March.

Revenue per shipment, including fuel surcharge, increased 2.1%, which included an increase in weight per shipment of 1.4% and an increase in revenue per hundredweight, including fuel surcharge, of 0.8%. Again, excluding fuel surcharge, revenue per shipment was up by 7.3% and revenue per hundredweight was up by 5.8%.

As for the results, for the first quarter of 2015, YRC Freight improved operating income by approximately $33 million over the prior year to essentially breakeven, which translates into a 430 basis point improvement in OR margin, and it improved adjusted EBITDA of $32.1 million, a $35.8 million increase over the first quarter of 2014. The improvement in profitability is primarily due to disciplined pricing and continued active management of the freight mix offset by lower productivity.

Our Regional segment reported operating income of $4.6 million, a decrease of $3.3 million from 1Q '14 and an operating ratio of 99%. This decrease was largely due to 2.5 fewer working days, an additional $7.7 million of expense related to adverse development of prior year liability and work comp claims, which James already addressed, and $5.4 million of additional lease expense as we continue to enter into operating leases to recapitalize our fleet.

On an adjusted EBITDA basis, the Regional segment reported $26.2 million, which was a slight increase from the $25.9 million reported in the first quarter of '14. In terms of liquidity, our cash, cash equivalents and amounts able to be drawn under our ABL facility at March 31 was $175.6 million, down from $198.2 million at the end of the year and down slightly from the $183.2 million at March 31, 2014, as we used additional cash from operations to reinvest in the business and double the amount of capital expenditures on a year-over-year basis.

As usual, I'd like to leave you with several parting takeaways. First, during the first quarter of 2015, we spent $21.3 million on CapEx, and excluding the sleeper units we normally lease, we entered into operating leases for an additional $35.1 million of capital value of equipment for a total of $56.4 million.

In the first quarter of 2014, those exact-same numbers were $11.7 million on CapEx and no new leases in the first quarter '14 for a total of $11.7 million. So you can see on a capital value equivalent basis, we spent almost 5x as much this quarter than we did the prior year's comparable period.

In terms of units, we leased 225 new tractors, 600 new trailers. For comparison purposes again, we leased approximately 350 new tractors and 900 new trailers in all of 2014.

And before you ask, the lease expense was about 1.7% of revenue in 1Q '15 compared to 1.1% in 1Q '14. As we have stated, we are investing back in the business and will continue to do so in the form of operating leases to the extent that it makes sense.

And today, it make sense. We're able to enter into these leases at a lower rate than our cost of debt, and the down payment for these leases is substantially less than an outright purchase, which allows us to preserve liquidity to invest in what we believe to be high-yielding technology projects.

Second and while we're on the topic of technology in addition to all the new units rolling off the lines, the latest and greatest accident prevention equipment, such as lane-departure warning, adaptive cruise control and stability control, we have started a 3-vendor aftermarket NCAP safety pilot for our existing fleet. We are targeting to have most if not substantially all of our existing fleet retrofitted by the end of this year.

This is an aggressive goal, and while still in the testing phases, we believe the returns justify the pace. Third, as James mentioned earlier, on a consolidated basis, we increased adjusted LTM EBITDA by approximately $60 million to $280 million, which translates into a funded debt to adjusted EBITDA ratio of 3.9x.

This time last year, that ratio was 5.2x. This is the first time this company has been under 4 turns since 2007 and is proof positive that we continue to invest back into the business in the denominator of that equation and that those investments are absolutely paying off.

And fourth and finally, because I know you guys want to immediate to minimal list [ph], while our financial progress is notable in the first quarter of the year, there is still much more to do. Specifically, we must improve our productivity at all of our operating companies to further drive our operating results.

Our results in this area have not met our expectations. And each of our operating companies have launched an initiative to communicate and engage our most valuable asset: our people.

We fully anticipate this effort will ultimately drive improved operational performance. At this point, I'll turn the call over to Darren to discuss YRC Freight results and their priorities for the balance of the year.

