YRC Worldwide Management Discusses Q3 2013 Results - Earnings Call Transcript

Nov.12.13 | About: YRC Worldwide, (YRCW)

YRC Worldwide (NASDAQ:YRCW)

Q3 2013 Earnings Call

November 12, 2013 4:30 pm ET

Executives

Stephanie D. Fisher - Vice President and Controller

James G. Pierson - Chief Financial Officer and Executive Vice President

James L. Welch - Chief Executive Officer and Director

Analysts

Justin B. Yagerman - Deutsche Bank AG, Research Division

Allison M. Landry - Crédit Suisse AG, Research Division

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

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

Operator

Good afternoon. My name is Candice, and I will be your conference operator today. At this time, I would like to welcome everyone to the YRC Worldwide third quarter earnings conference call. [Operator Instructions] Ms. Stephanie Fisher, Vice President and Controller, you may begin your conference.

Stephanie D. Fisher

Thank you, Candice. Good afternoon. Thank you for joining us for the YRC Worldwide third quarter 2013 earnings call. James Welch, Chief Executive Officer of YRC Worldwide and President of YRC Freight; and Jamie Pierson, CFO of YRC Worldwide, will provide comments this afternoon. James and Jamie will be available for questions following our comments.

Now for our disclaimers. 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 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. Additionally, please see today's release for a reconciliation of operating income's 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 Jamie to discuss our third quarter financial results.

James G. Pierson

Thanks, Stephanie, and good afternoon, everyone. For the third quarter of 2013, consolidated EBITDA decreased $16.4 million from $78.8 million, to $62.4 million, primarily as a result of 2 items. First, the change of operations at YRC Freight continue to hinder service, which in turn led to some customer flight in our higher-margin channels. Secondarily, as a result of our driver shortage, we were forced to pay a fair amount of overtime to our existing drivers, and in some cases, had to pay a third-party carriage carrier to deliver the freight. More on this in a moment.

Second, for the first time in almost 2 years, the accounting adjustments for workers' compensation and bodily injury and property damage, or BIPD, were not favorable. As we have discussed ad nauseam in the past, safety and the resulting financial impacts are real. And while we continue to see positive results on workers' comp, we were hurt by a few significant BIPD cases.

Now for the year-over-year stats. YRC Freight's tonnage was down 0.5%, and regional tonnage per day was up 6%. The decline at YRC Freight was due to a loss of business in our local channel. YRC Freight's revenue per shipment grew by 0.6%, which included a decrease of 2.2% in revenue per hundredweight and an increase in its weight per shipment of 2.8%. While the regional carriers increased their revenue per shipment by 0.8%, and the revenue per hundredweight by 1%, their weight per shipment decreased by 0.2% on a year-over-year basis.

As for earnings, YRC Worldwide consolidated revenue -- I'm sorry, YRC Worldwide reported consolidated revenue of $1.253 billion for 3Q '13, an increase of $15.9 million over 3Q '12 due to top line revenue growth at the regional carriers, offset by a decline at YRC Freight. Additionally, we reported consolidated operating income of approximately $5.8 million for 3Q '13, a decrease of $21.5 million when compared to 3Q '12. Finally, we reported adjusted EBITDA for 3Q '13 of $62.4 million, which is a decrease of $16.4 million from the $78.8 million reported for 3Q '12. This brings adjusted EBITDA to the latest 12-month period to $274.8 million.

During the third quarter of 2013, we experienced adverse development in relation to the severity of our bodily injury and property damage claims and recorded $4.4 million of an additional expense related to these claims as compared to the same period in 2012. We continue to see favorable workers' compensation trends as we advance our safety initiatives. However, on a year-over-year basis, we recorded an additional $2.2 million of workers' compensation expense in the third quarter of 2013.

