UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-12255

Yellow Corporation

(Exact name of registrant as specified in its charter)


Delaware		48-0948788
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

501 Commerce Street, Suite 1120, Nashville, Tennessee		37203
(Address of principal executive offices)		(Zip Code)

(913) 696-6100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	YELL	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐			Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at ~~May 5,~~October 28, 2022
Common Stock, $0.01 par value per share		~~51,517,731~~51,664.478 shares

INDEX


Item		Page		Page
	PART I – FINANCIAL INFORMATION		PART I – FINANCIAL INFORMATION
1	Financial Statements	3	Financial Statements	3
	Consolidated Balance Sheets – March 31, 2022 and December 31, 2021	3	Consolidated Balance Sheets - September 30, 2022 and December 31, 2021	3
	Statements of Consolidated Comprehensive Income (Loss) – Three Months Ended March 31, 2022 and 2021	4	Statements of Consolidated Comprehensive Income (Loss) – Three and Nine Months Ended September 30, 2022 and 2021	4
	Statements of Consolidated Cash Flows - Three Months Ended March 31, 2022 and 2021	5	Statements of Consolidated Cash Flows - Nine Months Ended September 30, 2022 and 2021	5
	Statements of Consolidated Shareholders’ Deficit - Three Months Ended March 31, 2022 and 2021	6	Statements of Consolidated Shareholders’ Deficit - Three and Nine Months Ended September 30, 2022 and 2021	6
	Notes to Consolidated Financial Statements	7	Notes to Consolidated Financial Statements	8
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
3	Quantitative and Qualitative Disclosures About Market Risk	19	Quantitative and Qualitative Disclosures About Market Risk	24
4	Controls and Procedures	19	Controls and Procedures	24
	PART II – OTHER INFORMATION		PART II – OTHER INFORMATION
1	Legal Proceedings	20	Legal Proceedings	25
1A	Risk Factors	20	Risk Factors	25
2	Not Applicable		Not Applicable
3	Not Applicable		Not Applicable
4	Not Applicable		Not Applicable
5	Not Applicable		Other Information	25
6	Exhibits	20	Exhibits	25
	Signatures	21	Signatures	27

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

Yellow Corporation and Subsidiaries


(Amounts in millions except share and per share data)	March 31, 2022			December 31, 2021			September 30, 2022			December 31, 2021
	(Unaudited)						(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	233.8		$	310.7		$	284.5		$	310.7
Restricted amounts held in escrow		8.3			4.1			7.7			4.1
Accounts receivable, net		741.3			663.7			706.6			663.7
Prepaid expenses and other		54.0			65.0			69.9			65.0
Total current assets		1,037.4			1,043.5			1,068.7			1,043.5
Property and Equipment:
Cost		3,152.2			3,164.6			3,143.3			3,164.6
Less – accumulated depreciation		(2,014.0	)		(2,032.3	)		(1,959.3	)		(2,032.3	)
Net property and equipment		1,138.2			1,132.3			1,184.0			1,132.3
Deferred income taxes, net		1.4			1.4			1.3			1.4
Pension		41.2			40.5			42.6			40.5
Operating lease right-of-use assets		164.9			184.8			133.2			184.8
Other assets		22.6			23.1			21.1			23.1
Total Assets	$	2,405.7		$	2,425.6		$	2,450.9		$	2,425.6
Liabilities and Shareholders’ Deficit
Current Liabilities:
Accounts payable	$	210.6		$	178.4		$	208.7		$	178.4
Wages, vacations and employee benefits		227.4			252.5			257.5			252.5
Current operating lease liabilities		70.6			76.5			55.7			76.5
Claims and insurance accruals		140.3			125.9			124.0			125.9
Other accrued taxes		77.6			72.8			75.4			72.8
Other current and accrued liabilities		49.0			45.7			51.1			45.7
Current maturities of long-term debt		70.7			72.3			71.4			72.3
Total current liabilities		846.2			824.1			843.8			824.1
Other Liabilities:
Long-term debt, less current portion		1,482.1			1,482.2			1,488.6			1,482.2
Pension and postretirement		86.3			88.2			104.5			88.2
Operating lease liabilities		103.5			118.9			86.1			118.9
Claims and other liabilities		274.5			275.7			263.8			275.7
Commitments and contingencies
Shareholders’ Deficit:
Cumulative preferred stock, $1 par value per share - authorized 5,000,000 shares		0			0			—			—
Common stock, $0.01 par value per share - authorized 95,000,000 shares, issued 51,296,000 and 50,955,000 shares, respectively		0.5			0.5
Common stock, $0.01 par value per share - authorized 95,000,000 shares, issued 51,467,000 and 50,955,000 shares, respectively								0.5			0.5
Capital surplus		2,390.1			2,388.3			2,392.2			2,388.3
Accumulated deficit		(2,502.5	)		(2,475.0	)		(2,437.7	)		(2,475.0	)
Accumulated other comprehensive loss		(182.3	)		(184.6	)		(198.2	)		(184.6	)
Treasury stock, at cost		(92.7	)		(92.7	)		(92.7	)		(92.7	)
Total shareholders’ deficit		(386.9	)		(363.5	)		(335.9	)		(363.5	)
Total Liabilities and Shareholders’ Deficit	$	2,405.7		$	2,425.6		$	2,450.9		$	2,425.6

The accompanying notes are an integral part of these statements.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

Yellow Corporation and Subsidiaries

For the Three and Nine Months Ended ~~March 31~~September 30

(Unaudited)


							Three Months						Nine Months
(Amounts in millions except per share data; shares in thousands)	2022			2021			2022			2021			2022			2021
Operating Revenue	$	1,260.4		$	1,198.4		$	1,360.4		$	1,301.4		$	4,044.5		$	3,812.9
Operating Expenses:
Salaries, wages and employee benefits		711.0			723.8			715.9			729.7			2,163.6			2,204.8
Fuel, operating expenses and supplies		243.6			203.5			279.3			216.1			810.2			636.6
Purchased transportation		185.4			200.0			193.0			200.3			584.5			610.6
Depreciation and amortization		35.7			33.3			36.0			37.8			107.2			106.1
Other operating expenses		81.0			64.4			88.2			68.9			231.3			205.5
(Gains) losses on property disposals, net		(5.5	)		1.0			(1.1	)		0.2			(9.8	)		1.5
Total operating expenses		1,251.2			1,226.0			1,311.3			1,253.0			3,887.0			3,765.1
Operating Income (Loss)		9.2			(27.6	)
Operating Income								49.1			48.4			157.5			47.8
Nonoperating Expenses:
Interest expense		37.7			35.9			41.3			38.6			117.0			112.2
Non-union pension and postretirement benefits		(0.4	)		(1.3	)		3.7			1.7			2.8			(0.7	)
Other, net		0.2			0			(1.6	)		(0.2	)		(1.5	)		(0.5	)
Nonoperating expenses, net		37.5			34.6			43.4			40.1			118.3			111.0
Loss before income taxes		(28.3	)		(62.2	)
Income tax expense (benefit)		(0.8	)		1.1
Net loss		(27.5	)		(63.3	)
Other comprehensive income, net of tax		2.3			3.6
Comprehensive Loss	$	(25.2	)	$	(59.7	)
Income (loss) before income taxes								5.7			8.3			39.2			(63.2	)
Income tax expense								0.9			—			1.9			1.2
Net income (loss)								4.8			8.3			37.3			(64.4	)
Other comprehensive loss, net of tax								(17.4	)		(28.8	)		(13.6	)		(21.9	)
Comprehensive Income (Loss)							$	(12.6	)	$	(20.5	)	$	23.7		$	(86.3	)

Average Common Shares Outstanding - Basic		51,091			50,358			51,448			50,868			51,295			50,661
Average Common Shares Outstanding - Diluted		51,091			50,358			52,346			51,818			52,217			50,661

Loss Per Share - Basic	$	(0.54	)	$	(1.26	)
Loss Per Share - Diluted	$	(0.54	)	$	(1.26	)
Income (Loss) Per Share - Basic							$	0.09		$	0.16		$	0.73		$	(1.27	)
Income (Loss) Per Share - Diluted							$	0.09		$	0.16		$	0.72		$	(1.27	)

The accompanying notes are an integral part of these statements.