Darren?

Thanks, Jamie, and good afternoon, everyone. I am pleased to report that our strategic focus on pricing discipline, people and operational process has contributed to a much-improved financial performance in what is typically a challenging quarter.

Consistent with our strategy for the year, we placed yield improvements over tonnage growth and did see shipment volumes decrease as we worked to improve the quality of our revenue. Our primary volume decline was due to the intentional reduction of minimum-charge shipments from our corporate channel as we removed many of these from our network to improve mix and profitability.

The approach paid off as we reported positive results in weight per shipment, revenue per shipment and revenue per hundredweight, which ultimately helped improve our margin. As Jamie stated, we launched an initiative that is centered around communication engagement with our front line employees to drive the revenue generation and operational performance of the company.

It's geared to set a sustained, continuous improvement foundation for YRC Freight. The employee engagement initiatives is currently focused on key distribution centers that handle 40% of our freight.

We have launched new disciplines in the 3 DCs and will roll out this program to 4 additional locations in the next 14 weeks. At these DCs, the process is being led by employee groups working with outside consultants because we feel strongly about tapping into one of the greatest resources available to us: the most professional and tenured employees in the industry.

We are proud of the ideas we are able to implement based on their feedback, creativity and determination through this effort. Safety remains critically important.

We invested nearly 11,000 hours in safety training in Q1. New processes, 360 peer-filled safety trainers and improved communication led to a year-over-year reduction in lost-time injuries and vehicle accidents.

And we are excited about the number of employees who have volunteered for the safety trainer roles in addition to their normal day-to-day responsibilities. Technology investments in terminal and network operations continued in Q1 with the rollout of dock tablets to all distribution centers, and the implementation of linehaul system upgrades, which give us greater visibility and tools to improve volume balance across our network.

These types of investments along with new trucks and trailers coming into our network, are tangible signs that we are investing in the long-term success of our company. I was proud to introduce our commitment to hiring military veterans through our partnership with Hiring Our Heroes in an event in February alongside the U.S.

Chamber of Commerce. We are aggressively recruiting and hiring drivers and dock workers and have seen our partnerships and new programs make a positive impact.

Lastly, we remain committed to the 4 foundational priorities of safety, service, efficiency and everyone sells that are the road map for continuous improvement at YRC Freight in 2015 as we provide safe and reliable transportation solutions that make a difference for our people, our customers and our communities. With these comments, we're ready to take your questions.

Darren, you talked about, I guess, getting rid of some of the lighter-weight shipments, smaller shipments, and you're really removing minimum-charge freight. Why was that, I guess, the targeted approach rather than just raising the minimum charge?

David that's exactly how we moved those shipments out of the system is by targeting that. Where it really plays in strong through our company is with the length of haul.

That length of haul went up 18 miles this quarter versus last year. So at 1,296 miles, those are crucial that we get paid appropriately for those shipments.

And with the pricing that we went to, many of those shipments did exit the network.

Okay. So you raised the minimum charge, and that's what caused the freight to leave?

Absolutely.

Excellent. And then any commentary on April volumes and yields.

Are they trending better than we exited March, both again, on the hauling side and the yield side?

David, this is James. Volumes are down, but they certainly have slowed other rate of decent over the last couple of months.

And we're still performing as we would like to perform with our yield.

David, this is Darren. The only thing I would add to that from a contract-rate-negotiation perspective, we did see solid results in Q1, and those results continued on in to April.

And last question is just about the 401(k) match. I read that's being reinstated or has been reinstated.

Is there a significant cost to that? And how many employees that apply to?

Yes, David, it's Jamie. It's not material at all.

It's for our nonunion employees and about 5,000 of those. And you know as well as I do that that's 100% voluntary.

So it will simply depend on the participation rate.

Did you give -- I'm sorry, if I missed it. Did you give the monthly tonnage numbers?

Yes. We did.