On a segment basis, from third quarter of 2013, YRC Freight reported an operating loss of $9.7 million, a decrease of $12.5 million over the prior year, which translated into an operating ratio of 101.2, a decrease of 150 basis points versus 3Q '12. Further, Freight reported adjusted EBITDA of $24.2 million, a $13 million decrease from the third quarter of 2012, and adjusted EBITDA margin of 3%, a decrease again of 150 basis points over the prior year. Our regional segment reported operating income of $20 million, a decrease of $7.2 million over 3Q '12, and operating ratio of 95.5. Additionally, they reported adjusted EBITDA of $38.3 million, which was a decrease of $6.1 million over the third quarter of 2012. The decrease in adjusted EBITDA for the regional group is primarily attributable to adverse development in relation to the severity of our BIPD claims of $4.2 million and unfavorable experience on our workers' compensation prior year claims of $4 million.

Turning to cash flow and liquidity. We ended the quarter with balance sheet cash and ABL availability of $234 million, which is an increase of $15 million from the second quarter of 2013, and only a $4 million decrease on a year-over-year basis. Our ability to maintain liquidity at this level is due to our continued active management of our balance sheet and working capital and the current seasonality of the business cycle.

As with the last couple of calls, I'd like to leave you with what I consider to be a few key takeaways for the quarter. One, we took delivery of additional new tractors and trailers as a part of the 2013 leasing program we mentioned on our first and second quarter earnings call. On our second quarter 2013 conference call, we noted we are beginning the process of returning to a more normal CapEx spend. However, due to the decline in performance at YRC Freight, we have had to cut back on that plan for the time being. While we will be -- while we will continue to reinvest in our fleet and especially technology, it simply will not be at a pace that we had originally anticipated. Two, we again decreased our outstanding letters of credit by another $21 million, from $386 million at the end of the second quarter, to $365 million at the end of the third quarter. This is in addition to the $57 million decrease in the first half of 2013, and is a result of the safety initiatives we started in late 2011. However, it's incredibly important to understand that as our outstanding work comp and BIPD claims and liabilities gravitate towards a more normal or historical levels, we will see the favorable development from frequency and severity diminish.

Three, in the third quarter of 2013, approximately $15.1 million of aggregate principal amount plus PIK and make whole interest of our Series B notes were converted into 817,000 shares of common stock.

And fourth, and finally, today, we are able to amend our credit agreement and ABL agreement to account for the disappointing third quarter results by giving us additional cushion on all of our major covenants. James will discuss in his closing comments, this is all part of a trend to more holistically refinance our capital structure. On that point, we believe we have the amendment and we're just simply finalizing some of the voting mechanic issues as we speak.

In closing, our overall performance in the third quarter was not where we wanted it to be, and we know that we have tons of work to do.

I'll now turn the call over to James to explain what went wrong and how we're directing our operational issues, in particular, at YRC Freight.

James L. Welch

Thanks, Jamie, and good afternoon. Obviously, we were not pleased at all with our overall reported results for the third quarter. After exceeding our internal financial plan for 8 consecutive quarters with this management team around in 2011, we had a rather large steep up during the third quarter. Several different factors contributed to our overall disappointing performance, and I will provide some commentary to help you understand our shortfalls.

First and foremost, YRC Freight did not perform well. During the second quarter conference call, we acknowledged a major change of operations that was implemented in May, and indicated we have faced challenges with the implementation. And while we had indeed physically completed the change of operations during the second quarter, we had several different issues that continue to challenge the YRC Freight network during the third quarter as a result of network optimization.

One, we did not have enough drivers relocate to the terminals that gained freight volume as a result of the change of operations. The overall vehicle fill rate was relatively high as compared to previous changes of operations. However, we still ended up short on manpower, and the shortage was amplified by the normal vacation season on the docks and in the city P&D, as well as our line haul operation.

Two, with a manpower shortage, there were too many locations in the YRC Freight network where freight was not processed timely, causing the network to be out of cycle. With the network out of cycle, we increased spend on purchased transportation and incurred a lot of unplanned over time to help clean out the freight that was clogging the network. Simply put, we were operating an inefficient network.

Three, the service under pressure for basically the entire third quarter due to the manpower shortages, we experienced some temporary loss of business that obviously we're not happy about.

