Yellow Corporation

Tony Carreno - Vice President of Investor Relations James Welch - Chief Executive Officer Darren Hawkins - President and Chief Operating Officer Stephanie Fisher - Chief Financial Officer T.J. O'Connor - President, YRC Freight

Brad Delco - Stephens Amit Malhotra - Deutsche Bank David Ross - Stifel Scott Group - Wolfe Research Willard Milby - Seaport Global Securities Brad Delco - Stephens

Thanks, operator, and good morning, everyone. Welcome to YRC Worldwide’s first quarter 2018 earnings conference call.

Joining us on the call today are Darren Hawkins, Chief Executive Officer of YRC Worldwide, Stephanie Fisher, Chief Financial Officer of YRC Worldwide T.J. O’Connor, President, YRC Freight and James Welch, Senior Advisor to YRC Worldwide.

Before we begin, I must remind you of the inherent uncertainties in any forward-looking statements in our discussion this morning. During this call, we may make some forward-looking statements within the meaning of Federal Securities laws.

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. 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 the risk factors. For a full discussion of the risk factors that could cause the results to differ, please refer to this morning's earnings release and our most recent SEC filings, including our Forms 10-K and 10-Q.

These items are available on our website at yrcw.com. Additionally, please see today’s release for a reconciliation of net income or loss to adjusted EBITDA on a consolidated basis and operating income or 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. In conjunction with today’s earnings release, we issued a presentation, which will be referenced during the call.

The presentation was filed in an 8-K, along with the earnings release and is available on our website. The format of this morning's call will include comments from James, followed by an overview of the first quarter from Darren.

Next Stephanie who will discuss our financial results and T.J. will provide an update on YRC Freight.

Following the prepared remarks Darren, Stephanie, T.J. and James will be available for a question and answer session.

I’ll now turn the call over to James.

Thanks, Tony, and good morning. I just want to make a few comments before Darren gives the first quarter update.

When announced earlier in the week that we went ahead and named Darren the CEO and that I will continue to serve on the board and remain employed as a Senior Advisor before I retire on July 31. I have been very pleased with the pace of our transition and believe the timing was right to accelerate the CEO change while still allowing me the opportunity to help Darren until I retire.

My goal when I to return YRCW in late 2011 was to leave a company a better place than I found it. And we have always made a lot of progress there's still much left to do.

I’m very confident that we have a talented team of executives in place who can continue moving YRCW forward. I firmly believe better days are ahead for this company.

So, this will be my last quarterly call. I also want to let the analyst community know how much I have enjoyed our interaction over the years, for sure I have learned a lot from each one of you.

With these comments, I will now turn the call over to Darren.

Thank you, James and good morning everyone. Before commenting on the quarter, I want to thank James for his leadership and his commitment to all of our stakeholders including our customers, our employees and the investment community.

James's vision has been instrumental to the evolution of YRC Worldwide, and I am grateful for his contributions and personal support. I look forward to the opportunity to continue James' legacy of strong leadership and working closely with him to ensure a smooth transition.

Turning to Q1, the overall financial results were in line with our expectations and let me reiterate what we said we would do. We are executing our strategy to secure the right price and freight mix with our customers who value the service and capacity that Holland, New Penn, Reddaway and YRC Freight provide.

The pricing and demand environment remained favorable and we're especially focused on improving yield and our corporate channel. In Q1 YRC freight and the regional carriers reported the highest year-over-year increases in revenue per hundredweight excluding fuel surcharge since 2015.

Although the year-over-year tonnage per day was down in Q1 at YRC freight predominantly due to the corporate channel the year-over-year monthly results improved sequentially during the quarter and turned positive in March while the regional carriers year-over-year tonnage per day was slightly positive during the quarter. We are also investing in our fleet by onboarding a significant amount of revenue equipment this year.

During Q1 we took delivery of more than 500 tractors with approximately another 400 scheduled for delivery in 2018. The tractors count with improved safety equipment are more fuel efficient and require less maintenance than the units they replace.