And I can give them to you, give me just one second again. So at YRC Freight, on a monthly basis, tonnage per day decreased by 20% in January, 5% in February and 6.7% in March.

And on a Regional basis, it actually increased by 8.5% in January and decreased by 0.7% in February and 1.4% in March.

Okay. That's helpful.

And James, your point is that April is down but not down as much as that 5% to 6%.

That would be correct, Scott.

Okay. Even though the comp -- comparison looks like it's tougher.

I didn't hear the last part.

Well, the comparison is something, I mean, you were up a lot in second quarter last year on tonnage so that the comp gets tougher, but you're saying even with that, you're still less worse [ph]. That's good.

No, that comp really got tough and -- or got more difficult in May of last year. So like I said, it's decelerated but certainly slowed compared to what it was in March.

Okay. So Jamie, I see salaries is down $20 million-or-so.

And can you just talk through what's driving that and how sustainable that is?

Sure. So we are looking at a couple of different factors going on there.

One, first and foremost, is lower volume at YRC freight. The other one is 2.5 fewer days at the Regional companies.

We also had some lower group insurance payments. And because workers' compensation rolls through spread for us [ph], so do our LTBs [ph] that support that program.

And because of that refinancing, we saved a couple million dollars on that as well. So there's 3 or 4 different factors that are leading to that.

Okay. James, just maybe big-picture macro, clearly, a lot of concern out there in the market.

What's your pulse of the economy right now. And how does that impact the way you're going to go about pricing the business, if it has any impact at all?

Good question, Scott. Our focus is going to continue to be on yield growth and improving our profitability.

It's been hard to get good pulse on the economy. The first quarter, we had, I mean, a lot of severe winter weather up in New England and the Northeast.

And some of the factors that we look at have given us some mixed signals, but I think we're positioned, overall, with the strategy that we have in place and the value and the scale of covers that we provide to try to be as successful as we can in getting the freight that we would like to get. But we're just going to continue to be working very hard with our freight mix.

And I think I said it on a couple of other quarterly calls that we haven't had this opportunity in a number of years to really try to get our freight mix right once and for all. And so we're going to continue to work on that until we get the network running the way we want from an efficiency standpoint at YRC Freight and then continue to maximize what we do every day at the Regional carriers.

Okay. That makes sense.

And then just last thing, Jamie, so we've seen nice improvement in EBITDA, but the total liquidity has been dropping the past few quarters. Help us understand that dynamic of one getting better, one getting worse.

And do you have a -- and how much of this is seasonal and you think just starts to sequentially start improving again? Do you think they start to see that in the second quarter?

Yes. Actually, it's predominantly seasonal, Scott.

And the reason I say that is anytime between December and March, it's when the bulk of our annual renewals are, the insurance comes through there as well. We had our IBT bonus that went through there.

We also had a pension payment go to there. So I bet you we had anywhere between $70 million plus or minus in payments rolled through just in the first quarter that are on an annualized basis.

But if you went back to the first quarter of '14, we were at about 184. Now we're at about 176.

So there's a slight decrease on a year-over-year basis. But we're investing a lot more in CapEx.

And we're investing back in the business. We're going to double down and continue to double down.

Actually, if I follow-up on Scott's question about the liquidity and what you said, Jamie, was helpful. But can you talk about if -- is there a level by which you do not want to go below on your liquidity levels?

And then forgive me for asking this. I couldn't remember and I tried to look it up.

But are there covenants related to minimum liquidity requirements that you still have?

Yes, Art. Great memory.

The good news is, for us, that memory is in the past. The minimum covenant -- or at least the minimal liquidity requirement was more of the deal that we refinanced in February of 2014.

So that covenant no longer exists for us. For now, we're just using really CapEx to be the lever and governor of liquidity.

So to the extent that we continue to improve our operational performance, we're going to continue to plow that money right back into the business.

Great. That's helpful.

And second question, looking at the unit operating income. Just looking at corporate, it was only negative $1.1 million, a big drop year-over-year and big drop sequentially.

