Yellow Corp (YELL) 2021 Q1 法說會逐字稿

Good day and welcome to the Yellow Corporation First Quarter 2021 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Tony Carreño, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone.

Welcome to Yellow Corporation's First Quarter 2021 Earnings Conference Call.

Joining us on the call today are Darren Hawkins, Chief Executive Officer; Dan Olivier, Interim Chief Financial Officer; and Darrel Harris, President.

During this call, we may make some forward-looking statements within the meaning of federal securities law. These forward-looking statements and all other statements that might be made on this call, which are not historical facts, are subject to uncertainty and a number of risks and therefore, actual results may differ materially.

The format of this call does not allow us to fully discuss all the risk factors. For a full discussion of the risk factors that could cause the results to differ, please refer to this afternoon's earnings release and our most recent SEC filings, including our Forms 10-K and 10-Q. These items are also available on our website at myyellow.com.

Additionally, please see today's release for a reconciliation of net income or loss to adjusted EBITDA. In conjunction with today's earnings release, we issued a presentation which may be referenced during the call. The presentation was filed in an 8-K along with the earnings release and is available on our website.

I will now turn the call over to Darren.

Thanks, Tony, and good afternoon, everyone. Thank you for joining our call.

Before I get into the details of the Q1 results, I would like to congratulate Darrel for his promotion to President of Yellow Corporation.

He joined the company last year as Executive Vice President of Strategic Initiatives with the primary responsibility of overseeing our enterprise transformation.

In his new role, Darrel's leadership will guide all aspects of our transformation to becoming One Yellow. During his 25 year career, he has built a solid track record of success with extensive LTL experience.

Prior to joining Yellow, he most recently served as Chief Executive Officer of Express Global Systems.

Darrel is an inspirational leader, whose experience, energy and innovative ideas will help guide the company's future. I look forward to working with him in his new role.

Turning to Q1. Severe winter weather had a significant impact on our network with the recovery lasting into March.

Trucking is an outdoor sport that requires us to work through challenging weather, and it can take a while for our expansive North American network to fully recover.

One of the benefits of completing the transformation to One Yellow in 2022 will be the recovery time from similar weather events is expected to be much quicker.

As we look ahead, the economy continues to build momentum as it recovers from the impact of the COVID-19 pandemic. Industrial demand and consumer optimism are contributing to tight trucking capacity and a strong yield environment. Favorable year-over-year pricing trends have carried into Q2. For the month of April, the Yellow Company's averaged around 7% on contract negotiations.

Another contributing factor to the tight trucking capacity is an industry-wide shortage of qualified drivers, and the need to hire more drivers unfavorably impacted our purchased transportation expense in Q1. We have launched a nationwide recruiting drive that includes holding more than 2 dozen hiring events focused on recruiting drivers, mechanics and dock workers. We have also expanded the number of driver academy locations to 17.

In addition to offering good jobs and competitive benefits, as an LTL carrier, most of our drivers can be at home with their families every night. Our most important asset is our team of nearly 30,000 freight professionals, and we are working aggressively to add new members.

During the first quarter, we made headway on one of the largest fleet refreshes in our company's history by taking delivery of more than 1,100 tractors, more than 1,600 trailers and over 140 containers, most of which were added late in the quarter. These investments will have a positive impact on the age and efficiency of our fleet and should also help mitigate maintenance expense over time.

For 2021, our capital expenditure guidance remains between $450 million and $550 million.

Next, I would like to share what One Yellow means. It means going to market as one Yellow brand that provides customers with choice, simplicity, speed, visibility and reliability. Our roughly 200,000 customers will interact with one Yellow sales team whose shipments will move through one Yellow network. There will be one bill of lading, and the customers will receive one Yellow invoice.

Culturally, One Yellow also means continuing to do the right thing for our customers and our employees. We are making steady progress towards this vision, and the multiyear enterprise transformation to One Yellow remains on schedule for completion in the middle of 2022. This is also a critical step in aligning our cost structure with other large single brand LTL carriers.