Four, we experienced a decline in productivities during the third quarter as compared to those experienced prior to the network optimization. And finally, the momentum created by our concentrated sales effort leading up to the May change of operations took a step backwards in the third quarter. The good news is we have regained our sales momentum and have resecured a good portion of the business that was temporarily lost, so we can say that certainly there were self-inflicted wounds of YRC Freight during the changes of operations. However, there were other issues as well and it started with the timing of the change. Originally, we wanted to implement the change at the end of last March, which we believe would've caused less disruption than the change in May. However, we were unable to implement the change at that time. Additionally, the summer holidays all combined to create further challenges on an already stressed network.

So I'm sure you're sitting there asking what the heck we have done or what are we going to do to get YRC Freight back on track. First, we made a leadership change on September 20. I was named President of the company. Additionally, we brought Phil Gaines back to the company as Senior Vice President of Finance. Phil led our finance efforts during the 7 years that I was President at Yellow Transportation. I have a lot of confidence in Phil's ability to analyze and understand things. He's already making a noticeable difference. Second, getting the YRC Freight work back in cycle has been my #1 priority, and I'm pleased with the progress we have made over the last 30 days and certainly expect continued improvement.

Third, we've developed a holiday plan when I first took over the position that is fairly focused on people, processes and performance. Fourth, and finally, with our service almost back to pre-chop [ph] levels, we are aggressively pursuing profitable business for sale strategies by channel and a new balanced sales scorecard that focuses on leading indicators and also incentivize sales force. And I'm sure you're thinking, how can we be certain that it will not be a repeat performance of these self-inflicted mistakes. One, we are focused on growing the business versus just cutting cost, which will require YRC Freight to maintain even higher service levels. Again, we have made good progress in this area. Two, we developed a new balanced operations scorecard that narrows the focus of the terminal manager and the terminal management on the top 10 metrics that move the needle. With this scorecard, we will have greater accountability per field management levels to deliver the desired operational outcomes. Three, we have a prioritized technology list of enhancements that are focused on improving operations and higher margins. Four, we have conducted root cause analysis on operational disruptions from the change of operations, which certainly we have corrected our issues. And five, and possibly most important, we're not planning for any other major changes -- for any other changes of operations with this magnitude at any time in the future.

In addition to that, just in a difficult change of operations, YRC Freight also experienced challenges in increasing yield, a combination of lower-than-expected [indiscernible] results, some churn from higher-yielding customers and then higher rate per LTL shipment during the change of operations and all these things contributed to a yield decline of 2.2% versus 2012.

So we typically do not give any guidance or typically make any forward-looking statements. However, I do want to share with you that we've seen improvements in the performance of YRC Freight in October. Volume levels have improved in comparison to 2012, and this is the first time since March of 2012 that we've seen this. Load average is also up considerably. Productivities are rebounding and services returning to pre [indiscernible] levels. However, we still have a lot of work to do at YRC Freight.

Moving onto the regional carriers. We're overall displeased with third quarter fundamental operating results, Holland, Reddaway and New Penn continue to perform well, and our regional carriers provide market-leading service. And during the quarter, our customers rewarded us with new business. Our regional carrier employees were proud for their respective brands, and I appreciate the effort they give to provide excellent service to our customers and to produce excellent results.

We know what we need to accomplish at YRC Freight, and I believe our focus on providing the best customer service possible and a commitment to work safely and injury-free are the twin pillars of success for the company in the months and years to come. Our focus on service improvement will be the foundation of our growth strategy and is essential to YRC Freight's success.

What encourages me most after being in the position for 45 days is to see a never-give-up-attitude on the YRC Freight management team and employees who care deeply about returning the company to a leadership position within this industry. This same never give up drive to success has made the regional companies' leaders in their segments and I’m convinced it will also to put YRC Freight back on the right track.