I don't recall that you had talked about that in your comments. Can you address kind of what's going on there?

And should we expect that to kind of bounce up to a more normalized level that you've seen over the last couple years going forward?

Hold on one second, Art. It's such a small number for us.

Let me see if I can't get a bead on it. Yes, I'm looking at about $0.5 million of adjusted EBITDA in corporate for 2015, $700,000 for the same period of 2014.

It's just not a material enough amount for us to really pay that much attention to. From what we're doing on a corporate basis, we're continuing to evaluate our volume, and to the extent that we need to make adjustments at the corporate level, we're the first ones to do it.

And then finally, you, all, -- you spent a lot of effort working on safety. Is there anything you can point to or talk about right -- from a metric standpoint or maybe even from a dollar standpoint, the improvement you've seen in that?

And additionally -- actually, I think more importantly, kind of what the opportunity is going forward as you continue to invest in safety within the business?

Art, this is James. I'll jump in and discuss it just for a second, and then Darren or Jamie may want to follow up.

Safety is a big opportunity for us. Number one, we want our employees to come to work safe and go home safe.

So that's the first and foremost reason why we are so about safety. But just over the last several years, the operating companies have had some severe accidents, and we're spending a lot of time putting drivers through Smith System training.

We're talking about installation of the same -- NCAP's technology. And we just got to do a better job of training and making sure that our employees understand the role that they play.

But there's a big opportunity for this company to improve financially if we can continue to improve our hours worked between loss-time injuries and our miles driven between accidents. Those are 2 of the really key factors that we are working daily on.

And so that's going to continue to be a big party for us. I don't know, Darren or Jamie, if you want to jump in there, but...

Yes. Certainly, James, I'll jump in.

I mentioned in my comments about the 11,000 hours of safety training that we did in Q1. That certainly involved the Smith System training for our drivers.

I mentioned we've added that 360 peer safety trainers increased the frequency of our preshift safety focus messages. And then also, we're increasing the use of our NCAP technology, which is designed to reduce the frequency and severity of those accidents.

So I'll kind of wrap that up by saying, those investments are showing some initial positive results at YRC Freight. In the workers' comp area, our open playing [ph] count has gone down each of the last 5 months.

In the liability area, we've seen an increase in our miles between accidents, and that's a good thing.

As a follow-up to Art's questions with regard to the safety investments you guys are doing, can you give us a sense in terms of the initial investment you're planning for the remainder of the year, whether it's coming up in the form of operating expense or CapEx? And any sort of way we should be kind of framing the potential ROI on those investments.

I'll let Jamie handle that from a financial standpoint. Darren, anymore comments you want to make about the question?

Certainly, the 11,000 hours of training I mentioned, that's a direct expense that we incurred in the first quarter of this year that we did not incur in the first quarter of last year. So I think that's a testament to the wise investment piece from the safety training, and that's already paid for.

And we're going to continue that process and reap those benefits. But from a wider view, I'll let Jamie respond on the investment.

Before Jamie talks, Rob, at the Regional companies, they probably have more opportunities than even YRC Freight does based on their performance over the last couple of years. And they took a big hit in the fourth quarter of 2014 and another big hit in the first quarter of 2015.

And so the Smith System training, the safety training with employees, the employee-led safety committees, I mean, we have a full court press at the Regional companies as well. And it's frustrating that we haven't made more progress, but I can tell you that the management team at each 1 of the 4 companies are very committed to getting this opportunity under control and making it a positive for our company.

So Jamie, I'll let you talk about the financial piece.

Yes. So your rule question is a numerically [ph] and threefold OpEx versus CapEx and ROI.

So on an OpEx basis, those 11,000 hours [indiscernible] the P&L doesn't show up on the balance sheet. So I'm glad you asked, Rob, because it actually is an investment in the company that's going to flow through the P&L.