STATEMENTS OF CONSOLIDATED CASH FLOWS

Yellow Corporation and Subsidiaries

For the ~~Three~~Nine Months Ended ~~March 31~~September 30

(Unaudited)


(in millions)	2022			2021			2022			2021
Operating Activities:
Net loss	$	(27.5	)	$	(63.3	)
Adjustments to reconcile net loss to cash flows from operating activities:
Net income (loss)							$	37.3		$	(64.4	)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization		35.7			33.3			107.2			106.1
Lease amortization and accretion expense		27.2			36.9			75.2			103.4
Lease payments		(28.6	)		(37.7	)		(77.4	)		(105.6	)
Paid-in-kind interest		2.3			2.3			8.2			7.0
Debt-related amortization		5.9			5.7			17.4			17.2
Equity-based compensation and employee benefits expense		4.3			5.1			10.5			12.3
Non-union pension settlement charges								4.0			3.4
(Gains) losses on property disposals, net		(5.5	)		1.0			(9.8	)		1.5
Deferred income taxes, net		0			(1.0	)		—			(1.0	)
Other non-cash items, net		0.2			0.7			(1.5	)		0.6
Changes in assets and liabilities, net:
Accounts receivable		(77.5	)		(74.9	)		(42.9	)		(135.7	)
Accounts payable		36.1			36.1			18.4			28.4
Other operating assets		9.3			(4.0	)		1.7			(19.8	)
Other operating liabilities		(15.4	)		21.0			(27.0	)		55.9
Net cash provided by (used in) operating activities		(33.5	)		(38.8	)		121.3			9.3
Investing Activities:
Acquisition of property and equipment		(36.4	)		(202.4	)		(140.7	)		(442.9	)
Proceeds from disposal of property and equipment		6.6			0.4			13.3			1.1
Net cash provided by (used in) investing activities		(29.8	)		(202.0	)		(127.4	)		(441.8	)
Financing Activities:
Issuance of long-term debt, net		0			176.5			—			325.2
Repayment of long-term debt		(8.9	)		(0.5	)		(15.7	)		(1.8	)
Debt issuance costs		0			(0.1	)		—			(0.2	)
Payments for tax withheld on equity-based compensation		(0.5	)		(0.3	)		(0.8	)		(0.5	)
Net cash provided by (used in) financing activities		(9.4	)		175.6			(16.5	)		322.7
Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Amounts Held in Escrow		(72.7	)		(65.2	)		(22.6	)		(109.8	)
Cash and Cash Equivalents and Restricted Amounts Held in Escrow, Beginning of Period		314.8			478.0			314.8			478.0
Cash and Cash Equivalents and Restricted Amounts Held in Escrow, End of Period	$	242.1		$	412.8		$	292.2		$	368.2


Supplemental Cash Flow Information:
Interest paid	$	(30.9	)	$	(27.3	)	$	(102.8	)	$	(86.2	)

The accompanying notes are an integral part of these statements.

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ DEFICIT

Yellow Corporation and Subsidiaries

For the Three and Nine Months ended ~~March 31~~September 30

(Unaudited)


(in millions)	Preferred Stock		Common Stock		Capital Surplus		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock, At Cost			Total Shareholders' Deficit
Balances at December 31, 2021	$	—	$	0.5	$	2,388.3	$	(2,475.0	)	$	(184.6	)	$	(92.7	)	$	(363.5	)
Equity-based compensation		—		—		1.8		—			—			—			1.8
Net loss		—		—		—		(27.5	)		—			—			(27.5	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			2.2			—			2.2
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation		—		—		—		—			0.2			—			0.2
Balances at March 31, 2022	$	—	$	0.5	$	2,390.1	$	(2,502.5	)	$	(182.3	)	$	(92.7	)	$	(386.9	)
Equity-based compensation		—		—		1.3		—			—			—			1.3
Net income		—		—		—		60.0			—			—			60.0
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			2.2			—			2.2
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation		—		—		—		—			(0.6	)		—			(0.6	)
Balances at June 30, 2022	$	—	$	0.5	$	2,391.4	$	(2,442.5	)	$	(180.8	)	$	(92.7	)	$	(324.1	)
Equity-based compensation		—		—		0.8		—			—			—			0.8
Net income		—		—		—		4.8			—			—			4.8
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			2.2			—			2.2
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Settlement adjustment											4.0						4.0
Net actuarial loss											(22.1	)					(22.1	)
Foreign currency translation		—		—		—		—			(1.4	)		—			(1.4	)
Balances at September 30, 2022	$	—	$	0.5	$	2,392.2	$	(2,437.7	)	$	(198.2	)	$	(92.7	)	$	(335.9	)

(in millions)

Preferred Stock

Common Stock

Capital Surplus

Accumulated Deficit

Accumulated Other Comprehensive Loss

Treasury Stock, At Cost

Total Shareholders' Deficit

Balances at December 31, 2021

$
—

$
0.5

$
2,388.3

$
(2,475.0
)
$
(184.6
)
$
(92.7
)
$
(363.5
)
Equity-based compensation

—

—

1.8

—

—

—

1.8

Net loss

—

—

—

(27.5
)

—

—

(27.5
)
Pension, net of tax:

Amortization of prior net losses

—

—

—

—

2.2

—

2.2

Amortization of prior service credit

—

—

—

—

(0.1
)

—

(0.1
)
Foreign currency translation

—

—

—

—

0.2

—

0.2

Balances at March 31, 2022

$
—

$
0.5

$
2,390.1

$
(2,502.5
)
$
(182.3
)
$
(92.7
)
$
(386.9
)

(in millions)

Preferred Stock

Common Stock

Capital Surplus

Accumulated Deficit

Accumulated Other Comprehensive Loss

Treasury Stock, At Cost

Total Shareholders' Deficit

Balances at December 31, 2020

$
—

$
0.5

$
2,383.6

$
(2,365.9
)
$
(148.8
)
$
(92.7
)
$
(223.3
)
Equity-based compensation

—

—

1.8

—

—

—

1.8

Net loss

—

—

—

(63.3
)

—

—

(63.3
)
Pension, net of tax:

Amortization of prior net losses

—

—

—

—

3.0

—

3.0

Amortization of prior service credit

—

—

—

—

(0.1
)

—

(0.1
)
Foreign currency translation

—

—

—

—

0.7

—

0.7

Balances at March 31, 2021

$
—

$
0.5

$
2,385.4

$
(2,429.2
)
$
(145.2
)
$
(92.7
)
$
(281.2
)


(in millions)	Preferred Stock		Common Stock		Capital Surplus		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock, At Cost			Total Shareholders' Deficit
Balances at December 31, 2020	$	—	$	0.5	$	2,383.6	$	(2,365.9	)	$	(148.8	)	$	(92.7	)	$	(223.3	)
Equity-based compensation		—		—		1.8		—			—			—			1.8
Net loss		—		—		—		(63.3	)		—			—			(63.3	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			3.0			—			3.0
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Foreign currency translation		—		—		—		—			0.7			—			0.7
Balances at March 31, 2021	$	—	$	0.5	$	2,385.4	$	(2,429.2	)	$	(145.2	)	$	(92.7	)	$	(281.2	)
Equity-based compensation		—		—		0.9		—			—			—			0.9
Net loss		—		—		—		(9.4	)		—			—			(9.4	)
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			3.0			—			3.0
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Settlement adjustment		—		—		—		—			0.3			—			0.3
Foreign currency translation		—		—		—		—			0.1			—			0.1
Balances at June 30, 2021	$	—	$	0.5	$	2,386.3	$	(2,438.6	)	$	(141.9	)	$	(92.7	)	$	(286.4	)
Equity-based compensation		—		—		0.7		—			—			—			0.7
Net income		—		—		—		8.3			—			—			8.3
Pension, net of tax:
Amortization of prior net losses		—		—		—		—			3.1			—			3.1
Amortization of prior service credit		—		—		—		—			(0.1	)		—			(0.1	)
Settlement adjustment		—		—		—		—			3.1			—			3.1
Net actuarial loss		—		—		—		—			(34.5	)		—			(34.5	)
Foreign currency translation		—		—		—		—			(0.4	)		—			(0.4	)
Balances at September 30, 2021	$	—	$	0.5	$	2,387.0	$	(2,430.3	)	$	(170.7	)	$	(92.7	)	$	(306.2	)

The accompanying notes are an integral part of these statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Yellow Corporation and Subsidiaries

(Unaudited)

1. Description of Business

Yellow Corporation (also referred to as “Yellow,” the “Company,” “we,” “us” or “our”) is a holding company that, through its operating subsidiaries, offers its customers a wide range of transportation services. We have one of the largest, most comprehensive less-than-truckload (“LTL”) networks in North America with local, regional, national and international capabilities. Through our team of experienced service professionals, we offer expertise in LTL shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.

Yellow provides for the movement of industrial, commercial and retail goods through our LTL subsidiaries including USF Holland LLC (“Holland”), New Penn Motor Express LLC (“New Penn”), USF Reddaway Inc. (“Reddaway”), YRC Inc. and YRC Freight Canada Company (both doing business as, and herein referred to as, “YRC Freight”). Our LTL companies provide regional, national and international services through a consolidated network of facilities located primarily across the United States and Canada. We also offer services through Yellow Logistics, Inc. (“Yellow Logistics”), our customer-specific logistics solutions provider, specializing in truckload, residential, and warehouse solutions.

The Company's labor force is subject to collective bargaining agreements, which predominantly expire on March 31, 2024.

2. Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Yellow and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We report on a calendar year basis.

All normal recurring adjustments necessary for a fair presentation of the consolidated financial statements for the interim periods included herein have been made. These unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information, the instructions to Quarterly Report on Form 10-Q and the applicable rules and regulations. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from these statements. The accompanying consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“the 2021 Form 10-K”). Operating results for the three and nine months ended ~~March 31,~~September 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, 2022 or other reporting periods.

Use of Estimates

Management makes estimates and assumptions when preparing the financial statements in conformity with U.S. generally accepted accounting principles which affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Disaggregation of Revenue

The Company’s revenue is summarized below with LTL shipments defined as shipments less than 10,000 pounds that move in our network:


					Three Months				Nine Months
(in millions)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		2022		2021		2022		2021
LTL revenue	$	1,129.6	$	1,083.5	$	1,224.1	$	1,170.5	$	3,636.5	$	3,436.8
Other revenue (a)		130.8		114.9		136.3		130.9		408.0		376.1
Total revenue	$	1,260.4	$	1,198.4	$	1,360.4	$	1,301.4	$	4,044.5	$	3,812.9

(a) Other revenue is primarily comprised of truckload shipments by the LTL operating companies.

