Roadrunner Transportation Systems, Inc. (NYSE: RRTS), a leading
asset-light transportation and logistics service provider, today
reported financial results for the three and nine months ended
September 30, 2016.
Revenues for the quarter ended September 30, 2016 increased
to $532.2 million from $497.2 million for the same quarter in 2015.
Operating income was $18.9 million, compared to $14.4 million for
the prior year quarter. Diluted earnings per share available to
common stockholders was $0.21 for the third quarter of 2016,
compared to $0.15 for the third quarter of 2015.
Operating income for the third quarter of 2016 included a $4.9
million gain from the sale of a non-core business and $2.1 million
of downsizing costs, which together resulted in a $0.05 benefit to
diluted earnings per share. Results for the third quarter of 2015
included an $0.08 charge associated with the termination of certain
independent contractor ("IC") lease purchase guarantee
programs.
Revenues for the nine months ended September 30, 2016 were
$1,481.3 million compared to $1,504.1 million for the nine months
ended September 30, 2015. Operating income was $38.1 million,
compared to $72.4 million in the prior year period. Diluted
earnings per share available to common stockholders was $0.33 for
the nine months ended September 30, 2016, compared to $0.91 in
the prior year period.
Operating income for the nine months ended September 30,
2016 included $8.1 million of downsizing costs and a $4.9 million
gain from the sale of a non-core business, which together resulted
in a $0.05 negative impact to diluted earnings per share. Results
for the nine months ended September 30, 2015 included an $0.08
charge associated with the termination of certain IC lease purchase
guarantees.
Roadrunner's EBITDA, a non-GAAP financial measure, was $28.6
million for the third quarter of 2016, compared to EBITDA of $22.8
million for the third quarter of 2015. EBITDA, excluding a $4.9
million gain from the sale of a non-core business and $1.5 million
of downsizing costs, was $25.2 million for the quarter ended
September 30, 2016. EBITDA, excluding a $5.0 million charge
associated with the termination of certain IC lease purchase
guarantee programs, was $27.8 million for the quarter ended
September 30, 2015.
EBITDA was $66.9 million for the nine months ended
September 30, 2016, compared to EBITDA of $95.3 million for
the nine months ended September 30, 2015. EBITDA, excluding
$6.5 million of downsizing costs and a $4.9 million gain from the
sale of a non-core business, was $68.5 million for the nine months
ended September 30, 2016. EBITDA, excluding a $5.0 million
charge associated with the termination of certain IC lease purchase
guarantee programs, was $100.3 million for the nine months ended
September 30, 2015.
For more information about EBITDA, see “Non-GAAP Financial
Measures” below. A reconciliation of net income to EBITDA is
provided below:
Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015
(In thousands) Net income $ 7,939 $ 5,791 $ 12,802 $ 35,866
Plus: Provision for income taxes 5,015 3,655 8,084 22,642 Plus:
Interest expense 5,949 4,913 17,252 13,895 Plus: Depreciation 7,581
6,394 22,352 16,710 Plus: Amortization 2,142 2,049
6,438 6,145 EBITDA $ 28,626 $ 22,802 $ 66,928 $ 95,258
2016 Third Quarter Results
In discussing the company's performance, Mark DiBlasi, CEO of
Roadrunner, said,
“For the quarter ended September 30, 2016, consolidated
revenue increased $35.0 million. A large portion of the revenue
increase related to our ground expedite business in which we
receive a management fee versus transportation or brokerage
margins. Our remaining transportation businesses, when compared to
the prior year, are experiencing continuing declines in freight
rates and volumes across most end markets and lower fuel surcharge
revenue, which declined by $7.4 million quarter-over-quarter.
“Overall, excess capacity and lower margins continued to impact
our TL segment. Third quarter 2016 operating income in our TL
segment, excluding a gain on the sale of a non-core business and
downsizing costs, was $11.6 million, a decline of $1.7 million from
the third quarter of 2015. Operating income, excluding downsizing
costs, improved sequentially from $8.7 million in the second
quarter of 2016 primarily due to a partial recovery in expedited
air and ground rates.