So in closing, I would say I'm encouraged by the fact that we are in discussions with the IBT to amend the current contract and increase our competitiveness in the market. We've been on a journey to refinance the capital structure since we took over in July of 2011. Today, I think, we made a lot of progress in focusing our attention on what we do best, in addition to pushing the economy, decision-making to build locations and then improving operating results. But admittedly, we took a step backwards with the most recent network optimization at YRC Freight. That being said, it is all about results. Thus the management change, and as discussed, we have a plan to get YRC Freight back on track.

Finally, we have listened to the market and it has resoundingly said that we need a more competitive contract for the IBT, and that's exactly where we are today. The path is clear. In order for us to more holistically refinance the capital structure, we need a more competitive contract. This is an incredibly important step in the long-term success of our company, and we will provide our employees with long-term job stability. In addition to securing jobs over 26,000 union employees, it will substantially increase the likelihood of a refinancing that will address the debt maturities in 2014 and 2015. And while you may be tempted to ask, please know it is way too premature to answer any questions on this front. As soon as we have something more concrete to report, we will.

So with these comments, Jamie and I are ready to take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Justin Yagerman with Deutsche Bank.

Justin B. Yagerman - Deutsche Bank AG, Research Division

Jim, you said that you don't want me to ask about the teams during negotiation. But maybe just around that, is that reaching a more competitive deal, something that is a precondition for getting a more permanent resolution with your banker?

James L. Welch

Justin, while I would love to give you the progress and the details on what we're trying to do, I think, this is really premature for me to get into any specifics about that whole process there.

Justin B. Yagerman - Deutsche Bank AG, Research Division

All right. Can't hate me for trying. So when I about LTL, I don't typically think about driver shortage, can you talk a little bit about why that was something that was impacting you so severely in the quarter?

James L. Welch

Well, one of the things that hurt us during the quarter was the fact that we had about 1,100 positions that were relocated from a dock P&D line haul standpoint. And even though we had a pretty good fill rate on the bid change, we were still well short of really what we needed to move the freight. And I just think some locations either didn't plan adequately or just got caught in the change without being prepared to bring on new drivers, and it takes a while to hire the right kind of driver that we're looking for. By the time you get them to pass the drug test, the background checks and all the other things that we're trying to do, we simply did not react good enough, soon enough or well enough to what we were facing and we certainly paid the price. So again, I think, a lot of this was self-inflicted. Typically, we don't have problems filling driver positions but it does take a while to go through all the necessary steps that we go through when hiring people.

Justin B. Yagerman - Deutsche Bank AG, Research Division

That's fair. Are you going to be running freight for the foreseeable future or are you guys going to be out there looking for somebody to take over that?

James L. Welch

Well, one of the things that's allowing me, Justin, to sit in the seat for the foreseeable future is the fact that our regional companies are really running pretty well while we touch base with them on an as needed basis. We certainly have our stringent monthly business reviews, because of how good they're running, I'm able to devote a lot of my time to YRC Freight. So having been back in the saddle for 45 days. We have a lot going on. We've got a very extensive 90-day plan that we're working under. I've got several other initiatives working to look at our cost structure and things that are important to us moving forward. So we're just going to take it a little bit at a time and see how it goes but I'm committed to doing whatever it takes to get YRC Freight turn back around.

Justin B. Yagerman - Deutsche Bank AG, Research Division

I mean, obviously, getting a new deal with the IBT would be helpful in that respect, but beyond that, when you look at the opportunity in front of you, you talked about a 90-day plan, what are the things you're going to be looking to do and kind of as you try to, at least, I guess, get across the threshold of profitability there, how long do you think that, that would take you as freight as you've now been under the hood for a couple of months and made some progress?