Accounting Standards

While there are recently issued accounting standards that are applicable to the Company, none of these standards are expected to have a material impact on our consolidated financial statements and accompanying notes.

3. Debt and Financing

Our outstanding debt as of ~~March 31,~~September 30, 2022, consisted of the following:


(in millions)	Par Value			Discount			Commitment Fee			Debt Issuance Costs			Book Value				Effective Interest Rate			Par Value			Discount			Commitment Fee			Debt Issuance Costs			Book Value				Effective Interest Rate
UST Loan Tranche A(a)	$	313.8		$	0		$	(11.8	)	$	(3.1	)	$	298.9		(b)		6.4	%	$	321.1		$	—		$	(9.5	)	$	(2.4	)		309.2		(b)		6.4	%
UST Loan Tranche B		400.0			0			(15.7	)		(4.1	)		380.2		(b)		6.5	%		400.0			—			(12.5	)		(3.3	)		384.2		(b)		6.5	%
Term Loan (a)		605.3			(13.3	)		0			(6.0	)		586.0		(c)		9.5	%		600.7			(10.3	)		—			(4.6	)		585.8		(c)		9.5	%
ABL Facility		0			0			0			0			0							—			—			—			—			—
Secured Second A&R CDA		23.5			0			0			0			23.5				7.7	%		23.5			—			—			—			23.5				8.5	%
Unsecured Second A&R CDA		42.5			0			0			0			42.5				7.7	%		42.5			—			—			—			42.5				8.5	%
Lease financing obligations		221.8			0			0			(0.1	)		221.7		(d)		17.4	%		214.9			—			—			(0.1	)		214.8		(d)		17.6	%
Total debt	$	1,606.9		$	(13.3	)	$	(27.5	)	$	(13.3	)	$	1,552.8						$	1,602.7		$	(10.3	)	$	(22.0	)	$	(10.4	)	$	1,560.0
Current maturities of Second A&R CDA		(66.0	)		0			0			0			(66.0	)						(66.0	)		—			—			—			(66.0	)
Current maturities of lease financing obligations		(4.7	)		0			0			0			(4.7	)						(5.4	)		—			—			—			(5.4	)
Long-term debt	$	1,536.2		$	(13.3	)	$	(27.5	)	$	(13.3	)	$	1,482.1						$	1,531.3		$	(10.3	)	$	(22.0	)	$	(10.4	)	$	1,488.6

(a) The Par Value and the Book Value both reflect the accumulated cash funds that have been drawn, plus the accumulated paid-in-kind interest.

(b) Variable interest rate based on the Eurodollar rate, which is currently determined by the 1, 2, 3 or 6-month USD LIBOR, with a floor of 1.0%, plus a fixed margin of 3.5%.

(c) Variable interest rate based on the Eurodollar rate, which is currently determined by the 1, 3 or 6-month USD LIBOR, with a floor of 1.0%, plus a fixed margin of 7.5%.

(d) Interest rate for lease financing obligations is derived from the difference between total rent payment and calculated principal amortization over the life of lease agreements.

Maturities

The principal maturities over the next five years and thereafter of total debt as of ~~March 31,~~September 30, 2022 are as follows:


(in millions)	Principal Maturity Amount		Principal Maturity Amount
2022 - remaining portion	$	69.3	$	67.1
2023		5.7		5.7
2024		1,323.2		1,326.2
2025		3.6		4.0
2026		0.3		0.6
Thereafter		204.8		199.1
Total	$	1,606.9	$	1,602.7

Fair Value Measurement

The book value and estimated fair values of our long-term debt, including current maturities, are summarized as follows:


	March 31, 2022				December 31, 2021				September 30, 2022				December 31, 2021
(in millions)	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
UST Loans	$	679.1	$	645.3	$	673.3	$	636.5	$	693.4	$	678.2	$	673.3	$	636.5
Term Loan		586.0		605.3		590.9		612.9		585.8		600.7		590.9		612.9
Second A&R CDA		66.0		66.0		66.5		66.6		66.0		66.0		66.5		66.6
Lease financing obligations		221.7		220.7		223.8		223.7		214.8		210.5		223.8		223.7
Total debt	$	1,552.8	$	1,537.3	$	1,554.5	$	1,539.7	$	1,560.0	$	1,555.4	$	1,554.5	$	1,539.7

The fair values of the Term Loan and Second A&R CDA are estimated based on observable prices (level two inputs for fair value measurements). The fair value of the UST Loans is estimated using certain inputs that are unobservable (level three input for fair value measurement), which are based on the discounted amount of future cash flows using our current estimated incremental rate of borrowing for similar liabilities or assets. The ~~fair value of the~~ lease financing obligations are unique to the Company, and the fair value is estimated using a publicly traded secured loan with similar characteristics (level three input for fair value measurement).

4. Leases


Leases (in millions)	March 31, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Assets
Operating lease right-of-use assets	$	164.9	$	184.8	$	133.2	$	184.8
Liabilities
Current operating lease liabilities	$	70.6	$	76.5	$	55.7	$	76.5
Noncurrent operating lease liabilities		103.5		118.9		86.1		118.9
Total lease liabilities	$	174.1	$	195.4	$	141.8	$	195.4


					Three Months				Nine Months
Lease Cost (in millions)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		2022		2021		2022		2021
Operating lease cost(a)	$	27.2	$	36.9	$	22.4	$	32.3	$	75.2	$	103.4
Short-term cost(b)		4.9		9.6		7.2		6.3		19.5	25.5
Variable lease cost(b)	4.7		2.5		1.1		2.5		7.7		7.6
Total lease cost	$	36.8	$	49.0	$	30.7	$	41.1	$	102.4	$	136.5

(a)

Operating lease cost represents non-cash amortization of ROU assets and accretion of the discounted lease liabilities and is segregated on the statements of consolidated cash flows.

(b)

These operating expenses are classified and recorded primarily within purchased transportation.

The maturities over the next five years and thereafter of lease liabilities as of ~~March 31,~~September 30, 2022 are as follows:


Remaining Maturities of Lease Liabilities (in millions)	Remaining Maturities of Lease Liabilities (in millions)	Operating Leases		Remaining Maturities of Lease Liabilities (in millions)	Operating Leases
2022 - remaining portion		$	68.5		$	23.0
2023			58.4			60.9
2024			28.8			30.6
2025			16.5			17.8
2026			12.7			13.4
After 2026			40.7			42.5
Total lease payments		$	225.6		$	188.2
Less: Imputed interest			51.5			46.4
Present value of lease liabilities		$	174.1		$	141.8


Lease Term and Discount Rate	2022			2021			2022			2021
Weighted-average remaining lease term - operating leases (years)		4.1			3.2			4.5			3.2
Weighted-average discount rate - operating leases		11.4	%		12.0	%		11.2	%		11.8	%


	Three Months				Three Months				Nine Months
Other Information (in millions)	2022		2021		2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	28.5	$	37.2	$	23.9	$	30.6	$	77.1	$	105.1
Leased assets obtained in exchange for new operating lease liabilities		0.9		0.6	$	1.7	$	3.6	$	5.9	$	4.5

5. Employee Benefits

Non-Union Pension Plans

The following table presents the primary components of net periodic pension expense (benefit) for our Company-sponsored pension plans:

(in millions)

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Interest cost

$
5.9

$
7.7

Expected return on plan assets

(8.5
)

(12.0
)
Amortization of prior net losses

2.2

3.0

Amortization of prior net service credit

(0.1
)

(0.1
)
Total net periodic pension expense (benefit)

$
(0.5
)

$
(1.4
)


	Three Months						Nine Months
(in millions)	2022			2021			2022			2021
Interest cost	$	5.9		$	7.7		$	17.7		$	23.0
Expected return on plan assets		(8.5	)		(12.0	)		(25.5	)		(36.0	)
Amortization of prior net losses		2.2			3.0			6.6			9.1
Amortization of prior net service credit		(0.1	)		(0.1	)		(0.3	)		(0.3	)
Settlement adjustment		4.0			3.1			4.0			3.4
Total net periodic pension expense (benefit)	$	3.5		$	1.7		$	2.5		$	(0.8	)

For the three and nine months ended September 30, 2022, net periodic pension expense included non-union pension settlement charges of $4.0 million. The $4.0 million pension settlement charge for the Yellow Corporation Pension Plan (the "Yellow Plan") was triggered due to the amount of lump sum benefit payments distributed from plan assets in 2022. The lump sum benefit payments reduce pension obligations and are funded from existing pension plan assets and therefore do not impact the Company’s cash balance. As a result of this settlement, the Company was required to remeasure the Yellow Plan as of August 31, 2022.

9Plan assets specific to the Yellow Plan decreased by $78.7 million as a result of smaller than expected return on plan assets held in a master trust over our three pension plans. Plan liabilities decreased by $58.5 million largely due to increasing discount rates. The net impact of the remeasurement resulted in a change in the Yellow Plan funded status from a net liability of $36.8 million as of December 31, 2021 to a net liability of $57.0 million as of September 30, 2022.