In March, the American Rescue Plan Act of 2021 was passed and signed into law. The passage is followed by a 120-day rulemaking period to finalize the application process for the pension plans. The Pension Benefit Guaranty Corporation rulemaking is expected to be completed this summer.

The act will strengthen eligible multi-employer pension plans that are severely underfunded and substantially mitigate their unfunded liabilities for the next 30 years. The act and the relief it provides will protect the hard-earned benefits of retirees from many companies in many industries, including members of the Yellow team.

I will now turn the call over to Dan, who will share additional details about the quarter.

Thank you, Darren, and good afternoon, everyone.

For the first quarter 2021, operating revenue was $1.2 billion compared to $1.15 billion in 2020. Operating loss for the first quarter was $27.6 million, which included a $1 million net loss on property sales compared to operating income of $28 million in the prior year, which included a $39.3 million net gain on property sales.

Excluding net gains and losses on property sales, the operating loss in the first quarter 2021 was $26.6 million compared to a loss of $11.3 million in the first quarter 2020. Adjusted EBITDA for the first quarter was $13.2 million compared to $34.1 million in the first quarter 2020.

As Darren mentioned, the severe weather events during the first quarter had a significant impact on our network. And while we always anticipate higher costs and operational impacts during the first quarter, the events in mid- to late February that impacted many Southern states and spanned across the South Central corridor of the U.S. materially impacted our financial results. We estimate the operating income and adjusted EBITDA impact of those weather events to be approximately $16 million.

Our revenue for the first quarter reflected year-over-year LTL tonnage per day growth of 0.5% and LTL weight per shipment was down 1.2%. Sequential LTL tonnage per day trends compared to the prior year were as follows: January, up 2.5%; February, down 5.5%; and March, up 3.8%. On a preliminary basis, April LTL tonnage per workday was up approximately 24%. Excluding fuel surcharge, LTL revenue per hundredweight was up 6.9%, and LTL revenue per shipment was up 5.6% compared to the prior year. Including fuel surcharge, LTL revenue per hundredweight was up 6.7%, and LTL revenue per shipment was up 5.4%.

Total liquidity at the end of the first quarter was $423 million compared to $118 million at the end of the first quarter 2020. Total capital expenditures for the first quarter were $202 million compared to only $13 million in the first quarter 2020. As you heard from Darren, we still expect our 2021 capital expenditures to be in the range of $450 million to $550 million. During the second quarter, we plan on continuing our strong levels of CapEx, including the purchase of approximately 1,100 tractors, 800 trailers and 400 rail containers.

Now for a brief update on the U.S. Treasury loans. First, the $300 million Tranche A loan. As a reminder, all $300 million of the Tranche A loan was drawn down as of the end of 2020, and there was $26 million remaining to be used. As expected, we used that $26 million during the first quarter, and as such, there will be no further Tranche A activity.

Related to the $400 million Tranche B loan. As of the end of the first quarter, we had drawn down $251 million of Tranche B. And in April, we received the next $130 million. So as of now, we have drawn down a total of $381 million of the $400 million total, and we expect to draw the remaining $19 million in the back half of 2021.

And finally, on last quarter's earnings call, we discussed that elevated purchase transportation costs would persist and be a financial headwind through the first half of 2021. With continued strong economic demand, combined with an industry-wide driver shortage, we still expect that to be true. However, we also remain confident that we are taking the prudent actions necessary to mitigate those costs, and we continue to be optimistic about our financial performance as we move forward through 2021.

With that, I will turn the call over to Darrel.

Thank you, Dan, and good afternoon, everyone. I want to begin by saying how honored and proud I am to serve as President of Yellow Corporation. It's a very exciting time to be with our company, and I look forward to working alongside our 30,000 freight professionals who are committed to meeting our customers' expectations.

As Darren mentioned, we are well on our way to becoming One Yellow. The journey began in 2019 when we aligned the sales and operational structures of our LTL brands. This provided our customers with a single point of contact, making it easier to do business with us while also eliminating redundancies in our network.