James L. Welch

Well, it was certainly good to see progress in October. Obviously, I can't get into forward-looking guidance or statements. We have some tough months coming up in front of us. But my 90-day plan is really focused a lot about getting this network back into repeatable, spendable, consistent, reliable cycle. And for some reason, we just haven't made the progress there that I thought we would've. Certainly, putting the 2 cultures together and the different operating philosophies and all the things that this company has been fighting for several years, I wanted to think we've been further down the road than we are but we still have ways to go to get the processes really where we want it. So part of the 90-day plan is just fully focused around the people side. We're picking back up some training in some critical areas built around the service cycle. And if I can't get people to do what I want them to do, then we're showing them with pictorials and training around pictorials and timelines and clocks and we've got to get this network back to where it is very dependable in a service cycle. And so that's where the process piece comes in. And then, with the scorecards that we put in place, the accountability is certainly driven down deeper into the organization, we've been really pretty good at holding every director of operations accountable and division VPs and area director themselves and things like that, but these scorecards are meant to drive it deeper down into the organization. So there's a lot of things that I'm attacking, but obviously, I can't really reach out there and predict what the results will be in the future, but certainly, we hope, better about what we saw in October.

Justin B. Yagerman - Deutsche Bank AG, Research Division

Okay. Last question and I'll turn it over to someone else. On the CapEx side, you made some progress [indiscernible] doing a better job. Whether you brought some [indiscernible] the pace was kind of be slowing down. Could you talk a little bit about how you think about CapEx going forward, where your equipment is and how much slower the progress is going to be?

James G. Pierson

Justin, you're cutting out a little bit but I think your question is how much slower on a CapEx basis the progress is going to be?

Justin B. Yagerman - Deutsche Bank AG, Research Division

Yes. I guess, the question was where are we right now on the fleet? And you said that you were able to accelerate some but now you're going to have to slow it down. So what's the thought process on equipment and how that's all going to have to play out going forward?

James G. Pierson

Yes, I think, from -- where we're going to spend our CapEx dollars, it will be more focused on the technology side. I mean, we're going to continue to do what we can from the revenue equipment in terms of the total fleet, in particular, on the engine swings and to the extent that we can continue to lease, we'll certainly do that. And I think, our biggest bang for the buck, not only in the near term but in the long term, is going to be along the lines of our handheld technology, actually getting that to being more of a partner in how we operate the dimensioning units. I think, we've mentioned in the past that we are piloting across a couple of the operating companies. We continue to do that on a pretty aggressive timeline basis. And then, the last thing, I don't know how much you've heard us talk about, but is with Chronos [ph] and our ability to proactively manage our workforce. So it's not just a time cost per se as you think that it is. But it really is a tool that allows us to proactively measure our force, knowing what the loads are coming into them. So very long-winded answer to think what's been -- as much as we can, our technology in near term, we continue to do what we do on a revenue equipment side.

Operator

And your next question comes from Allison Landry with Crédit Suisse.

Allison M. Landry - Crédit Suisse AG, Research Division

I was just wondering if you could give us some parameters for how to think about pension expense in 2014 with the expected change in the discount rate at the end of the year?

Stephanie D. Fisher

Allison, it's Stephanie. I'm not sure that we have that data at this point. Let's take that off-line and as we move through to the end of the year, we can probably give you a better idea of that. But I don't have that data right with me yet today.

Allison M. Landry - Crédit Suisse AG, Research Division

Okay. We can take that off-line. And I guess, thinking about some of what happened at freight and you're caught short at some of the terminals, do you think that it was pretty much all due to some of the things, James, that you had mentioned? Or were there any situations or terminals, regions, that demand was actually a little bit stronger than you had anticipated or do you think it was primarily planning and that sort of thing?

James L. Welch

Good question. It could've been some of the volume that we were hauling during that time, depending on what terminals were either consolidated and/or DCs that were consolidated. But I still think, primarily, it was just a situation where it was a very large change of operations, the second largest in the history of a long-time company. I think, the team thought they were prepared, but obviously, we just didn't execute as good as we should've. And the Yellow days, Yellow was always a company that executed changes of operations very well. But I think, the summer holidays, Memorial Day, Fourth of July being on Thursday and Friday, and then Labor Day, all kind of exacerbated the network that was out of cycle. And so we would see our distribution centers be current and then not be current, and then they would not have consistent freight flows to them like we needed them, all that just adds up to a very inefficient operation. So I still think a lot of it is self-inflicted, and I'm encouraged by what we've seen in October. We’re much more in cycle. Productivities have returned. Big increase on load average, which is good, and then volume returns. So I'm feeling better about where we're at, but certainly, we've got to do a better job of executing what we said we were going to do.