The other two plans held in the same master trust, the Roadway LLC Pension Plan and the YRC Retirement Pension Plan, did not trigger a similar settlement charge and will be remeasured on December 31, 2022.

6. ~~Loss~~Earnings (Loss) Per Share

We calculate basic earnings (loss) per share by dividing our net income (loss) available to common shareholders by our basic weighted-average shares outstanding. The calculation for diluted earnings (loss) per share adjusts the weighted average shares outstanding for our dilutive unvested shares and stock units using the treasury stock method. Our calculations for basic and dilutive earnings (loss) per share for three and nine months ended September 30, 2022 and 2021 are as follows:


	Three Months				Nine Months
(dollars in millions, except per share data; shares and stock units in thousands)	2022		2021		2022		2021
Basic and dilutive net income (loss) available to common shareholders	$	4.8	$	8.3	$	37.3	$	(64.4	)

Basic weighted average shares outstanding		51,448		50,868		51,295		50,661
Effect of dilutive securities:
Unvested shares and stock units(a)		898		950		922		—
Dilutive weighted average shares outstanding		52,346		51,818		52,217		50,661
Basic earnings (loss) per share(b)	$	0.09	$	0.16	$	0.73	$	(1.27	)
Diluted earnings (loss) per share(b)	$	0.09	$	0.16	$	0.72	$	(1.27	)

(a)

Includes unvested shares of Common Stock, unvested stock units and vested stock units for which the underlying Common Stock has not been distributed.

(b)

Earnings (loss) per share is based on unrounded figures and not the rounded figures presented.

Given our net losses incurred during the ~~three~~nine months ended ~~March 31, 2022 and~~September 30, 2021, we do 0tnot report dilutive securities for ~~these periods.~~this period. At ~~March 31,~~September 30, 2022 and 2021, our anti-dilutive unvested shares, options, and stock units were approximately ~~390,000~~647,000 and ~~35,000~~180,000, respectively.

7. Commitments, Contingencies and Uncertainties

~~Department of Defense Complaints~~

In December 2018, the United States on behalf of the United States Department of Defense filed a complaint in Intervention against the Company (and two other defendants) in the U.S. District Court for the Western District of New York captioned United States ex rel. James Hannum v. YRC Freight, Inc.; Roadway Express, Inc.; and Yellow Transportation, Inc., Civil Action No. 08-0811(A). The complaint alleged that the Company violated the False Claims Act by overcharging the Department of Defense for freight carrier services by failing to comply with the contractual terms of freight contracts between the Department of Defense and the Company and related government procurement rules. The complaint also alleges claims for unjust enrichment and breach of contract. Under the False Claims Act, the complaint seeks treble damages, civil penalties, attorneys’ fees and costs of suit, all in unspecified amounts. The remaining common causes of action seek an undetermined amount for an alleged breach of contract or alternatively causes constituting unjust enrichment or a payment by mistake. The Company has moved to dismiss the case, and the court heard oral arguments on the motion on August 12, 2019. On July 17, 2020, the Magistrate Judge to whom the case had been referred issued a Report and Recommendation recommending that the District Judge grant the Company’s motion to dismiss in part with respect to one claim and deny it in all other respects. On May 10, 2021, the District Court entered a Decision and Order adopting Magistrate Judge’s Report and Recommendation and Decision and Order. On December 6, 2021, the District Court granted a ~~sixty day~~ stay of all proceedings to allow parties time to discuss a potential resolution in this action. On February 3, 2022, the United States filed a Status Report and Motion to Stay (the “Motion”) with the District Court to facilitate efforts to reach a settlement agreement. The Motion was granted on February 4, 2022, and stayed all proceedings another ~~sixty days. A no fault admission settlement of all claims in the matter was finalized on March 9, 2022 wherein the Company agreed to pay a settlement amount of approximately $6.8~~ ~~million comprising restitution and interest on the amount from December 13, 2021 to the United States and approximately $0.4~~ ~~million in legal fees and expenses to the relator. On March 28, 2022 the U.S. District Court approved the parties’ Joint Stipulation of Dismissal thereby closing the case.~~

~~Shareholder Derivative Complaint~~

In February 2021, two putative shareholders filed an action derivatively and on behalf of the Company naming Douglas A. Carty, Raymond J. Bromark, William R. Davidson, Matthew A. Doheny, Robert L. Friedman, James E. Hoffman, Michael J. Kneeland, Patricia M. Nazemetz, James F. Winestock, Jamie G. Pierson, Darren D. Hawkins, James L. Welch and Stephanie D. Fisher individually as defendants and the Company as the nominal defendant. The case, captioned Bhandari, et al. v. Carty, et al., Case No. 2021-0090-SG, was filed in the Court of Chancery in the State of Delaware. The complaint alleged that the Company was exposed to harm by the individual defendants’ purported conduct concerning its freight-billing practices as alleged in the Department of Defense complaint and a settled class action securities complaint. The complaint asserts that the individual defendants breached their fiduciary duties and were unjustly enriched as a result of their purported conduct. Claims similar to those raised in Bhandari had been raised in two shareholder derivative cases that were previously disclosed by the Company and have been dismissed. The defendants moved to dismiss the action on April 19, 2021. On July 16, 2021, the putative shareholders moved for entry of an order dismissing the Bhandari action without prejudice. On July 19, 2021, the Court entered an order dismissing the action without prejudice.

~~Other~~ Legal Matters

We are involved in litigation or proceedings that arise in ordinary business activities. When possible, we insure against these risks to the extent we deem prudent, but no assurance can be given that the nature or amount of such insurance will be sufficient to fully indemnify us against liabilities arising out of pending and future legal proceedings. Many of these insurance policies contain self-insured retentions in amounts we deem prudent. Based on our current assessment of information available as of the date of these consolidated financial statements, we believe that our consolidated financial statements include adequate provisions for estimated costs and losses that may be incurred within the litigation and proceedings to which we are a party.

8. Subsequent Events

On October 31, 2022, we completed an amendment to our ABL agreement which was set to end on January 9, 2024. The new agreement will extend the term to January 9, 2026 and includes a springing maturity commencing thirty days prior to the maturity of any of the Term Debt, the UST Tranche A Facility Indebtedness, or the UST Tranche B Facility Indebtedness. The amended facility has an increased capacity of $50 million up to $500 million. The facility has an interest rate of Secured Overnight

Financing Rate ("SOFR") + 1.75%, a 50 basis point reduction in the fixed portion of the interest rate from the previous rate of LIBOR + 2.25%.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements included elsewhere in this report. This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements include those preceded by, followed by or characterized by words such as “will,” “expect,” “intend,” “anticipate,” “believe,” “could,” “should,” “may,” “project,” “forecast,” “propose,” “plan,” “designed,” “estimate,” “enable” and similar expressions which speak only as of the date the statement was made. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Readers are cautioned not to place undue reliance on any forward-looking statements. Our future financial condition and results could differ materially from those predicted in such forward-looking statements because of a number of business, financial and liquidity, and common stock related factors, including (without limitation):

•

our ability to attract and retain qualified drivers and increasing costs of driver compensation;

•

the impact of compliance with Executive Order 14042 and any Federal Occupational Safety and Health Administration requirements, each as applicable, regarding mandatory COVID-19 vaccinations and testing of non-vaccinated employees, respectively;

•

the risk of labor disruptions or stoppages if our relationship with our employees and unions were to deteriorate;

•

general economic factors, including (without limitation) impacts of COVID-19 and customer demand in the retail and manufacturing sectors;

•

the widespread outbreak of an illness or any other communicable disease, including the effects of pandemics comparable to COVID-19, or any other public health crisis, as well as regulatory measures implemented in response to such events;

•

interruptions to our computer and information technology systems and sophisticated cyber-attacks;

•

business risks and increasing costs associated with the transportation industry, including increasing equipment, operational and technology costs, disruption from natural disasters, and impediments to our operations and business resulting from anti-terrorism measures;

•

competition and competitive pressure on pricing;

•

changes in pension expense and funding obligations, subject to interest rate volatility;

•

increasing costs relating to our self-insurance claims expenses;

•

our ability to comply and the cost of compliance with, or liability resulting from violation of, federal, state, local and foreign laws and regulations, including (without limitation) labor laws and laws and regulations regarding the environment and climate change initiatives;

•

the impact of claims and litigation expense to which we are or may become exposed;

•

that we may not realize the expected benefits and costs savings from our performance and operational improvement initiatives;

•

a significant privacy breach or IT system disruption;

•

our dependence on key employees;

•

our ability to finance the maintenance, acquisition and replacement of revenue equipment and other necessary capital expenditures;

•

seasonality and the impact of weather;

•

shortages of fuel and changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility;

•

damage to our corporate reputation may cause our business to suffer;

•

risks of operating in foreign countries;

•

our failure to comply with the covenants in the documents governing our existing and future indebtedness;

•

our ability to generate sufficient liquidity to satisfy our indebtedness and cash interest payment obligations, lease obligations and pension funding obligations;

1113

•

fluctuations in the price of our common stock;

•

dilution from future issuances of our common stock;

•

we are not permitted to pay dividends on our common stock in the foreseeable future;

•

that we have the ability to issue preferred stock that may adversely affect the rights of holders of our common stock; and

•

other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the SEC, including those described under “Risk Factors” in our annual report on Form 10-K and quarterly reports on Form 10-Q, including this quarterly report.