We also took delivery of more than 400 trailers in Q1, with approximately another 2100 expected to be delivered in 2018. As we upgrade our fleet with these units we expect to be pleased with these units, we expect a number of more expensive short-term renewals to decline overtime.

We remain confident that our business is positioned for a better year in 2018, with year-over-year financial improvement to be weighted to the second half of the year. On a segment basis, YRC freight improved its year-over-year results and was positively impacted by an increase in revenue from stronger yield.

The regional segment reported similar positive yield results. However, this segment was unfavorably impacted by severe weather in early January and the series of nor'easter's in March which concluded it to a decline in the regional segments financial results compared to last year.

In closing, the yield momentum that we are seeing, along with the investments we're making in our fleet continues to give me confidence that YRC worldwide is moving in the right direction. I would like to thank our nearly 32,000 employees for focusing on providing award-winning customer service and putting safety first in everything we do.

With these comments I’ll now turn the call over to Stephanie for a review of our financial results.

Thanks Darren, and good morning. For the first quarter 2018, YRC Worldwide reported consolidated revenue of $1.21 billion which is up from $1.17 billion in the first quarter 2017.

Even with one half less working day this year. In terms of consolidated operating results, the company reported an operating loss of $4.3 million which includes a $3.2 million loss on property disposals.

This compares to operating income of $0.3 million which included a $2.7 million loss on property disposals in the first quarter 2017. On an adjusted EBITDA basis, YRC Worldwide reported results of $45.7 million for first quarter 2018 compared to $43.2 million in the same period last year.

The earnings release and presentation issued this morning include 2018 segment financial information and statistics. Therefore, I’ll keep my segment comments focused on a few key first quarter stats.

At YRC Freight, the first quarter 2018 year-over-year tonnage per day was down 2.4%. This was comprised of year-over-year decreases of 6.1% in January, and 1.3% in February and an increase of 0.6% in March.

Preliminary April results indicate YRC Freight’s year-over-year tonnage per day was down approximately 3.8%. As a reminder the year-over-year comp has shown with April 2017 reporting a 6.2% year-over-year increase in tonnage per day which was the biggest month of increase at YRC Freight in 2017.

Additionally, for the first quarter 2018 year-over-year revenue for hundredweight including fuel surcharge was up 6% and revenue per hundredweight excluding fuel surcharge was up 4.4%. year-over-year revenue per shipment including fuel surcharge was up 8.3% and up 6.7% when excluding fuel surcharge.

Turning to the stats for the regional segment, the first quarter 2018 year-over-year tonnage per day was up 0.2%. This was comprised of year-over-year decrease of 0.8% in January and increases of 0.7% in February and 0.6% in March.

Preliminary April results indicate the regional segments’ year-over-year tonnage per day was down approximately 1.6%. For the first quarter 2018 year-over-year revenue per hundredweight including fuel surcharge was up 5.3% and revenue per hundredweight excluding fuel surcharge was up [3.6%].

year over-year revenue per shipment including fuel surcharge was up 9% and up 7.3% when excluding fuel surcharge. In terms of liquidity, our cash and cash equivalents and managed accessibility under the ABL facility, at March 31, 2018, was $117.2 million which is in line with yearend 2017.

We maintained our liquidity during what is typically the most demanding quarter for cash and we expect to strengthen our position by the end of 2018. The company’s total debt at the end of the first quarter 2018 was $918.7 million, which is a reduction of $86.1 million compared to a year ago and the lowest balance in 13 years.

Reinvesting in the business continued during the first quarter with the capital expenditure equivalent of 97.2 million or 8% of operating revenue. The total represents the 72.5 million increases over the 24.7 million invested in first quarter 2017.

Regarding our credit facility covenant, at the end of the first quarter 2018, the last 12 months consolidated adjusted EBITDA was $276.7 million and the funded debt to adjusted EBITDA ratio was 3.32 times compared to a maximum credit facility covenant of 3.5 times. As a reminder, the covenant maximum remains at 3.5 times through the end of 2018.

