Yellow Corporation

Good afternoon and welcome to the Yellow Corporation's Third Quarter 2022 Earnings Call. All participants will be in the Sonali mode. After today's presentation, there will be a question and answer session. Please note, this event is being recorded. And now I'd like to turn the conference over to Tony Carino, Senior Vice President of Treasury and Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to the Yellow Corporation's Third Quarter 2022 Earnings Conference Call. Joining us on the call today are Darren Hawkins, Chief Executive Officer, and Dan Olivier, Chief Financial Officer. In addition, Darrell Harris, President and Chief Operating Officer, will be available during today's question and answer session. 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 therefore actual results may differ materially. The format of this call does not allow us to fully discuss all of these 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. These items are also available on our website at myyellow.com. Additionally, please see today's release for a reconciliation of net income to adjusted EBITDA. In conjunction with today's earnings release, we issued a presentation which may be referenced during the call. The presentation was filed in an 8K along with the earnings release and is available on our website. I will now turn the call over to Darren.

Thanks, Tony, and good afternoon, everyone. Thank you for joining our call. In Q3, revenue and operating income increased compared to a year ago, marking the sixth consecutive quarter of year-over-year improvement. Operating income improved despite an unfavorable impact from higher third-party liability claims expense compared to a year ago. Our strategy includes mitigating incremental purchase transportation expense, and as a percentage of revenue, it decreased by 120 basis points in the third quarter compared to a year ago. Throughout 2022, we have consistently kept our focus on improving the quality and profitability of the freight moving through our network, and that continues to be our plan as we execute the final steps on the transformation to One Yellow. In Q3, year-over-year LTL revenue per hundredweight, including fuel, increased 24.6%. Overall, the demand for LTL capacity appears to be moderating following a period where demand exceeded supply. However, the price of environment remains favorable. For the month of October, yellow averaged an increase of approximately 5% on contract negotiations. In September, we successfully executed phase one of the network optimization. Phase one impacted 89 legacy YRC freight and Retaway terminals in the western U.S., and integrated the long-haul network to support both regional and long-haul service as well as the optimization of pickup and delivery operations. We went into the transition with a straightforward set of goals that would define success. First, we stood the terminals up to begin operating as a super-regional network. Our employees moved customer shipments across the network and delivered them as designed. We made things simpler for our customers by having one driver picking up and delivering both YRC Freight and Red Away brands, which resulted in reduced congestion at our customers' dots. We reallied and optimized more than 4,600 terminal zip codes, positioning our facilities closer to our customers, enabling earlier pickups and deliveries, and reducing city miles traveled. Finally, our employees remain highly engaged throughout the implementation of these changes, allowing us to capture valuable data and lessons learned as we prepare to integrate the rest of the network. The performance of the network following the implementation of phase one is meeting our expectations, and we are excited about what this means when the entire network is operating as a super regional carrier. we plan to have the rest of the network transformation completed around the end of the year. One of the benefits of optimizing an LTL network with more than 300 terminals such as ours is we will be able to dispose of terminals in close proximity to each other that have overlapping service territories. However, we do not plan to sacrifice customer service or geography. We will look for opportunities to sell the excess terminals that we own and we expect to continue de-risking the balance sheet by paying down debt with these proceeds. Turning to our recently extended asset-based loan facility, the progress the company has made during the transformation of OneYellow helped position us to improve the terms of the facility, including enhancing our liquidity. You will hear more about this from Dan. Thank you for joining us today, and I will now turn the call over to Dan. who will share additional details about the quarter.