Overview

MD&A includes the following sections:

Our Business: a brief description of our business and a discussion of how we assess our operating results.

Consolidated Results of Operations: an analysis of our consolidated results of operations for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021.

Certain Non-GAAP Financial Measures: presentation and an analysis of selected non-GAAP financial measures for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 and trailing-twelve-months ended ~~March 31,~~September 30, 2022 and 2021.

Financial Condition, Liquidity and Capital Resources: a discussion of our major sources and uses of cash and an analysis of our cash flows and, if applicable, material changes in our contractual obligations and commercial commitments.

The ~~“first~~“third quarter" and "first three quarters" of the years discussed below refer to the three and nine months ended ~~March 31.~~September 30, respectively.

Our Business

Yellow Corporation is a holding company that, through its operating subsidiaries, offers our customers a wide range of transportation services. The Company has one of the largest, most comprehensive LTL networks in North America with local, regional, national and international capabilities. Through its team of experienced service professionals, the Company offers industry-leading expertise in LTL shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.

We measure the performance of our business using several metrics, but rely primarily upon (without limitation) operating revenue, operating income (loss), and operating ratio. We also use certain non-GAAP financial measures as secondary measures to assess our operating performance.

•

Operating Revenue: Our operating revenue has two primary components: volume (commonly evaluated using tonnage, tonnage per day, number of shipments, shipments per day or weight per shipment) and yield or price (commonly evaluated using picked up revenue, revenue per hundredweight or revenue per shipment). Yield includes fuel surcharge revenue, which is common in the trucking industry and represents an amount charged to customers that adjusts with changing fuel prices. We base our fuel surcharges on the U.S. Department of Energy fuel index and adjust them weekly. Rapid material changes in the index or our cost of fuel can positively or negatively impact our revenue and operating income as a result of changes in our fuel surcharge. We believe that fuel surcharge is an accepted and important component of the overall pricing of our services to our customers. Without an industry accepted fuel surcharge program, our base pricing for our transportation services would require changes. We believe the distinction between base rates and fuel surcharge has diminished over time, and it is impractical to clearly separate all the different factors that influence the price that our customers are willing to pay. In general, under our present fuel surcharge program, we believe rising fuel costs are beneficial to us and falling fuel costs are detrimental to us in the short term, the effects of which are mitigated over time.

•

Operating Income (Loss): Operating income (loss) is operating revenue less operating expenses.

•

Operating Ratio: Operating ratio is a common operating performance measure used in the trucking industry. It is calculated as (i) 100 percent (ii) minus the result of dividing operating income by operating revenue or (iii) plus the result of dividing operating loss by operating revenue, and is expressed as a percentage.

1214

•

Non-GAAP Financial Measures: We use EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, to assess the following:

EBITDA: a non-GAAP measure that reflects our earnings before interest, taxes, depreciation, and amortization expense. EBITDA is used for internal management purposes as a financial measure that reflects our core operating performance.

Adjusted EBITDA: a non-GAAP measure that reflects EBITDA, and further adjusts for letter of credit fees, equity-based compensation expense, net gains or losses on property disposals, restructuring charges, transaction costs related to issuances of debt, non-recurring consulting fees, non-cash impairment charges and the gains or losses from permitted dispositions, discontinued operations, and certain non-cash expenses, charges and losses (provided that if any of such non-cash expenses, charges or losses represents an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period will be subtracted from Consolidated EBITDA in such future period to the extent paid). All references to “Adjusted EBITDA” throughout this section and the rest of this report refer to “Adjusted EBITDA” calculated under our UST Credit Agreements and the Term Loan Agreement (collectively, the “TL Agreements”) (defined therein as “Consolidated EBITDA”) unless otherwise specified. Consolidated EBITDA is also a defined term in our ABL Facility and the definition there aligns with the prior definition of Consolidated EBITDA under the Prior Term Loan Agreement. Adjusted EBITDA is used for internal management purposes as a financial measure that reflects our core operating performance, to measure compliance with financial covenants in our TL Agreements and to determine certain management and employee bonus compensation.

We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors and other users as these measures represent key supplemental information our management uses to compare and evaluate our core underlying business results, particularly in light of our leverage position and the capital-intensive nature of our business. Further, EBITDA is a measure that is commonly used by other companies in our industry and provides a comparison for investors to evaluate the performance of the companies in the industry. Additionally, Adjusted EBITDA helps investors to understand how the company is tracking against our financial covenant in our TL Agreements as this measure is calculated as defined in our TL Agreements and serves as a driving component of our key financial covenants.

Our non-GAAP financial measures have the following limitations:

EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt;

Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt, letter of credit fees, restructuring charges, transaction costs related to the issuance of debt, non-cash expenses, charges or losses, or nonrecurring consulting fees, among other items;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will generally need to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

Equity-based compensation is an element of our long-term incentive compensation package, although Adjusted EBITDA excludes employee equity-based compensation expense when presenting our ongoing operating performance for a particular period; and

Other companies in our industry may calculate Adjusted EBITDA differently than we do, potentially limiting its usefulness as a comparative measure.

Because of these limitations, our non-GAAP measures should not be considered a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and use our non-GAAP measures as secondary measures.

Business Strategy Overview

13Our strategy is focused on our multi-year enterprise transformation to optimize and structurally improve our network that includes more than 300 strategically located terminals throughout North America. The transformation is expected to increase asset utilization, enhance network efficiencies, and create cost savings and leverage operational flexibilities gained with our 2019 labor agreement, consolidate disparate company systems onto a single platform and rationalize the more than 300 physical locations in

the network while maintaining geographic coverage. The result will be to operate as one Yellow company, one Yellow network, under one Yellow brand that provides great super-regional service.

With all of our LTL companies migrated to a common technology platform the focus in 2022 has been the integration of our four disparate linehaul networks into a single national network. The combination of our four individual linehaul networks currently tied to our legacy national and regional carrier brands will result in greater density as freight moves throughout our network from origin to destination terminals. Also, the local terminal pickup and delivery optimization efforts will eliminate the overlapping coverage and customer interactions that currently exist between our legacy national and regional carrier brands. When completed, this operational transformation will result in enhanced customer service, cost savings opportunities from reduced miles and productivity gains, and will create additional capacity without adding incremental physical infrastructure. In September, we successfully implemented phase one of the network optimization in the western U.S. Phase one included integrating 89 legacy YRC Freight and Reddaway terminals to operate as a super-regional network. The early results are meeting our expectations and customers are benefitting by having one driver pick-up and deliver both regional and long-haul shipments. We remain focused on applying lessons learned from phase one and completing the transition of the rest of the network around December 31, 2022.

Capital investment remains a top priority for us. Our UST Credit Agreements have enabled us to significantly increase the amount of capital we are able to invest in revenue equipment to improve the age of our fleet as there is an immediate return in improved fuel miles per gallon and expected reduced vehicle maintenance expense. To properly execute on our transformation plan, we are committed to continued investing in technology in order to enhance the customer experience and improve our operational flexibility.

Consolidated Results of Operations

The table below provides summary consolidated financial information for the third quarter and first ~~quarter~~three quarters of 2022 and 2021:


	First Quarter															Third Quarter										First Three Quarters
	2022						2021						Percentage Change 2022 vs 2021			2022						2021				2022						2021						Percentage Change 2022 vs 2021
(in millions)	$			%			$			%			%			$			%			$		%		$			%			$			%			Third Quarter %			First Three Quarters %
Operating Revenue	$	1,260.4			100.0		$	1,198.4			100.0			5.2		$	1,360.4			100.0		$	1,301.4		100.0	$	4,044.5			100.0		$	3,812.9			100.0			4.5			6.1
Operating Expenses:
Salaries, wages and employee benefits		711.0			56.4			723.8			60.4			(1.8	)		715.9			52.6			729.7		56.1		2,163.6			53.5			2,204.8			57.8			(1.9	)		(1.9	)
Fuel, operating expenses and supplies		243.6			19.3			203.5			17.0			19.7			279.3			20.5			216.1		16.6		810.2			20.0			636.6			16.7			29.2			27.3
Purchased transportation		185.4			14.7			200.0			16.7			(7.3	)		193.0			14.2			200.3		15.4		584.5			14.5			610.6			16.0			(3.6	)		(4.3	)
Depreciation and amortization		35.7			2.8			33.3			2.8			7.2			36.0			2.6			37.8		2.9		107.2			2.7			106.1			2.8			(4.8	)		1.0
Other operating expenses		81.0			6.4			64.4			5.4			25.8			88.2			6.5			68.9		5.3		231.3			5.7			205.5			5.4			28.0			12.6
(Gains) losses on property disposals, net		(5.5	)		(0.4	)		1.0			0.1		NM*				(1.1	)		(0.1	)		0.2		0.0		(9.8	)		(0.2	)		1.5			0.0		NM*			NM*
Total operating expenses		1,251.2			99.3			1,226.0			102.3			2.1			1,311.3			96.4			1,253.0		96.3		3,887.0			96.1			3,765.1			98.7			4.7			3.2
Operating Income (Loss)		9.2			0.7			(27.6	)		(2.3	)	NM*
Operating Income																	49.1			3.6			48.4		3.7		157.5			3.9			47.8			1.3			1.4		NM*
Nonoperating Expenses:
Nonoperating expenses, net		37.5			3.0			34.6			2.9			8.4			43.4			3.2			40.1		3.1		118.3			2.9			111.0			2.9			8.2			6.6
Loss before income taxes		(28.3	)		(2.2	)		(62.2	)		(5.2	)		(54.5	)
Income tax expense (benefit)		(0.8	)		(0.1	)		1.1			0.1		NM*
Net loss	$	(27.5	)		(2.2	)	$	(63.3	)		(5.3	)		(56.6	)
Income (loss) before income taxes																	5.7			0.4			8.3		0.6		39.2			1.0			(63.2	)		(1.7	)		(31.3	)		(162.0	)
Income tax expense																	0.9			0.1			—		-		1.9			0.0			1.2			0.0		NM*			NM*
Net income (loss)																$	4.8			0.4		$	8.3		0.6	$	37.3			0.9		$	(64.4	)		(1.7	)		(42.2	)		(157.9	)