Although we typically do not provide forward looking information, I would like to mention the potential for non-union pension settlement charges at YRC Freight, these changes will not impact the company's cash balance or liquidity and will be excluded from adjusted EBITDA and from operating income. The charges are expected to total approximately 5 million to 20 million with the portion impacting the second and fourth quarters of 2018.

In closing I’m encouraged with the progress we are making to secure the right price and [segments] with our customers while materially investing in our company. As you heard from Darren we expect improved year-over-year performance in 2018 that is weighted to the second half of the year.

At this time, I’ll turn the call over to T.J. to discuss YRC Freight.

Thanks Stephanie and good morning everyone. I’m excited to be part of the YRC Freight team once again, as its energizing to recent acts with the company and many of the people I saw good portion my earlier career working with to deliver on our customers' expectations.

In the first quarter YRC Freight reported year-over-year improvement and revenue operating income, operating ratio and adjusted EBITDA. These results largely reflect the progress that we are making with our strategy to improve yields.

As Stephanie mentioned excluding fuel surcharge first quarter revenue per hundredweight increased 4.4% and revenue per shipment increased 6.7% when compared to the same period last year. Including fuel surcharge these increases were even more significant.

Poor pricing results accelerated as the quarter progressed, and we are very encouraged by the current state of demand in the marketplace. This is clearly, one of the strongest freight environments in several years.

In fact, our customer contract negotiations increased in average 6.2% during the quarter. The eight new distribution centers we discussed last year as part of our latest network enhancement became fully operational in the first quarter of 2018 and are handling freight as designed.

As planned we made progress creating on revenue equipment in the first quarter. These units are a meaningful investment in the heart of our operation and should drive the many benefits we have previously discussed including our reduction and our short-term rental needs overtime.

While YRC freight reported improved financial results over the last year. We are happy and satisfied with our overall performance.

As we move forward our focus will remain on our strategic objectives of enhancing safety, service, efficiency and quality, as well as driver hiring. We also find to continue leveraging the favorable industry dynamics to ensure that we are compensated appropriately for the capacity and services we provide to the marketplace.

I would like to thank all members of the YRC freight team for their continued efforts to meet our customers' needs and expectations. Thanks for your time this morning.

We would now be happy to answer any questions that you may have.

James, first off congrats to you, and best of luck to you and your new role there and congrats on your new role and I guess T.J. as well.

I wanted to ask a couple questions here. I guess first on the quarter can you talk about the cadence of when you took delivery of these tractors and to the extent you can provide us any sort of color around what you saw that due to your short-term rentals throughout the quarter?

I'm just trying to figure out how much short-term rentals did cost you in the quarter and at what pace or cadence we should see that come off in the second quarter?

Its Stephanie. As we went through the quarter, unfortunately those rentals did not come in all at the beginning of the quarter, in fact most of them came in the back half of the quarter in March.

And so, we did experience higher short-term rentals in Q1 on a year-over-year basis, kind of consistent with what we saw in Q4, we were able to reduce short-term rentals slightly towards the end of the quarter but as you can see from our purchase transportation line we did experience a significant increase on a year-over-year basis. The other piece of that purchase transportation line is really some additional solutions that we are providing to our customers, in the environment that we are operating in, our customers are demanding more than just LCL solutions, so we are providing a suite of solutions for our customers and that business continues to grow and business that we recognize the margin on.

But in terms of quantifying the short-term rentals, I think you said in the release PT included 9.9 increase in equipment lease expense, 5.5 of which was long-term, that's something separate than what you're referring to as short-term rentals right?

That’s right, but the other piece of the 9.9 is the short-term rentals.

So, we could assume that like -- what is that…

4.3.

4.3 million, okay.

Brad this is Darren, just a little more color on that, certainly all the units didn’t come in on January 1 but we have got a good pace of delivery, T.J and his team have worked well with the OEMs, and we like what we are seeing there. And once the tractors do hit the network they are immediately beneficial.