Earlier this year, we officially renamed the holding company to Yellow Corporation in anticipation of a company-wide rebrand to Yellow. And currently, we are in the process of moving all brands to one technology platform. This will streamline the flow of information for operations, sales, customer service, human resources, maintenance and in-cab safety onto one shared technology solution.

As One Yellow, we will continue to improve our service, get faster, create more next day lanes and offer regional service in locations we never have before, and we'll give our customers access to all that Yellow can offer in the easiest, most efficient way possible. The integration to one Yellow network will strengthen asset and network efficiencies while providing customers with a broader network of Yellow services.

When our multiyear enterprise transformation is complete next year, we will go to market as One Yellow, laser-focused on meeting the needs of our customers and growing our business. In addition to the progress we are making with our enterprise transformation, we are in the process of implementing one of the largest capital expenditure plans in our company's history. It really is incredible to see the volume of equipment that we are placing into the network in 2021.

In the first quarter, we took steps to restore appropriate service levels for our customers, contributing to already elevated purchased transportation and short-term rental expense. With the weather disruption behind us, we've taken firm actions to reduce purchased transportation and short-term rental expense going forward. These actions include requiring the immediate return of short-term rental equipment in most locations as we gain momentum in the arrival of our new equipment.

We've also bolstered hiring in locations utilizing high levels of purchased transportation, due to the lack of delivery drivers. And lastly, we've made adjustments within our linehaul network to minimize the impact of rising purchased transportation expense in certain lanes.

In summary, as President of Yellow, my initial priorities are very straightforward. Number one, consistently meeting our customers' expectations. Number two, the successful execution of our hiring and retention strategies, which will allow us to take full advantage of the strong pricing environment while tightly managing our cost structure. And number three, completing the enterprise transformation to One Yellow as planned in 2022.

In closing, I could not be more excited about our future here at Yellow. We have plenty of work to do, but we are on the right path, and I fully expect us to take advantage of the strong freight environment. I want to thank our 30,000 freight professionals who continue to deliver for our customers each and every day. They truly are what makes this company special, and I look forward to working alongside them on the journey to becoming One Yellow.

I will now turn the call back over to Darren for some closing comments.

Thank you, Darrel. As you heard this afternoon, we are all excited about the road ahead. Despite the weather in the first quarter and the near-term purchased transportation headwinds, we are encouraged by the strong yield momentum we saw at the end of March and in April. With our multiyear enterprise transformation progressing, one of the largest CapEx plans in our company's history, along with tight LTL capacity, I have high expectations from our team, and I remain confident that we are well positioned for 2021 and beyond.

Thanks for your time this afternoon. We would now be happy to answer any questions that you may have.

We will now begin the question-and-answer session. (Operator Instructions) Our first question today will come from Jack Atkins with Stephens.

Well, so I guess, Darren, if we could maybe start for a moment. And I guess let's kind of think about the quarter and how it trended sequentially. Obviously, weather was a pretty big impact to your network in February and in early March. You made that pretty clear.

You've got yield momentum there. Could you -- I'd like for my first question, to maybe focus on the expense side. Because it looked like you had some expenses that came back in a pretty material way, particularly around operating supplies and expenses and also headcount or just salaries and wages.

Could you maybe talk a little bit about what drove the significant increase in those 2 expense buckets as we moved from the fourth quarter into the first quarter? And was that pandemic-related cost reduction maybe coming back into the business in preparation for a recovery in demand in '21?

Yes, certainly, Jack. And I'll start this, first of all, I'm not pleased with these Q1 results. Even when you look at excluding the property sales, the Op loss in Q1 of $26 million versus $11 million in 2020, and you put in the $16 million for weather, it's essentially flat. And in this yield environment, I'm not pleased with that.

However, I will say that when you think about the yield progression moving forward, and I'll ask Dan to give you some revenue per hundredweight, including fuel surcharge metrics for each month of the quarter, just to reinforce where we're at on pricing. And then also, from an expense standpoint, the proper utilization of purchased transportation is key to our network. It also allows us to run our linehaul operation as needed, as Darrel mentioned in the script, to align and take great care of our customers.