*Not meaningful

~~First~~Third Quarter of 2022 Compared to the ~~First~~Third Quarter of 2021

During these reporting periods, the industry has been in a tight capacity environment with fewer drivers available to meet shipping demands, which has led to price increases charged to customers and an increase in the cost of purchased transportation. The Company’s results reflect a consolidatedConsolidated operating revenue, including fuel surcharge, ~~increase of $62.0~~increased $59.0 million compared to the ~~first~~third quarter of 2021 on lower shipping volumes, which reflects both a short-term strategic decision to limit terminal operations in select markets and an internal focus of retaining the optimal freight mix relative to human capital availability throughout the first quarter of 2022.2021. Fuel surcharge revenue grew significantly compared to the ~~first~~third quarter of 2021 primarily due to higher fuel ~~prices, despite the shipping volume decreases.~~prices. Excluding ~~the~~ fuel surcharge revenue, ~~the~~ consolidated operating revenue was relatively unchanged as ~~the~~ shipping volume decreases were largely offset by ~~the~~ yield increases charged to ~~customers.~~customers which were primarily driven by continued driver shortages and supply chain disruptions.

The Company’s results reflect the net revenue increase offset by increased fuel expense and certain variable operating expenses. Overall inflation in costs driven by macroeconomic conditions impacted costs across the Company, which were generally offset by overall volume decreases in our shipping activities. Further material changes are provided below.

Salaries, wages and employee ~~benefits.~~benefits. Salaries, wages and employee benefits decreased ~~$12.8~~$13.8 million primarily due to shipping volume decreases partially offset by contractual wage and benefit increases. During the first quarter of 2021, severe winter weather impacted results, causing 215 of our terminals to have service outages. This increased the need for additional labor hours in the prior year to meet customer service expectations.

Fuel, operating expenses and supplies. Fuel, operating expenses and supplies increased ~~$40.1~~$63.2 million, primarily due to a ~~$22.5~~$34.0 million increase in fuel expense, which was largely a result of higher fuel prices ~~partially offset by fewer miles driven,~~and a ~~$10.7~~$13.2 million increase in uncollectible receivables and expected customer credit ~~losses.~~losses, partially offset by fewer miles driven. Additional increases resulted from higher facility maintenance, travel expenses, ~~facility maintenance,~~ and usage of professional services.

Purchased transportation. Purchased transportation decreased ~~$14.6~~$7.3 million primarily due to targeted efforts by the Company to mitigate certain impacts from significant rate increases and other factors noted above. ~~These decreases were noted in most of our modes~~While the cost of purchased transportation ~~and~~has increased, overall utilization by the Company has declined leading to an overall decrease. These decreases include a ~~$16.0~~$12.9 million decrease in over-the-road purchased transportation expense and a ~~$13.4~~$12.1 million decrease in vehicle ~~rentals and a $8.5 million decrease in local purchased transportation expense.~~rentals. These decreases were partially offset by an increase of ~~$13.6~~$11.4 million in third-party costs due to the growth in customer-specific logistics solutions and an ~~$8.3~~increase of $2.4 million ~~increase~~ in rail purchased transportation expense.

Other operating expenses. Other operating expenses increased ~~$16.6~~$19.3 million primarily due to a ~~$9.6~~$19.4 million increase in third-party liability claims expense mostly due to unfavorable development of prior year claims during 2022.

Income tax. The Company’s tax provision or benefit for interim periods is computed using an estimate of the annual effective tax rate and adjusted for discrete items, if any, that occurred during the reporting periods presented. Our effective tax rate for the third quarter of 2022 and 2021 was 15.8% and 0.0%, respectively. The effective tax rate for 2022 differed from the U.S. federal statutory rate primarily due to the valuation allowance on our domestic net deferred tax assets partially offset by foreign and state income taxes. The effective rate for 2021 differed from the U.S. federal statutory rate primarily due to the valuation allowance on our domestic net deferred tax assets. The Company maintained a full valuation allowance on our domestic net deferred tax assets as of the reporting periods presented. On August 16, 2022, the United States enacted the Inflation Reduction Act (the

“IRA”). The IRA included provisions related to aspects of corporate income taxes. We do not currently expect the IRA to have a significant impact on our provision for income taxes.

The table below summarizes the key revenue metrics for the third quarter of 2022 compared to the third quarter of 2021:


	Third Quarter
	2022			2021			Percent Change(a)
Workdays		64.0			63.5

Operating ratio		96.4	%		96.3	%	(0.1) pp

LTL picked up revenue (in millions)	$	1,227.4		$	1,167.0			5.2	%
LTL tonnage (in thousands)		1,961			2,323			(15.6	%)
LTL tonnage per workday (in thousands)		30.64			36.58			(16.2	%)
LTL shipments (in thousands)		3,557			4,141			(14.1	%)
LTL shipments per workday (in thousands)		55.58			65.22			(14.8	%)
LTL picked up revenue per hundred weight	$	31.30		$	25.12			24.6	%
LTL picked up revenue per hundred weight (excluding fuel surcharge)	$	24.65		$	21.84			12.8	%
LTL picked up revenue per shipment	$	345		$	282			22.4	%
LTL picked up revenue per shipment (excluding fuel surcharge)	$	272		$	245			10.9	%
LTL weight per shipment (in pounds)		1,102			1,122			(1.7	%)

Total picked up revenue (in millions)(b)	$	1,339.5		$	1,283.2			4.4	%
Total tonnage (in thousands)		2,494			3,045			(18.1	%)
Total tonnage per workday (in thousands)		38.97			47.96			(18.7	%)
Total shipments (in thousands)		3,650			4,257			(14.3	%)
Total shipments per workday (in thousands)		57.03			67.05			(14.9	%)
Total picked up revenue per hundred weight	$	26.85		$	21.07			27.5	%
Total picked up revenue per hundred weight (excluding fuel surcharge)	$	21.36		$	18.40			16.1	%
Total picked up revenue per shipment	$	367		$	301			21.8	%
Total picked up revenue per shipment (excluding fuel surcharge)	$	292		$	263			10.9	%
Total weight per shipment (in pounds)		1,367			1,431			(4.5	%)


(in millions)	2022			2021
(b) Reconciliation of operating revenue to total picked up revenue:
Operating revenue	$	1,360.4		$	1,301.4
Change in revenue deferral and other		(20.9	)		(18.2	)
Total picked up revenue	$	1,339.5		$	1,283.2

(a)

Percent change based on unrounded figures and not the rounded figures presented.

(b)

Does not equal financial statement revenue due to revenue recognition adjustments between accounting periods and the impact of other revenue.

First Three Quarters of 2022 Compared to the First Three Quarters of 2021

Consolidated revenue, including fuel surcharge, increased $231.6 million compared to the first three quarters of 2021 on lower shipping volumes. Fuel surcharge revenue grew significantly compared to the first three quarters of 2021 primarily due to higher fuel prices. Excluding fuel surcharge revenue, consolidated operating revenue was relatively unchanged as shipping volume decreases were largely offset by yield increases charged to customers which were primarily driven by continued driver shortages and supply chain disruptions.

The Company’s results reflect these revenue increases partially offset by increased variable and other expenses as discussed below. Further material changes are provided below and, for salaries, wages and employee benefits, refer to the third quarter discussion above.

Salaries, wages and employee benefits. Salaries, wages and employee benefits decreased $41.2 million primarily due to shipping volume decreases partially offset by contractual wage and benefit increases.

Fuel, operating expenses and supplies. Fuel, operating expenses and supplies increased $173.6 million, primarily due to a $108.1 million increase in fuel expense, which was largely a result of higher fuel prices and a ~~$5.3~~$31.5 million ~~settlement charge~~increase in ~~association with~~uncollectible receivables and expected customer credit losses, partially offset by fewer miles driven. Additional increases resulted from higher travel expenses, facility maintenance, and usage of professional services.

Purchased transportation. Purchased transportation decreased $26.1 million primarily due to targeted efforts by the ~~Department~~Company to mitigate certain impacts from significant rate increases and other factors noted above. While the cost of ~~Defense claim. Additionally, increases~~purchased transportation has increased, overall utilization by the Company has declined leading to an overall decrease. These decreases include a $44.6 million decrease in ~~cargo claims~~over-the-road purchased transportation expense and a $38.1 million decrease in vehicle rentals. These decreases were partially offset by ~~decreases~~an increase of $33.3 million in third-party costs due to the growth in customer-specific logistics solutions and an increase of $25.3 million in rail purchased transportation expense.