“Trends in our LTL segment remain mostly unchanged with
continued market impacts from weak freight demand in the general
industrial markets we serve and lower fuel surcharge revenue.
During the quarter, our LTL segment incurred $0.9 million of
downsizing costs from reducing the number of long haul employee
drivers and trucks in favor of more cost effective purchase power
and independent contractors. Operating income, excluding downsizing
costs, was $2.3 million in the third quarter of 2016, an increase
of $0.3 million from the third quarter of 2015. Although expected
revenue increases have been muted by the current freight
environment, we still expect improvement in LTL in 2017 as a result
of service and productivity initiatives launched throughout the
year. Operating income, excluding downsizing costs, improved
sequentially from $1.4 million in the second quarter of 2016 to
$2.3 million in the third quarter of 2016.
“Our Global Solutions segment had revenue declines of $10.9
million during the third quarter of 2016, primarily due to a
decrease in domestic transportation management and lower
international freight forwarding volumes and rates, partially
offset by increases in warehousing and consolidation. As a result
of these revenue declines, operating income of $7.1 million
decreased $1.4 million in the third quarter of 2016 compared to the
third quarter of 2015. Operating income improved sequentially from
$6.7 million in the second quarter of 2016 to $7.1 million in the
third quarter of 2016.
“We were in compliance with all the financial covenants
contained in the amended credit agreement for the four quarters
ended September 30, 2016.
“Given market conditions and uncertainties, we believe it is
prudent at this time to withdraw, and investors should not rely on,
our previously issued guidance for the fiscal year ending
December 31, 2016. We will not provide guidance until we have
more clarity that market conditions and uncertainties have
stabilized.”
Goodwill Impairment
Roadrunner completed step one of its annual goodwill impairment
analysis as required during the quarter ended September 30,
2016 and concluded that the carrying value of its LTL reporting
unit exceeded its fair value. Consequently, Roadrunner is required
to perform the second step of its goodwill impairment analysis to
measure the amount of goodwill impairment. Given the timing and
complexities involved in completing this analysis, Roadrunner has
not yet completed step two of its goodwill impairment analysis. At
this time, Roadrunner is unable to provide a reasonable estimate
for the non-cash goodwill impairment loss. Roadrunner expects to
complete step two of its goodwill impairment analysis during the
fourth quarter of 2016. Any such non-cash goodwill impairment loss
may be material to Roadrunner's results of operations for the three
months ending December 31, 2016, but would have no impact on
Roadrunner's business operations, liquidity, credit agreement or
compliance with existing debt agreements.
Third Quarter 2016 Segment Information
Roadrunner has three operating segments: truckload logistics
(TL), less-than-truckload (LTL), and Global Solutions. In 2016, the
company reassigned two of its operating companies to different
existing reportable segments to align the operating companies with
how they are being managed. The change in reportable segments did
not have any impact on previously reported financial results, but
prior year segment results have been revised to align with the
current reportable segments. The following highlights exclude
intercompany eliminations and corporate expenses:
TL
LTL Global Solutions Three Months Ended September
30, 2016 2015 Change
2016 2015 Change 2016
2015 Change Revenues $ 310,494 $
251,947 $ 58,547 $ 106,445 $ 111,722 $ (5,277 ) $ 83,294 $ 94,198 $
(10,904 )
Fuel Surcharge 24,889 29,465
(4,576 ) 12,743 15,562 (2,819 )
— — —
Total Revenues $
335,383 $ 281,412 $ 53,971 $
119,188 $ 127,284 $ (8,096 ) $ 83,294
$ 94,198 $ (10,904 )
Operating Income $ 15,368 $ 13,364
$ 2,004 $ 1,400 $ 1,955 $
(555 ) $ 7,086 $ 8,525 $ (1,439 )
Third quarter 2016 TL revenues increased over the prior year
primarily due to increased revenues in the ground expedite business
where the company only collects a management fee and pass through
billings, offset by lower fuel surcharge revenues across the entire
TL segment. Fuel surcharge revenue decreased $4.6 million
quarter-over-quarter.