Allison M. Landry - Crédit Suisse AG, Research Division

Okay. Well, I mean, that's great to hear on November. I guess, just my last question, could you remind us what percentage of your drivers have handhelds currently?

James L. Welch

All of our drivers and all 4 companies have handhelds but the latest edition of our handhelds were rolled out at YRC Freight Holland and Reddaway and New Penn still has the same handhelds that they've had for several years.

Operator

And your next question comes from Tom Albrecht with BB&T.

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

I've got a couple of factual questions I want to just squared away and then go back to a bigger discussion. So particularly debt-to-EBITDA at the end of June was 4.7, what was it at September 30?

James G. Pierson

It is about point [indiscernible] give me 1 second I'll figure out that. Okay, yes, 4.9.

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

Okay. And then, Jamie, did you say the workers' comp adverse hit at Regional was 4 million. I'm kind of driving through the mountains of Pennsylvania, so a little bit in and out here.

Stephanie D. Fisher

Yes, it was 4 million and 1 million for BIPD.

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

All right. And so, James, when you talk about substantial improvement in load factor, can you be more specific? What sort of percentage, if you don't want to give a load factor, I mean, you said a couple of times on this call, fairly large increase or improvement in that?

James L. Welch

It was about 3.3% in October.

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

Okay. And I think, everybody understands there's not much that can be done looking backwards now, but it does seem like there's a little bit of sense of optimism you're trying to convey that you're going to try to reestablish some operational momentum looking forward. What might be helpful is if -- so October definitely made some progress. Can you share with whether your operating ratio was packed, let's say, below 100 or even below 99 at freight?

James L. Welch

No. I can't say that I can say that it was an improvement over September but I can't tell you what the operating ratio was. Stephanie would kick me under the table.

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

Well, I mean, this is a public forum so it wouldn't be something where it's selective disclosure. I mean, that would go a long way towards helping people understand whether the rate of improvement is real or just much more miniscule.

James G. Pierson

Tom, this is Jamie. We're not going to get to the, I guess, the cadence of giving intra-quarter guidance. I would echo James' comment that it's better if we're going to stay away from giving it too much detail.

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

All right. Because I don't think anybody would take it as guidance and apply it to November and December. But you know what's happened with the stock and you know all of the fresh rumors that are out there, it would just be statement of fact that October was x. A year ago, the operating ratio of freight excluding gains on sale was 98.5, including gains, was 97.3, are you confident you can get back to those kinds of 97 to 98 numbers in the next quarter or 2 at the freight?

James L. Welch

Well, I think, last year, in the fourth quarter and then the first quarter this year had a lot of work comp positive adjustments that made those results look pretty good. But I'm confident that we're going to continue to move the company forward. I just can't seem to predict how fast it will be just coming onto the holiday season and the tough winter months. But I'll just say the fundamentals of the business are better than they have been.

James G. Pierson

And Tom, if I may add to that, we do not forecast what an actuary price do in a corner of an office in the basement in Chicago, Illinois. I mean, the ability to forecast the business is one thing. The ability to forecast what an individual actuary is going to do for our reserves is impossible. And what we have noticed this quarter is that a couple of bad accidents from BIPD basis have a profound effect in our results. And the regional, they're feeling that as we speak.

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

So it sounded a little bit like when you were talking about the BIPD that it was current quarter activity of freight and maybe it was negative development on prior claims at Regional. Is that fair?

Stephanie D. Fisher

Yes, that is fair.

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

And then, on the driver situation, James, you're not necessarily saying that you had a driver problem apart from change of operations, right? You're saying that in those terminals, those regions, that's where it was pronounced and led to higher PT cost and other issues. Is that correct?

James L. Welch

That's correct.