Other operating ~~taxes.~~expenses. Other operating expenses increased $25.8 million primarily due to an $18.1 million increase in third-party liability claims expense mostly due to unfavorable development of prior year claims during 2022 and a $7.9 million increase in cargo claims.

2022 differed from the U.S. federal statutory rate primarily due to the valuation allowance on our domestic net deferred tax ~~assets.~~assets partially offset by foreign and state income taxes. The effective rate for 2021 differed from the U.S. federal statutory rate primarily due to the valuation allowance on our domestic net deferred tax assets along with foreign and state income taxes. The Company maintained a full valuation allowance on our domestic net deferred tax assets as of the reporting periods presented. On August 16, 2022, the United States enacted the Inflation Reduction Act (the “IRA”). The IRA included provisions related to aspects of corporate income taxes. We do not currently expect the IRA to have a significant impact on our provision for income taxes.

The table below summarizes the key revenue metrics for the first ~~quarter~~three quarters of 2022 compared to the first ~~quarter~~three quarters of 2021:


	First Quarter									First Three Quarters
	2022			2021			Percent Change(a)			2022			2021			Percent Change(a)
Workdays		63.5			63.5						191.0			191.0

Operating ratio		99.3	%		102.3	%	3.0 pp				96.1	%		98.7	%	2.6 pp

LTL picked up revenue (in millions)	$	1,137.2		$	1,090.6			4.3	%	$	3,642.9		$	3,446.4			5.7	%
LTL tonnage (in thousands)		1,980			2,478			(20.1	%)		6,023			7,312			(17.6	%)
LTL tonnage per workday (in thousands)		31.18			39.02			(20.1	%)		31.54			38.28			(17.6	%)
LTL shipments (in thousands)		3,561			4,263			(16.5	%)		10,837			12,824			(15.5	%)
LTL shipments per workday (in thousands)		56.08			67.13			(16.5	%)		56.74			67.14			(15.5	%)
LTL picked up revenue per hundred weight	$	28.72		$	22.00			30.5	%	$	30.24		$	23.57			28.3	%
LTL picked up revenue per hundred weight (excluding fuel surcharge)	$	23.83		$	19.53			22.0	%	$	24.11		$	20.67			16.7	%
LTL picked up revenue per shipment	$	319		$	256			24.8	%	$	336		$	269			25.1	%
LTL picked up revenue per shipment (excluding fuel surcharge)	$	265		$	227			16.7	%	$	268		$	236			13.7	%
LTL weight per shipment (in pounds)		1,112			1,163			(4.3	%)		1,112			1,140			(2.5	%)

Total picked up revenue (in millions)(b)	$	1,252.4		$	1,196.3			4.7	%	$	3,992.9		$	3,787.1			5.4	%
Total tonnage (in thousands)		2,543			3,216			(20.9	%)		7,697			9,529			(19.2	%)
Total tonnage per workday (in thousands)		40.05			50.64			(20.9	%)		40.30			49.89			(19.2	%)
Total shipments (in thousands)		3,653			4,380			(16.6	%)		11,124			13,188			(15.7	%)
Total shipments per workday (in thousands)		57.53			68.98			(16.6	%)		58.24			69.05			(15.7	%)
Total picked up revenue per hundred weight	$	24.62		$	18.60			32.4	%	$	25.94		$	19.87			30.5	%
Total picked up revenue per hundred weight (excluding fuel surcharge)	$	20.59		$	16.56			24.3	%	$	20.88		$	17.50			19.4	%
Total picked up revenue per shipment	$	343		$	273			25.5	%	$	359		$	287			25.0	%
Total picked up revenue per shipment (excluding fuel surcharge)	$	287		$	243			17.9	%	$	289		$	253			14.3	%
Total weight per shipment (in pounds)		1,392			1,468			(5.2	%)		1,384			1,445			(4.2	%)

(in millions)

2022

2021

(b) Reconciliation of operating revenue to total picked up revenue:

Operating revenue

$
1,260.4

$
1,198.4

Change in revenue deferral and other

(8.0
)

(2.1
)
Total picked up revenue

$
1,252.4

$
1,196.3

~~(a)~~

~~Percent change based on unrounded figures and not the rounded figures presented.~~

~~(b)~~

~~Does not equal financial statement revenue due to revenue recognition adjustments between accounting periods and the impact of other revenue.~~


(in millions)	2022			2021
(b) Reconciliation of operating revenue to total picked up revenue:
Operating revenue	$	4,044.5		$	3,812.9
Change in revenue deferral and other		(51.6	)		(25.8	)
Total picked up revenue	$	3,992.9		$	3,787.1

Certain Non-GAAP Financial Measures

As previously discussed in the “Our Business” section, we use certain non-GAAP financial measures to assess performance including EBITDA and Adjusted EBITDA. We believe our presentation of EBITDA and Adjusted EBITDA is useful to investors and other users as these measures represent key supplemental information our management uses to compare and evaluate our core underlying business results, particularly in light of our leverage position and the capital-intensive nature of our business. These secondary measures should be considered in addition to the results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, our GAAP financial measures.

Adjusted EBITDA

The reconciliation of net ~~loss~~income (loss) to EBITDA and EBITDA to Adjusted EBITDA (defined in our TL Agreements as “Consolidated EBITDA”) for the third quarter of 2022 and 2021, first ~~quarter~~three quarters of 2022 and 2021, and the trailing twelve months ended ~~March 31,~~September 30, 2022 and 2021, is as follows:


	First Quarter						Trailing-Twelve-Months Ended						Third Quarter						First Three Quarters						Trailing-Twelve-Months Ended
(in millions)	2022			2021			March 31, 2022			March 31, 2021			2022			2021			2022			2021			September 30, 2022			September 30, 2021
Reconciliation of net loss to Adjusted EBITDA:
Net loss	$	(27.5	)	$	(63.3	)	$	(73.3	)	$	(121.1	)
Net income (loss)													$	4.8		$	8.3		$	37.3		$	(64.4	)	$	(7.4	)	$	(83.1	)
Interest expense, net		37.7			35.8			152.3			143.2			41.2			38.5			116.8			111.9			155.3			145.7
Income tax expense (benefit)		(0.8	)		1.1			1.2			(18.1	)
Income tax expense														0.9			—			1.9			1.2			3.8			0.4
Depreciation and amortization		35.7			33.3			146.0			132.5			36.0			37.8			107.2			106.1			144.7			138.6
EBITDA		45.1			6.9			226.2			136.5			82.9			84.6			263.2			154.8			296.4			201.6
Adjustments for TL Agreements:
(Gains) losses on property disposals, net		(5.5	)		1.0			(5.8	)		(5.0	)		(1.1	)		0.2			(9.8	)		1.5			(10.6	)		1.5
Non-cash reserve changes(a)		(1.9	)		(1.8	)		11.5			0.8			(3.9	)		(2.7	)		(0.2	)		0.2			11.2			0.1
Letter of credit expense		2.1			2.1			8.5			7.8			2.2			2.1			6.5			6.3			8.7			8.4
Permitted dispositions and other		0.3			0.7			0.4			0.8			0.1			—			0.4			0.8			0.4			0.6
Equity-based compensation expense		2.3			2.1			4.6			4.8			1.0			0.8			4.3			3.5			5.2			3.9
Non-union pension settlement charge		—			—			64.7			3.6			4.0			3.1			4.0			3.4			65.3			5.1
Other, net		0.7			1.0			2.7			6.1			(0.4	)		0.8			0.8			2.7			1.1			4.7
Expense amounts subject to 10% threshold(b):
Department of Defense settlement charge		5.3			—			5.3			—			—			—			5.3			—			5.3			—
COVID-19		—			—			—			3.7
Other, net		3.6			4.6			23.3			19.0			5.8			6.7			14.0			19.6			18.7			28.1
Adjusted EBITDA prior to 10% threshold		52.0			16.6			341.4			178.1			90.6			95.6			288.5			192.8			401.7			254.0
Adjustments pursuant to TTM calculation(b)		—			(3.4	)		—			(7.1	)		—			(1.2	)		—			(2.3	)		—			(5.6	)
Adjusted EBITDA	$	52.0		$	13.2		$	341.4		$	171.0		$	90.6		$	94.4		$	288.5		$	190.5		$	401.7		$	248.4

(a)

Non-cash reserve changes reflect the net charges for union and nonunion vacation, with such adjustments to be reduced by cash charges in a future period when paid.

(b)

Pursuant to the TL Agreements, Adjusted EBITDA limits certain adjustments in aggregate to 10% of the trailing-twelve-month ("TTM") Adjusted EBITDA, prior to the inclusion of amounts subject to the 10% threshold, for each period ending. Such adjustments include, but are not limited to, restructuring charges, integration costs, severance, and non-recurring charges. The limitation calculation is updated quarterly based on TTM Adjusted EBITDA, and any necessary adjustment resulting from this limitation, if applicable, will be presented here. The sum of the quarters may not necessarily equal TTM Adjusted EBITDA due to the expiration of adjustments from prior periods.

1621

Financial Condition, Liquidity and Capital Resources

The following sections provide aggregated information regarding our financial condition, liquidity and capital resources. As of ~~March 31,~~September 30, 2022 and December 31, 2021, our total debt was ~~$1,552.8~~$1,560.0 million and $1,554.5 million, respectively.