The decrease in LTL revenues for the third quarter 2016 over the
prior year quarter was due to a combination of lower fuel surcharge
revenue, which decreased $2.8 million quarter-over-quarter, and
weak freight demand in the general industrial market the company
serves.
Summary LTL operating statistics for the three and nine months
ended September 30 is shown below:
Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 % Change 2016
2015 % Change Operating ratio 98.8 98.5
99.1 95.2 Tonnage (in thousands of tons)
302.0
336.1 (10.1 %) 917.5 1,045.6 (12.3 %) Shipments (in thousands)
555.4 574.6 (3.3 %) 1,668.2 1,777.8 (6.2 %) Revenue per
hundredweight (incl. fuel) $ 19.71 $ 19.09 3.2 % $ 19.38 $ 19.14
1.3 % Revenue per hundredweight (excl. fuel) $ 17.60 $ 16.77 4.9 %
$ 17.40 $ 16.70 4.2 % Weight per shipment (lbs.) 1,087 1,170 (7.1
%) 1,100 1,176 (6.5 %) Linehaul cost per mile (excl. fuel) $ 1.25 $
1.25 — % $ 1.25 $ 1.25 — % Note: Other than operating ratio,
the statistics above do not include (i) adjustments for undelivered
freight required for financial statement purposes in accordance
with Roadrunner's revenue recognition policy; and (ii) non-LTL
related business captured within the LTL segment.
The decrease in Global Solutions revenues quarter-over-quarter
was primarily due to a decrease in domestic transportation
management and lower international freight forwarding volumes and
rates, partially offset by increases in warehousing and
consolidation revenues.
Conference Call
A conference call is scheduled for Wednesday, November 2,
2016 at 4:30 p.m. Eastern Time. To access the conference call,
please dial 888-285-2105 (U.S.) or 503-406-4042 (International)
approximately 10 minutes prior to the start of the call. Callers
will be prompted for passcode 93571460. The conference call will
also be available via live webcast under the Investor Relations
section of Roadrunner's website, www.rrts.com.
If you are unable to listen to the live call, a replay will be
available through Wednesday, November 9, 2016, and can be
accessed by dialing 855-859-2056 (U.S.) or 404-537-3406
(International). Callers will be prompted for passcode 93571460. An
archived version of the webcast will also be available under the
Investor Relations section of Roadrunner's website, www.rrts.com.
About Roadrunner Transportation Systems, Inc.
Roadrunner is a leading asset-light transportation and logistics
service provider offering a comprehensive suite of global supply
chain solutions, including truckload logistics, customized and
expedited less-than-truckload, intermodal solutions, freight
consolidation, inventory management, expedited services, air
freight, international freight forwarding, customs brokerage and
transportation management solutions. For more information, please
visit Roadrunner's website, www.rrts.com.
Safe Harbor Statement
This press release contains 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, that relate to future events or performance. These
statements often include words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate," or similar expressions.