And we're going to continue to make that investment in terms of those hours for their foreseeable future. So I think that is truly an investment on our time and our people and really is almost an opportunity cost in some sense because those are hours that they're not on the dock actually moving freight.

So that's going to continue. On the CapEx piece of it, it depends on the vendor that we go with, and it also depends on how we finish them out and on how many units.

But I'll tell you that I anticipate the ROI from the NCAP technology piece to be anywhere between 40% to 70%.

That's helpful, Jamie. And any kind of initial thoughts in terms of the potential ROI.

I would imagine it's really very high. But any color -- additional color you can provide there.

Not really, because we don't know which 1 of 3 that we're going to go with. If we go with something that has simple auditory warnings alone or if we go auditory with event recorders, that's a significant difference in cost.

The one thing that I think a lot of people may overlook for us is the amount of LCs that we have posted supporting both work comp and BIPD liability. Because to the extent that we can actually reduce those accidents on both sides of those by the way, our LCs are going to come down, and when our LCs come down, so will the LC expense that goes with it.

So I think it's actually a kind of a twofold return numerically. You've got the fact that you're going to see the accrual rate.

The accrual rate should come down to the extent that the Smith System training reduces the work comp claims. And to the extent that the NCAP technology reduces our liability claims, we should see both the reserve adjustment and the accrual rates come down if that does continue to, I guess, hold true.

The second piece of that, again, could be on more on the balance sheet, and that could be more just simple reduction in LCs and expense that go with it. The one thing that we cannot say enough and stress enough is, this has to do with the safety of our employees.

And we're going to focus on this every single day with every single employee beginning of every single shift.

Make sense. As my follow-up, Jamie, I'd like to dig in a little bit more in terms of your thoughts.

Obviously, we saw a precipitous decline in terms of the price of fuel. You guys made an adjustment with regards to the fuel surcharge mechanism in February.

How should I be thinking about the puts and takes to fuel in the month of February from an EBITDA perspective as well as from NOR perspective? Any color would be really helpful there.

Yes. So it's essentially to the -- I think that where we sat and had this conversation literally 90 days ago, and if you even backed up the tape 45 or 60 days even before that as fuel was literally falling from the sky, I thought it was going to have more of a headwind than it actually ended up having.

Because of the statement that we made then was all else remaining equal, if everything remained constant, this is what we would have [indiscernible] this is what we would have thought would have happened. Well, this is a very dynamic road.

There's nothing static about in which the environment we operate in. And several things that have happened that I think that have helped offset that decrease in the fuel surcharge, and I'd say, first of all, was the increase in the base rate, even though it's a lower percentage of a fuel surcharge, we're applying that percentage to a much higher base.

So that had a tremendous positive impact to the profitability of that piece. But you also had better miles per gallon than we had anticipated and fewer miles driven.

So we had a lower length to fall. So if you take those 3 things in combination, the impact from a fuel surcharge decrease didn't impacted us as negatively as I would have otherwise thought.

And was it -- did it end up being an aid to the OR improvement? Or was that more of a kind of offset just [indiscernible] I would think lower top line, lower expense should actually help it from an OR perspective.

Yes. [indiscernible].

You are, Rob. But I actually don't think it's that much.

And I think you'll actually -- it'll offset through time. So I really wouldn't even bank on that.

Some of my questions have been answered but wanted to just kind of throw out a couple of thoughts. I guess first of all, can you bring up to speed on the progress with dimensioners, either a ballpark, what percentage of shipments you might be getting through, how trained your employees are, et cetera.

Just some comments there.

Thomas, James. The majority of those implemented at YRC Freight.

So I'll let Darren speak to that.

Yes. As of last quarter, that number has stayed consistent.

We've got 43 dimensioners at all of our distribution centers. We consistently see the percentage of freight increase that goes through these dimensioners as we expand out into different commodities.

As we do that, the employees are trained, it's not a material impact on productivity. So we couldn't be more pleased with the ROI efforts we've seen on the dimensioners.