Liquidity

Our principal sources of liquidity are cash and cash equivalents, any prospective net cash flow from operations and available borrowings under our ABL Facility. As of ~~March 31,~~September 30, 2022, our cash and cash equivalents, exclusive of restricted amounts held in escrow, was ~~$233.8~~$284.5 million.

As of ~~March 31,~~September 30, 2022, our Availability under our ABL Facility was ~~$88.1~~$86.3 million, and our Managed Accessibility (as defined below) was ~~$43.1~~$41.3 million. Availability is derived by reducing the amount that may be advanced against eligible receivables plus eligible borrowing base cash by certain reserves imposed by the ABL Agent and our ~~$361.9~~$363.7 million of outstanding letters of credit. Our Managed Accessibility represents the maximum amount we would access on the ABL Facility and is adjusted for eligible receivables plus eligible borrowing base cash measured as of ~~March 31,~~September 30, 2022. If eligible receivables fall below the threshold management uses to measure availability, which is 10% of the borrowing line, the credit agreement governing the ABL Facility permits adjustments from eligible borrowing base cash to restricted cash prior to the compliance measurement date of ~~April 15,~~October 17, 2022. Cash and cash equivalents and Managed Accessibility totaled ~~$276.9~~$325.8 million at ~~March 31,~~September 30, 2022.

As of December 31, 2021, our ~~availability~~Availability under our ABL Facility was $93.1 ~~million. Of the $93.1~~ million, ~~in availability,~~and our Managed Accessibility was $48.1 million. ~~Our cash~~Cash and cash equivalents and Managed Accessibility ~~was~~totaled $358.8 million ~~as of~~at December 31, 2021.

Covenants

Under the UST Loans and Credit Agreement, ~~beginning at December 31, 2021,~~ the Company ~~had~~has a quarterly requirement to maintain a trailing-twelve-month ("TTM") Adjusted EBITDA of ~~$100.0 million. This requirement increased beginning March 31, 2022 to a TTM Adjusted EBITDA of $150.0~~$200.0 million ~~and increases at June 30, 2022, and thereafter~~ through the maturity of these ~~agreements, to a TTM Adjusted EBITDA of $200.0 million.~~agreements. Management expects, based on actual and forecasted operating results, the Company will meet this covenant requirement for the next twelve months.

Cash Flows

For the first ~~quarter~~three quarters of 2022 and 2021:


	First Quarter						First Three Quarters
(in millions)	2022			2021			2022			2021
Net cash provided by (used in) operating activities	$	(33.5	)	$	(38.8	)	$	121.3		$	9.3
Net cash provided by (used in) investing activities		(29.8	)		(202.0	)		(127.4	)		(441.8	)
Net cash provided by (used in) financing activities		(9.4	)		175.6			(16.5	)		322.7

Operating Cash Flow

Cash ~~used in~~provided by operating activities was ~~$33.5~~$121.3 million during the first ~~quarter~~three quarters of 2022, compared to ~~$38.8~~$9.3 million ~~used~~ during the first ~~quarter~~three quarters of 2021. The ~~decrease~~increase in cash ~~used~~provided was primarily attributable to a ~~$35.8~~$101.7 million ~~decrease~~increase in net ~~loss~~income partially offset by changes in working capital, including a ~~$36.4~~$92.8 million change in accounts receivable and a partially offsetting $82.9 million change in other operating liabilities.

Investing Cash Flow

Cash used in investing activities was ~~$29.8~~$127.4 million during the first ~~quarter~~three quarters of 2022 compared to ~~$202.0~~$441.8 million of cash used during the first ~~quarter~~three quarters of 2021. The d~~ecrease~~decrease of ~~$172.2~~$314.4 million in cash used was primarily driven by a decrease in cash outflows on revenue equipment acquisitions, including those primarily funded by our UST Credit ~~Agreements, and partially offset by higher cash proceeds from the sales of real properties.~~Agreements.

Financing Cash Flow

~~Cash used~~The decrease in cash provided by financing activities for the first ~~quarter~~three quarters of 2022 ~~was $9.4 million~~as compared to ~~$175.6 million of cash provided during the first quarter of 2021. The decrease in cash is primarily~~2021 was related to amounts drawn during the first ~~quarter~~three quarters of 2021 on our UST Credit ~~Agreements.~~Agreement Tranche B.

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Capital Expenditures

Our capital expenditures for the first ~~quarter~~three quarters of 2022 and 2021 were ~~$36.4~~$140.7 million and ~~$202.4~~$442.9 million, respectively. These amounts were principally used to fund the purchase of ~~new and used~~ revenue equipment, to improve our technology infrastructure and to refurbish engines for our revenue equipment fleet. The Company revised its capital expenditures plan and expects total capital expenditures during 2022 to be between $210.0 million and $230.0 million, primarily due to limited tractor and trailer production capacity at equipment manufacturers.

Contractual Obligations and Other Commercial Commitments

The following sections summarize consolidated information regarding our contractual cash obligations and other commercial commitments for any updates for material changes during the reporting period ended ~~March 31,~~September 30, 2022.

Contractual Cash Obligations

The Company has completed a review of our material cash requirements to analyze and disclose material changes, if any, in those requirements between those expected cash outflows as of December 31, 2021, as detailed in the Form 2021 10-K, and those as of ~~March 31,~~September 30, 2022.

As of ~~March 31,~~September 30, 2022 and December 31, 2021, we are contractually obligated to make other capital expenditures of approximately ~~$62.8~~$45.9 million and $27.7 million, respectively, primarily for revenue equipment ~~and information technology equipment~~ obligations.

All other changes in our cash requirements, for cash outflows that we are contractually obligated to make were considered by the Company and determined to be reasonably expected based upon our prior financial statement disclosures or in the ordinary course of business.

Other Commercial Commitments

The Company has completed a review of our other commercial commitments in order to analyze and disclose material changes, if any, in those commitments between those as of December 31, 2021, as detailed in the 2021 Form 10-K, and those as of ~~March 31,~~September 30, 2022. As a result, the Company determined that there were no material changes to disclose.

We have no off-balance sheet arrangements except for other contractual obligations for letters of credit and surety bonds and normal course service agreements and capital purchases, which were disclosed in the 2021 Form 10-K. Additionally, there have been no material changes to these arrangements subsequent to December 31, 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are primarily exposed to the market risk associated with unfavorable movements in interest rates, foreign currencies, and fuel price volatility. The risk inherent in our market risk-sensitive instruments and positions is the potential loss or increased expense arising from adverse changes in those factors. There have been no material changes to our market risk policies or our market risk-sensitive instruments and positions as described in the 2021 Form 10-K.

Item 4. Controls and Procedures

As required by the Exchange Act, we maintain disclosure controls and procedures designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive and financial officers, has evaluated our disclosure controls and procedures as of ~~March 31,~~September 30, 2022 and has concluded that our disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2022.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~March 31,~~September 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

1924

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We discuss legal proceedings in the “Commitments, Contingencies and Uncertainties” note to our consolidated financial statements included with this quarterly report on Form 10-Q, and that discussion is incorporated by reference herein.

Item 1A. Risk Factors

You should carefully consider the factors discussed in Part I, Item IA. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 which could materially affect our business, financial condition or future results. The risks in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, financial condition and/or operating results.

Item 5. Other Information

We are providing the following disclosure in lieu of providing this information in a current report on Form 8-K.

On October 31, 2022, we entered into Amendment No. 7 to our ABL agreement with the lenders party thereto and Citizens Business Capital, as agent for the lenders and issuing banks (the “Amended ABL”). The Amended ABL extended the maturity date from January 9, 2024 to January 9, 2026 and includes a springing maturity commencing thirty days prior to the maturity of any of the Term Debt, the UST Tranche A Facility Indebtedness, or the UST Tranche B Facility Indebtedness, subject to certain exceptions. The Amended ABL also increased the credit commitment capacity by $50 million to up to $500 million. The loans are subject to varying rates of interest based on whether the loan is a Secured Overnight Financing Rate (“SOFR”) loan or a base rate loan. SOFR loans bear an interest rate of SOFR + 1.75% + a 0.10% credit spread adjustment. Base rate loans bear an interest rate of the Base Rate (as defined in the Amended ABL) + 0.75%, in each case subject to a 0.00% floor. The letter of credit sublimit remains at $450,000,000.

The foregoing description of the ABL Amendment does not purport to be complete, and is qualified in its entirety by reference to the full text of the ABL Amendment, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Item 6. Exhibits



10.1*		Amendment No. 7 to Loan and Security Agreement by and among the Company, certain of the Company's subsidiaries party thereto, the lenders party thereto and Citizens Business Capital as agent.

31.1*		Certification of Darren D. Hawkins filed pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Daniel L. Olivier filed pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Darren D. Hawkins furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Daniel L. Olivier furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Interline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

__________________________

* Indicates documents filed herewith.

2026

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		YELLOW CORPORATION


Date: ~~May 10,~~November 2, 2022		/s/ Darren D. Hawkins
		Darren D. Hawkins
		Chief Executive Officer

Date: ~~May 10,~~November 2, 2022		/s/ Daniel L. Olivier
		Daniel L. Olivier
		Chief Financial Officer

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