So, we are on a good pace now.

And then the loss on property disposals is that your equipment or is that real estate? What exactly is that you are losing money on the disposal.

Most of its equipments there few property sales in there but those are the minority of that list, most of that is equipment write off from items that we either failed or we scrapped.

And then given the weather we saw in Q1 and your results close to flat I guess on an adjusted basis year-over-year, why are you suggesting that improvement wouldn't happen until back half of the year. It seems as if we could see something more in 2Q, is that cautiousness or [if your] some other item we need to be cognitive of that could impact Q2 and prevent you from seeing meaningful improvement then?

Yes, a couple of time and I’m saying that, first of all really proud of YRC Freight and the way they responded to the weather, clearly that to the network enhancement with the eight new distribution centers that were opened in existing end of the long-term what was the T.J and team were able to respond quickly and recover much more efficiently than we have been able to do in the past. That also gives me some confidence about summer capacity needs and being able to respond to that effectively.

Regional company's certainly bigger weather impact there, especially in the Northeast. At our Northeast carrier who had eight business days heavily impacted by weather and one of our largest carriers in the Midwest impacted with over three business days with that weather.

So certainly, impact on Q1 and to come out of it flat I think is a win for the company. As far as Q2 where we have got good yield momentum going into Q2 certainly, the tonnage fees our focus is to be flat to up.

I think what we saw in Q1 around corporate business the business that left companies was the right business to leave. And we welcome it back with the new pricing and expect to make progress on that in Q2.

So, there's several encouraging signs but we are also following our previous comments around the short-term rentals and getting that under control in the first half of the year.

James wish you the best of everything, it was really nice to work with you. A couple of quick questions I guess, first, maybe at a high level, Darren you know we are obviously in the strongest environment for LTL and over a decade.

The company is still reporting an operating loss and faced small profit in regional obviously there is some legacy issues there. Company specific issues as well, with respect to the ability to invest which actually seems to be a -- in fact positively maybe gain some momentum but we would love to maybe just give us a sense of your perspective.

I guess what needs to change whether its culturally or cost structure wise? What needs to be accelerated to maybe get that OR down?

And how quickly can you get there?

I start with the yield platform that we built at companies that’s certainly one of the largest levers to profitability in any LTL operation. Both regional and YRC Freight had the strongest yield increases since 2015 and that was also with like per shipment increases.

So, yield not being a pure price metric that when 1% per shipment is rising like ours is right now and yield is coming along at a pace of 6% at YRC Freight and 5.3 at the regional it's encouraging. And then you put the contract and yields on top of that with YRC Freight being at 6.2% in the regional that’s 6% it's very encouraging.

The last metric I look at there just to make sure the companies are on the right track and that I watch closely is the revenue per shipment and once we have seen some really strong numbers there with an 8.3% at YRC freight and 9% at the regional. So, the yield strategy is the first piece of the plan.

We are investing in the fleet that’s certainly on a progress to profitability is one of the most impacting levers that we have. And those are immediately beneficial the day we put them into service.

Our technology investments and I have talked about for a long time and certainly there is negative approach but they are coming along nicely and I expect those productivity improvements to come along with the benefit realization of that technology overtime. The network enhancement at our national carrier I think will give us a strong summer and a way to respond to the demand for capacity that we all see in the summer months.

And we can't ignore the economy, regardless of other outlooks, demand is still firm and I anticipate the pricing environment to remain favorable for a period of time in LTL. It seems that all carriers are very consistent in their approach and focused on recapitalizing other assets over time, which is exactly what we are doing.

And the last comment I’ll make on just 2018 perspective is fuel prices have the potential to remain a tailwind for the company over the next few quarters.

And then just on the yield comment, obviously which you started off talking about just given the fact that it's not a necessarily pure proxy for price. Could you help us what the -- I don’t know if you have mentioned this earlier, but what the contractual renewals are trending at in terms of pure price perspective?

Certainly, 6.2% in Q1 for YRC Freight and 6% at the regionals, and those trends are continuing and don’t appear to be letting up.