Now we did get into an area of using some expensive regional purchased transportation to get the right things done for the customer. But optimizing that out is key in Q2 moving forward, without driving that expense in the wrong direction, but the proper use of purchased transportation is essential to our network.

So from an expense category, that was my highest level of concern. That's why we called it out on the last earnings call, but also have been pointing our hiring events to that exact piece of reducing our exposure to the most expensive lanes.

I would like Dan to further comment. But Dan, if you would, start with the yield numbers by month for Q1, just to give everyone perspective of how we're trending. And keep in mind, as Dan gives these yield numbers for Q1, my comments about April that we're still seeing strong contract renewals as well. So Dan, take it from there.

Yes. Thanks, Darren. In my opening comments, obviously, you heard that our total yield, including fuel surcharge, was up 6.7% for the quarter. In our mid-quarter update, we reported that in January, we were up 1.8%. In February, we were up 6.3%. March, as Darren touched on as our yield accelerated in March, we were up 11.5%. So yield clearly continues to be our -- if not our -- one of our top priorities. We're happy with the performance up to this point. Contract renewals are averaging between 7% and 8%. We would expect that to continue.

A couple of other things, Jack, on the cost items that you mentioned. First of all, the $16 million weather impact that naturally kind of falls into that bucket, a lot of it in the salaries, wages and benefits and operating expenses. So that's really where a lot of that impact hit.

And then just one other point on that. The quarter itself, the first quarter had 3 more working days than the fourth quarter did. So just from a total cost perspective, that has an impact there as well.

Okay. That makes more sense, and I appreciate that additional color. Going back to the contract rate commentary for April. I thought that was really interesting, plus 7%. Is there any way to maybe talk about the contract renewals on average that you saw in the first quarter, just to kind of compare that?

Yes, Jack, as we came through the first quarter, they were 7% to 8%. So the contract renewals were building steam. As you know, we took our general rate increase in February this year as well. So we started to see that benefit, and those contract renewals have remained strong. So that 7% to 8% is a good guide, and they continue to accelerate as well.

Okay. Okay. Understood. And then just kind of sticking with yield for a moment. If contract rate increases are up in the, call it, 7-plus percent range, which makes a lot of sense. We're hearing similar ranges from other carriers. Are there opportunities on the accessorial side as well? Could you maybe talk about that as a potential area to drive higher revenue per shipment?

Yes, absolutely. The accessorial piece is crucial to us and all LTL carriers, but the actual recording and collection of those is something that we've become much better at in just recent times. Handheld, ELDs and other devices allow us to capture that detention. And since the beginning of the pandemic and also continuing into this year with what's been happening in the retail sector and explosive growth with e-commerce, trailer availability has continued to be an opportunity for us and others as large customers tie those trailers up.

The customers aren't doing it intentionally, they're doing it because of a lot of the disruptions that we've even seen on the trucking side with quarantines, vaccinations, weather impacts, container shortages, all those things put together. So we're seeing a willingness for them to pay those detention rates.

And then also on multiple areas of other accessorials, including Hazmat fees, residential deliveries, there's a much higher compliance rate than what we've seen in the past with capacity being so tight.

Okay. All right. Got it. Darrel, I guess this one's for you. And congratulations on your promotion. There are obviously a lot of areas that need focus within the business.

As you sort of think about the next 12 months, what are you going to be your number one, number two priorities, the highest level impact initiatives that you think you can undertake to really drive improved profitability here and capture the strength that we're seeing in the freight market?

Yes, Jack, thank you. To your point, I mean, as we discussed, I'm really focused on the successful execution of our transformation plan to One Yellow. I mean we're well underway, obviously, with the component we discussed relative to our technology.

But that's really the key to our future and our success, and it's on track. We're going to provide our customers with easy access to both the regional and long-haul services that our brands offer with one call, one truck and one driver. And that's extremely important, both for our customers and for our employees.

But to your point, initial focus, as I mentioned, we've got a line of sight daily to reduction of cost and purchased transportation expense. I mean, we have a great environment here from a yield perspective. And our focus, of course, is on the fundamentals of the business and cost controls necessary to drive the profit margins that we should have in this market.