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

And then, I guess, the last question, just sort of a hypothetical. Let's say you were to have substantially much more rapid improvement in the operating ratio to a point where you and the banks would be pleasantly surprised. Would that change their willingness to work with you apart from getting a labor extension?

James G. Pierson

Yes, I think, at the end of the day, Tom, it depends on 2 things: One, our performance; secondarily, it depends on the market outside of it, the capital markets outside of there. So I'm not going to say -- I'm not going to speak for any one of our individual banks, but what I will say is to the extent that we're operating at a level that we can more fundamentally [indiscernible] the capital structure, it's in everybody's best interest to do so.

Operator

And your next question comes from David Ross with Stifel.

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

It's actually Bruce Chan on for David Ross. You mentioned that October volumes were looking good so far. I'm wondering, is that still true net of the Hurricane Sandy impact last year? I mean, I realized it's hard to quantify. But I guess, what I'm getting at is volume is up just because of Sandy comp? Or are they up independent of Sandy?

James L. Welch

A little bit of both. I mean, I think, Sandy certainly had an impact but we're relatively flat to up if you take Sandy out of there.

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Great. And maybe just to follow-up on one of Justin's questions. You mentioned that it takes time to properly restaff all the terminals with drivers. Has that situation been fully resolved as far as driver terminal relocations?

James L. Welch

I think, we're in much better shape than we were, we still have spots where we're looking for drivers, but certainly, we've caught the summer months and vacation season was also a big factor during the summer months. So when you combine that with the shortage of drivers on relocation, that really hurt us. So our workforce returned in September and October back from vacations. And so, I think, overall, we're pretty good. We have a few spots, we're looking for drivers, but we always are, no matter what time period you go back and look, we always have drivers that are retiring and need to add to the complement. So -- but we're in much better shape than we were.

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

Sure. Okay. So almost there. Now on the yield side, it looks like yields were negatively influenced by customers leaving, it looks like cost of service issues and perhaps some negative mix effects in freight, too. But excluding those factors, I'm wondering what the average price increases on -- especially your national account contract renewals were in the third quarter?

James L. Welch

I think, our performance has been pretty stable all year long. The other fact that affected that yield was our weight per shipment was up 2.4% on an LTL basis in October, and total weight per shipment was up 2.7%. So that certainly drives yield down, but we're looking for heavier, easier on, easier off freight. And then, during the several months, the WNI coordinators, we had about 10 or 15 positions that were created and we didn't get those filled as quickly as we should have. So you're not doing as many inspections on weight or inspections on the dimensions and classification of the freight and that certainly hurt us more than you think. So we think we've got that fixed and we're back on track in October.

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

Okay. But net of those kind of mix effects and whatnot, you'd say pricing on contract renewals, were they flat, maybe down?

James L. Welch

It's pretty stable.

J. Bruce Chan - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Great. A little bit of static on the line. But just one final question. And really, I'm just curious. Earlier this year, when the stock was in the $20 to $30 range, I guess, you'd say we maybe expect to have seen an equity deal to deleverage a bit. What was the rationale there for not doing one?

James G. Pierson

Yes, no. So in times of when we filed the S3, obviously, you can tell from the press as of late, we have been busy working on a couple of items and it is traditionally -- you know as well as I do, you enter these blackout periods where you can't do anything. And candidly, we missed the window in terms of when you -- it spiked up. There's only a 45-day period when it ran to the roof and then it came pretty heavily back down, went from 7 to 34, and then it went back down to 15, now it's 10. Well, the good news is that, at 3, it's still alive. It's out there. We just need to clean up some of our supplemental disclosures and if we're so fortunate, we could choose to use it.

Operator

And we have no further questions at this time. I'll turn the call back to our presenters.

Stephanie D. Fisher

Thanks, Candice. That concludes our call for today. Thanks, everyone, for joining us. Please contact me with any follow-up questions you may have. Candice, I'm turning the call back over to you.

Operator

And this will conclude today's conference call. You may now disconnect.

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