And then the last question for me in terms of just the EBITDA progression. You know you guys did 275 million or so of EBITDA in 2017.

It looks like if this potential for 300 million plus EBITDA sort of low double-digit growth which would imply obviously doubling in the run rate of EBITDA as you move from the first quarter to second quarter and in the third quarter. Any thoughts on EBITDA progression as you move through the year so just we can calibrate some of our expectations.

And then also if you can also mention CapEx if you change your view on CapEx and how that would trend for the year?

I’ll answer the EBITDA please and then let Stephanie comment on the CapEx. All the things that I mentioned certainly it’s a long list of positive momentum.

One item I left out was we also had solid retention on [general rate] increase this year so all those factors together build into a foundation of continued performance improvement. That’s my expectations for all of our companies and the Presidents that lead those and even though we don't comment forward-looking I’d say that I’m standing in a position of confident about what we will be able to do in 2018 around our previously stated improvements here towards the second half of the year.

So, Stephanie if you give a little color on CapEx.

Sure, from a CapEx perspective for the first quarter we were 8% of revenue, some of that was still over from items that we did not take delivery from fourth quarter. So, we continue to expect that our CapEx will be in that 5% to 6% of revenue range.

And we will do so for the foreseeable future.

And that’s net rates net of proceeds from sales.

Correct.

So, I guess I’m going to start with T.J. now that you have moved off to west coast and looking at YRC Freight in the long-haul side.

What's been better-than-expected since you got into the weeks there and what's been more challenging work?

It's been as I stated very energizing. There is lots going on at YRC Freight.

And it's very encouraging frankly. The ability to [indiscernible] larger network and to implement the recent shops change of operations, which is performing pretty much as designed, I am getting my arms around thousands of dedicated employees that some new, some been around for a while and some are new previously et cetera but very encouraged and energized by these three to four if you will.

People are just have a very positive and can-do attitude, engaged in the business, the sales organization is very much engaged with the customers looking at new solutions for new and existing customers. The yield environment is very favorable so that makes what we do even more rewarding and enjoyable.

So, our challenges you know continued pressure on hiring. like everyone in the industry there is not enough truckers out there.

So, we are growing our own, we are recruiting different methods, different ways, we are focused on two locations that are some are universal for the industry [under-hired] right now and doing the very best we can to bring on additional talent that meets our standards in those markets. So that was a challenge in the regional side on the west coast and it’s a challenge here so obviously a bigger impact at rates because of the size of the organization.

But overall very optimistic and very encouraged by what I'm dealing with and what I see as opportunities for the organization.

And then there were issues last year with I guess the surge in heavier weighted shipments. I know that caused some issues on the pricing side and margin side, can you comment on I guess what's been done.

given the tight truckload environment there is going to be a tendency for shippers try to push some of those truckload type shipments down your throat? What have you guys done to make sure that if you are hauling that type of freight that you are getting appropriately compensated and that it doesn’t have any negative network impact on your broader LTL system?

That’s a good call out David and something we spent a lot of time internally and I’m very thankful that we started addressing that in Q2 of last year when we started seeing that happen. So, when you take YRC Freight and Holland our two largest companies and look at their truckload business combined you are talking about over a thousand shipments a day which is bigger than most truckload carriers.

So, there's a lot of exposure there and it's growing. Now that [indiscernible] side of that business is very positive for us.

It fills empty lanes, it does the right things in our network and that business comes with very nice margin. The part of that business that’s a little more complex and that you have to identify and address quickly, is in corporate contracts we are at a 10,000-pound line of rates so the corporate customer could actually put a truckload shipment onto LTL drop trailer and then it gets into your network and doesn't play its way.

That’s the piece that we started addressing in the middle 2017. I feel like we have a good handle on it.

It’s a continuous improvement process. But it's also being addressed in all of our contract negotiations from Q3 last year forward.