Okay. And I guess last question, I'll turn it over. When we think about your hiring efforts, could you -- I know it's still early. Some -- you guys are putting out press releases, I think, pretty regularly, but could you just talk about what the pipeline looks like for new recruits? And when do you think that's going to start having an impact either in terms of the level of purchased transportation expense or just overall level of profitability for the enterprise?

Is that something that we should start seeing in the second half of this year? Or do you think the pipeline is building, it could impact the second quarter?

Yes, Jack, I'll jump in on that one. And per Dan's comments in our prepared script, certainly going to see the purchased transportation headwinds in the first half of the year. But we're making progress in that area, as Darrel addressed. Certainly, getting the PT on the right lanes.

And to your point about pipeline, we've got an internal pipeline that's crucial to us. And when we talk about 17 driving academies, that internal pipeline is our dock workers.

So we move our -- the career path is you come in as a dock worker. You move into the driving academy, while you're still getting paid. You can also go the box truck route, and that's where we get the conversion from dockworker, box truck to full-blown CDL class A driver.

So we've got that target in those areas. That's why we've continued to expand the number of driving academies. It goes beyond that with pop-up academies. If we get 3 or 4 dockworkers in one area, then it makes sense for us to put the instructors there with them, convert over to box trucker, CDL and benefit accordingly.

So that's why we're being strategic in the areas that we're putting these employees into first. So that piece, we have confidence that you're going to see improvement in Q2 around those pieces.

And our next question will come from Scott Group with Wolfe Research.

It's Rob on for Scott. Typically, from the first quarter to the second quarter, we see about a 300 to 400 basis point improvement in the operating ratio. In light of the headwinds you guys experienced from weather in the first quarter as well as some of the purchased transportation initiatives that you were just discussing, how should we think about kind of OR seasonality, 1Q to 2Q this year?

Yes, Scott, this is Dan. I'll take a stab at that one. Well, we don't provide specific guidance or targets around profitability or OR. But when you talk about and think about sequential margins, especially from 1Q to 2Q, you touched on it. Historically, we improve about 3.5% to 4% points from Q1 to Q2.

Considering the significant weather that we talked about, and that's behind us now. Considering that and the economic environment that we're in and some of those actions we're taking to mitigate our purchased transportation cost, I would expect that we'd have a chance to perform at or even a little bit better than that historical trend.

Yes. And Rob, the part I like about your question is it goes into the areas that we're facing forward on. So when we think about that, we're in the middle of one of the largest CapEx plan in our 100 year history. As you heard from Darrel, One Yellow is on track. Matter of fact, on the tech side of One Yellow, we just moved New Penn over to the Yellow technology. That went well without any customer disruption. Reddaway and Holland coming over next. That will be done actually this year. The network side of One Yellow completes in the first half of '22.

Also on the positive news front, our union multiemployer pensions, they're good for the next 30 years with recent legislation. And our nonunion single employers, they're fully funded with no significant contribution moving forward. You mix that with Dan's comments on the yield environment and the acceleration we're seeing, that's where our confidence lies facing forward.

That's a nice segue into the pension reform. Darren, you kind of alluded that now you've got kind of full funding for decades at this point, which probably means a little bit less cost inflation. But can you walk us through kind of how this impacts Yellow's cash flow accruals for pension expense to your rank and file as well as some of the contingent liability that we've historically seen listed in the 10-K?

Our view is that this is really a non-event from a cash flow, from an operating expense standpoint, but brings down kind of future cost inflation as well as we could potentially see that contingent withdrawal liability disclosure come down over time. But I'd be curious to get your thoughts as we're looking out to the 10-Q and ultimately a 10-K later this year to get filed.

Rob, as usual, you've done your homework very well. And your comments are right on, and you've got a very good understanding of how the supply is at Yellow. The first thing I would say is for our retirees and our current employees, this is very good development and allows them access to the pensions that they've all worked very hard for.