As we look at expanding that effort, there's new technology coming along that will allow larger shipments to go through these. And that's currently what we're evaluating for the next phase.

So like on a typical week or month, what percentage of your shipments are you running through at freight?

It's less than 15%. It's going to fall in between that 12% to 15% range right now on what we're running through.

And I would say some that, that varies a little bit. I think on average, it's probably closer to 10%, but we're now -- we're splitting hairs between [indiscernible] to 15% to 10%.

I think the benefit for us is we're starting to use this particular piece of technology, originally was just simply on a rerate basis, I mean, it was basically getting paid for the work that we do. Now we're starting to run dim studies with some of our customers in some other stuff that we're doing.

So I think that this is actually going to be one of those types of investments that's going to continue to pay off and actually might pay off more in time as our customers actually start rating their shipments more appropriately. So we might, I guess, rerate revenue, but it will be priced more appropriately going into it.

Yes. And I would just follow up on that to say that, that, that 12% to 15% is the shipments that have revenue opportunities.

And with our length of haul, those shipments can have significant revenue opportunity. As we expand to include this information in our pricing strategy, that's where the percentage of shipments really increases.

Right. What's the eventual potential that you see to run through: 30%, 20%?

Well, I think it depends on the number of machines that we have. I mean, right now we have them all at the 23 DCs, we have 43 machines.

I think that's the right number. Is there incremental capacity that we can run through those today?

Yes there is, absolutely. But there's also I think more opportunity to put them in our larger end of the lines and capture those out there.

So those are things we're re-evaluating. We'll probably roll out a few more this year.

But we're just going to do it on a judicious basis because so much of our freight runs through those 23 DCs. It doesn't make a lot of sense to put them down at another 200 terminals when they originate and then they transfer to the DC.

We don't need to have them in both places.

Sure. As we -- what percentage of your revenues roughly are coming from 3PLs at Freight.

And then, imagine it's a completely different number at Regional.

Yes. And we've never broke down the channel information, Tom.

It's one of those things where it changes, especially with what we're doing with our freight mix. So it's probably changed more recently than it has in the past.

It's pretty stable. And what I want to also say is that we're probably not too dissimilar to our larger national peers.

And I reason the companies are about the same percentage as YRC Freight.

So just to clarify, some of your peers, public and private, or over 30% of their revenues are coming from 3PLs. So are you saying that your consistent with that type of figure?

Yes. I'd say the range that's going across the portfolio of companies, Tom, is probably 25% to 35%.

Okay. Let me just throw out a wild hypothetical.

Within your Regional network, you got New Penn, Holland and Reddaway. What would happen if 1 day you just shut down Reddaway because it seems like that's been the underperformer.

I know you haven't necessarily acknowledged it that way. But what's the pros of keeping it open?

What's the cons of hypothetical down the road shutting it down?

Let me say this, I'm extremely pleased with the Regional carriers overall. And Reddaway is a fine company, and it's performing well right now.

We obviously have opportunities with all 3 Regional companies. But I wouldn't trade any of the 3 Regional companies for anybody right now.

They give great service. And if we can get past the last couple of quarters of having some fed [ph] guys on previous and past severe accidents on work comp, I have a lot of confidence about our 3 regional companies.

Okay. And then, do you think you'll make money in the second quarter?

Well, it's something that we've never given guidance on, Tom. And I don't think we're going to start today.

We're certainly going to continue to reinvest back in the business. So when you start talking about money, I'd say, we've been very consistent about reinvesting back into it.

No, I get that. The reason I ask is, though, I think the -- when you look at the variety of estimates out there, there is a sense that a consensus expectation that you'll be profitable in the second quarter.

And given that you were in the fourth quarter and you should be further along with your operations, it would seem to make sense, seasonally adjusted and everything else, that you'd be able to make money.

I think that's a good comment.

Guys, I'm all set.

Thank you. That concludes our call for today.

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

Operator, that's all for today.