So, I like the position we are in, I like the truckload business that I’m seeing, which is predominant at the two companies I mentioned and also, we are seeing the yield numbers on that truckload segment even exceed the LTL numbers in some cases. So, it's a good segment of business for us and I feel like -- I won't be talking about it as an issue maybe speaking to it is more of an opportunity moving forward.

So, it sounds like there might be a little bit of tail to the issues as contracts come up for renewal but by the end of 2Q you will have gone for the whole annual repricing cycle since you started addressing it the back half of the year won't be a headwind anymore is that a fair way to put it?

Yes, and you are probably like I did, listened to some of the other carriers from the [NASDAQ] meeting this week and heard that saying approach from a couple other LTL carriers, so you stated it well.

And then last question for me, when does the fun start? And you guys start talking of the team [indiscernible].

Well, certainly March of 2019 is the expiration of our current agreement. There is frequent communication not specifically on that topic but on all the opportunities we have as the [teams through] organization.

T.J mentioned the dedicated employees, that’s why we are still here and that’s why I believe our opportunities are expanding moving forward. Those partnerships and relationships there well informed on our business and our strategy and we will continue doing that all the way through the process.

Best of luck to James. Stephanie give us April tonnage updates; can you give us anything on yields for April?

We are continuing to see the same trends that we have seen in the first quarter. I think Darren mentioned our price increases both at YRC Freight and regionals are trending around that 6% range but actual yield trends are trending in the same direction they were in first quarter.

And then as we think about going forward, is the focus on continuing to gather a lot of price and it's okay if the tonnage is still down or do we want more of the balance? What's the goal from a price per tonnage mix going forward?

I watched that closely and of course we have discussed it in the past. Revenue expansion that’s important to me and I’m getting that through yield.

There is a band slight negative to slightly positive on tonnage that I’m comfortable with, especially in a really tight capacity environment where cost for hire is going up and we certainly want to make sure that we are covering the cost of our networks. So, there is a band there that I watch closely and I believe in the current environment that I’ll be able to stay in that band, so that’s why my references around volume are typically flat.

And then I’d -- you made a couple of references to price investments 2015, that year you saw 0.5 of margin improvement at three. And reason the focus should be different this year?

I can't give you reasons that I think about it differently. The items I listed out, they are leading indicators in our business.

And there are certainly things that you can't predict. In 2017, we got into that short-term rental piece that could make things difficult, but overall with what we laid out here today, and the leading indicators that I see it feels like a very similar environment.

But I will say that the pricing points actually feel stronger from a demand standpoint.

And then last one Stephanie just on the liquidity front, it's sort of flat sequentially. Your point is that first quarter is typically when we burn cash and we should build cash in liquidity from here.

Is that right and is there any targets on what you think liquidity can get you by the end of the year, or where you would like it to get to?

Yes, I feel really good about our liquidity position at the end of first quarter, if you think about where we were at the end of the year, we basically maintained our liquidity through the quarter even with nearly 25 million of CapEx actual spend, plus the heavy demand that we see in first quarter on a typical basis. So, as we move through the year we will continue to build cash.

We will be in that 150 million to 200 million range by the end of the year as I mentioned is my comfort zone.

If I could go back to the tractor additions in the quarter I believe it's 500, can you help us out on how many of those maybe went through replacing older equipment versus went to replacing those short-term rentals, what kind of the split was there?

The rentals, it's not a one for one, but typically in the rental situation and expanding the fleet we have a good idea about equipment that we are going to remove from the operation. So, it’s a close to one for one on the rental pace once all of the tractors get into service.

So, of the 500 that were added all went to replace the rentals, is that way to take away from this?

Its replacing and we put the new ones in our line off late and a lot of the rentals occur in our local city operations.

Has there been a change in thinking about adding the remaining 400 tractors throughout the year just picked up on your wording of 400 in the remainder of 2018 and I think last quarter we talked getting all those in the first half of the year?

It might be timing versus when we can get to them from the manufacturers, so it might be 2Q versus 3Q. but we are getting them as soon as we can, part of it is the hold up with the manufacturing.