As you know, our pension rates are part of the collective bargaining agreement. So those are locked in for the life of our current agreement, which goes through 2024. You've already called out how this really, from a financial standpoint and the way we accrue for it, but I will let Dan take that piece before I get over my skis on that subject.

So Dan, fill in any -- there's not many blanks left, but go ahead and fill in anything that we missed.

Yes. Thanks, Darren. Look, Scott, you're right on. From a financial perspective, we expect to continue making our required contractual contributions to all the multiemployer pension plans that's agreed to in the collective bargaining agreement.

However, since we've not withdrawn from any of those plans in the past, we don't carry any of that unfunded pension liability or potential obligations on our balance sheet. So to your point, exactly, there's no immediate financial impact to us on that.

Yes. And then once we see what happens in the rulemaking period that I mentioned in the prepared comments, then we'll continue to update you as we move forward once we all understand more of the impacts together over time.

That's helpful. And my final question before I turn it over to someone else, is you obviously took delivery of a bunch of tractors and trailers in the first quarter. I think I heard that you guys were going to be taking delivery of north of 1,000 in the second quarter. So if I could just get kind of the total number that you guys will be receiving for tractors and trailers in 2Q? And if you're -- if there's any sort of difference in terms of your expected timing because of some of the supply chain issues like semiconductors that we're hearing from -- hearing a lot about in the news, that would be helpful.

Rob, I'll start with the back half of your question on issues. We have not run into any at this time. The production dates we've had, the 2 OEMS we're using, they've done a great job in providing them and others.

We did run into a few issues with some of the additional equipment that we had, like electronic logging devices and others. But we got -- we were able to overcome those. So we didn't see any delays on taking delivery of the units. So at this point in time, we're in good shape, and we have not been impacted by chip shortages and other things that you mentioned.

I'll let Dan go into the numbers side. Go ahead, Dan.

Yes. Thanks, Darren. We really started taking delivery of tractors and trailers already going back to the fourth quarter. So when you think about -- I'll just give you the cumulative role here.

In the fourth quarter, we took delivery of 300 tractors, 1,200 trailers. In the first quarter, 1,100 tractors and 1,600 trailers, as Darren had mentioned. That brings us up to 1,400 tractors, 2,800 trailers through Q1. And then as I mentioned in Q2 or within the next 2 to 3 months, we would expect that we'd be bringing on another 1,100 tractors and 800 trailers. So once we through with that will be at a total of 2,500 tractors and 3,600 trailers.

And what's the plan in terms of total tractor and trailer purchases for this year for you guys?

Total tractors, we're looking at between 2,300, 2,400 and total trailers, probably about 3,600 to 3,700.

And our next question will come from Jeff Kauffman with Vertical Research Partners.

Hey, I don't know that there's any questions left.

We've covered a lot of ground here, Jeff. That's for sure.

Well, let me see what I can come up with here. So you're going to bring on all this new equipment. Can you talk about how this is going to effect D&A and cash flow as you're bringing in higher-value equipment than what you probably have on your books?

Well, certainly, the oldest equipment goes out. And though we have not discussed publicly our fleet age, you can tell with these kind of numbers that Dan shared, roughly 2,400 Class 8s and throw another 100 box trucks, straight trucks and to give us 2,500 tractors for the year. That's going to bring the fleet age down significantly.

And the fleet age, when you look at it with those oldest units going out and our newest units going on the highest mileage lanes then naturally fuel miles per gallon, uptime, maintenance expense, in -- all those pieces benefit over time with the warranty programs.

And although our Q1 deliveries came in late in the quarter, we should see a consistent cascade of equipment into the network over the remaining quarters in the year. So that will definitely have a very positive impact on our financials moving forward. And as we've discussed, that's a big part of our plan while we're going through this transition to One Yellow.

So Dan, anything else there that I missed on that front?

Yes. I'd just go back to the D&A part of the question, Jeff. We generally use a useful life of 15 years for both trackers and trailers. So while I don't have the specific number in front of me, you can apply our CapEx total as it pertains to that new equipment and kind of do the math on that.