There is tremendous demand in that area, we order those well and advanced and certainly our significant customer, so we will implement those under the fleet as soon as possible.

I guess same story for the trailers, kind of some issues given those and maybe back half loaded on those deliveries as well.

Yes, that’s a good way to look at it.

And T.J if I could touch on the eight new -- I guess not new but transition to BCs that are up and running fully right now. Are those running as efficiently as you are expecting right now?

Could there be improvements and maybe that’s part of why we are going to see a step up in the last second half of this year?

The universal -- absolutely as we expect improvement everywhere. And the eight new DCs are newest DCs in the system are performing as designed but we also see some upward opportunity for each of those eight DCs.

And last one for me just I think Darren you said that GRI is holding well just I was wondering if you could talk a little about that given that some of the competitors haven’t chosen to implement one as of yet.

Yes, we measure that from the retention standpoint and we're seeing as good or better retention by geography as we have in years past. So that piece was encouraging to me.

And we have seen a large piece of the industry follow that and the timing of it was good for other YRC worldwide companies.

Darren or T.J you guys are rolling out the linehaul optimization and the P&D optimization software. Can you just give us an update on where that stands and then to the extent you can provide us any metrics like what improvement you're seeing with load factor or other metrics?

Can you give us some of those to help us gauge the impact it's having on the cost structure?

Brad I’ll start with that and then turn it over to T.J and of course we don’t provide any metrics at that level in the organization. I’m pleased with the optimization effort.

I believe that is an opportunity for YRC Freight to have significant continuous improvement and also I would say in Q1 what I saw from the YRC Freight companies and in that area was impressive from not having the number of diversions and other things in the network, the Quintec pickup in delivery solutions we have got as the operating officer for the company the last three months that’s a focus of mine across all of our companies, because it's such an impactful metric and I like what I’m seeing there but I’ll let T.J give you an update on the P&D side, so take it away.

So, Brad I’d tell you that the Quintec solution is not an office self-solution, as I’m digging in and learning more about that and my new role, its customized at each location. So, when we complete an install we like what we see and as we proceed with that we still have a fair amount of work to do because its customized, if not at specific locations certainly by size location and the nuances of particular operations to get it customized to that location to maximize the benefit of the technology.

So that continues to be rolled out. We like what we see, but we still have a fair amount of work to do in terms of full implementation.

Maybe if I could ask in a different way, I mean when you guys were talking about the opportunities that these systems would have on the organization, have we seen 20% of the benefit at this point, or we seeing 60, I mean how as an investor should they gauge what still to come with the investments we have made on these systems?

I think its weighted towards -- there is more benefit in front of us than behind us.

And then maybe I know there has been a lot of questions about equipment and maybe this is for you Stephanie, given the significant orders we have seen and deliveries to come, has there been any analysis on what impact on returns it may have to buy some of these four, five-year-old used equipment for these tractors that may come on the market here over the next six to nine months. Is that even being contemplated or is it sort of new and I guess, why?

Absolutely, we are always looking at the used markets, part of what doesn’t make those attractive is sometime suspects aren’t right for us. So, we absolutely look at any piece of used equipment that we can find but we often find that they aren’t to the specs that we like.

What we are doing though as units are coming up for either leased renewal internally or coming off lease we are purchasing those as we are able. So, you will see more purchases in 2018 than we have done in the recent past.

And we will continue to evaluate purchase versus leased as we continue to grow liquidity.

Just to make sure I understand that so instead of renewing some operating leases, you will be purchasing these assets and you still expect to grow your cash balance to 150 million to 200 million by end of the year.

Exactly.

Thank you, operator. I’m excited about the opportunity that we have at YRC Worldwide and I certainly have a great deal of confidence in our leadership team.

The transportation industry and overall climate remains strong and we intend to continue the investments that we believe benefit our customers, employees and investors well for the long term. Thanks again everyone for joining us today.

Please contact Tony with any follow-up questions that you may have. This concludes our call and operator I'll turn the call back to you.