Okay. And I hate to ask the obvious question. But even if I adjust for the real estate gains here in the prior year and give you credit for weather, I mean, everybody got affected by the weather this quarter. Your purchased transportation cost really wasn't up a whole lot more than most other LTL carriers this quarter. Your labor costs came in lower. Your yields were right in line with the rest of the industry, yet your margins went down 130 basis points, whereas the rest of the industry went up about 280, 300 basis points.

So what do you believe was causing this underperformance financially versus the rest of the industry? Was it that your tonnage was down about 2.5%, 3%, nobody else's was. I'm just trying to understand. Your metrics really weren't that out of line from any other LTL company that's reported this quarter, yet your P&L was meaningfully lower.

Jeff, certainly a fair question. And when I made my initial comments, and I spoke about cost and also the need to move to One Yellow. The idea of having one of our current brands behind -- in line behind another one of our brands at a customer's location is a difficult proposition.

When you've got regional networks that can recover much quicker from winter storms than national networks that still use a hub-and-spoke system, those things become glaringly apparent during stressful times like prolonged weather events that happened in parts of the country that aren't accustomed to them. So when we put all that together, it just reinforces that our One Yellow strategy is exactly the right thing to do and the direction to go. Our network will be less complex, but it will be more agile and able to recover as we open more and more velocity centers throughout and across the country.

We started this process already. You see what we did in Texas, what we've done in Richmond, what we've done in Little Rock. Those are territories where we haven't had regional presence that we're providing regional service right now through YRC freight. So just in a few quarters and by the first half of 2022. So in a few quarters, we'll have the technology piece done.

Reddaway, Holland -- New Penn's already on the Yellow technology, but all of the companies will be on one technology this year. We'll have visibility across all the linehaul networks, all the terminals with one technology system for all employees to use, all drivers to benefit from.

And then by the first half of 2022, we'll have the networks connected in the environment that I just talked about, what we've done in Texas, Richmond, Little Rock. We've already got the regional service where we have regional carriers present, but we will remove having 2 of our company drivers at the same customer and 2 trucks, 2 trailers, et cetera.

The asset utilization side of this is going to be huge. Our cost structure does not align well right now with large single-brand LTL carriers, and that's exactly what we're on a mission to fix.

All right, so end of day, we still have inefficiency and redundancy in the network, and that may explain some of that difference.

And you've got these transition costs with the systems changeover and those never go as smoothly as we'd all like to believe. Is that a fair assessment?

Jeff, you did an excellent job summarizing that.

All right, Last question. I want to go back to the yields. I mean, just an unbelievable environment for yields. It's not sustainable, but on the other hand, not going away anytime soon. What percentage of your 2021 contracts have been repriced at this point? And I know you said you just took the GRI, but what's remaining to be repriced still for this year?

Yes, Jeff, this is something we've looked a lot at. As you know, the contractual piece is so much bigger than GRI and the contractual piece, we're pretty well balanced across quarters. So if you look at the number of negotiations we do, they're pretty evenly balanced between each quarter of the year and also the way we staff to handle that, as you know, the volume of that is thousands and thousands of customers as the majority of business now is under contract.

So we've still got a lot of good pricing in front of us. And those renewals are going very well. Naturally, we're working with our customers. It's not an ambush. We're communicating ahead of time. Everyone understands the environment. It's no secret what's going on in transportation right now. And these negotiations are moving in the right direction for us, and also working with the customers to make sure their freight is in the right lanes so that their transportation budgets -- they're all going up, but also that they can run their businesses effectively. So we're pretty even across each quarter. And we started this -- we started in Q4 in a strong way. So you could really mark us right at the halfway point.

Jeff, did I lose you?

No, I'm good. I'm just passing it on.

And this will conclude our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Thank you, operator, and thanks again to everyone who participated and joined with us today. Please contact Tony with any additional questions that you may have. This concludes our call. And operator, I'm turning the call back to you.

And this does conclude today's call. Thank you for attending today's presentation. At this time, you may now disconnect your lines, and have a great day.