In particular, this press release contains forward-looking
statements about our expectation of improvement in LTL results in
2017 as a result of our services and productivity initiatives
launched throughout 2016; our plan to provide an update regarding
guidance when we have more clarity that market conditions and
uncertainties have stabilized; and expectation that we will
complete step two of our goodwill impairment analysis during the
fourth quarter; and our expected goodwill impairment charge to be
recorded in the fourth quarter. These statements reflect our
current expectations, and we do not undertake to update or revise
these forward-looking statements, even if experience or future
changes make it clear that any projected results expressed or
implied in this or other company statements will not be realized,
except as required by law. Furthermore, readers are cautioned that
these statements involve risks and uncertainties, many of which are
beyond our control, which could cause actual results to differ
materially from the forward-looking statements. These risks and
uncertainties include, but are not limited to, risks related to one
or more significant claims and the cost of maintaining insurance,
including increased premiums and insurance in excess of prior
experience levels; the cost of compliance with, liability for
violations of, or modifications to existing or future governmental
regulations; the effect of environmental regulations; a decrease in
the levels of capacity in the over-the-road freight sector; our
ability to execute our acquisition strategy and to integrate
acquired companies; our international operations; our indebtedness
and compliance with the covenants in our senior credit facility;
the unpredictability of and potential fluctuation in the price and
availability of fuel; the economic environment; competition in the
transportation industry; our reliance on ICs to provide
transportation services to our customers; and other "Risk Factors"
set forth in our most recent SEC filings.
Non-GAAP Financial Measures
Our reported results include EBITDA, a non-GAAP financial
measure. We use EBITDA as a supplemental measure in evaluating our
operating performance and when determining executive incentive
compensation. We believe EBITDA is useful to investors in
evaluating our performance compared to other companies in our
industry because it assists in analyzing and benchmarking the
performance and value of a business. The calculation of EBITDA
eliminates the effects of financing, income taxes, and the
accounting effects of capital spending. These items may vary for
different companies for reasons unrelated to the overall operating
performance of a company’s business. EBITDA is not a financial
measure presented in accordance with GAAP. Although our management
uses EBITDA as a financial measure to assess the performance of our
business compared to that of others in our industry, EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:
- EBITDA does not reflect our cash
expenditures, future requirements for capital expenditures, or
contractual commitments;
- EBITDA does not reflect changes in, or
cash requirements for, our working capital needs;
- EBITDA does not reflect the significant
interest expense or the cash requirements necessary to service
interest or principal payments on our debt;
- although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and EBITDA does not
reflect any cash requirements for such replacements; and
- other companies in our industry may
calculate EBITDA differently than we do, limiting its usefulness as
a comparative measure.
Because of these limitations, EBITDA should not be considered a
measure of discretionary cash available to us to invest in the
growth of our business. We compensate for these limitations by
relying primarily on our results of operations under GAAP.
ROADRUNNER TRANSPORTATION SYSTEMS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015
Revenues $ 532,209 $ 497,173 $ 1,481,273 $ 1,504,073
Operating expenses: Purchased transportation costs 360,548
326,251 986,477 1,000,815 Personnel and related benefits 71,197
65,997 210,354 193,846 Other operating expenses 71,838 81,559
217,514 213,590 Depreciation and amortization 9,723 8,443
28,790 22,855 Total operating expenses 513,306
482,814 1,443,135 1,431,670
Operating income
18,903 14,359 38,138 72,403
Interest expense 5,949
4,913 17,252 13,895 Income before provision for
income taxes 12,954 9,446 20,886 58,508
Provision for income
taxes 5,015 3,655 8,084 22,642 Net income
available to common stockholders $ 7,939 $ 5,791 $
12,802 $ 35,866
Earnings per share available to common
stockholders: Basic $ 0.21 $ 0.15 $ 0.33 $
0.94 Diluted $ 0.21 $ 0.15 $ 0.33 $ 0.91
Weighted average common stock outstanding: Basic 38,328
38,264 38,310 38,149 Diluted 38,340
39,471 38,360 39,446
ROADRUNNER TRANSPORTATION SYSTEMS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
September 30, 2016 December 31,
2015 ASSETS Current assets: Cash and cash
equivalents $ 4,868 $ 8,664 Accounts receivable, net of allowances
of $3,896 and $3,782, respectively 310,357 272,176 Deferred income
taxes 3,215 4,876 Prepaid expenses and other current assets 70,037
62,101 Total current assets 388,477 347,817
Property and equipment, net of accumulated depreciation of
$87,578 and $68,517, respectively 190,979 197,744
Other
assets: Goodwill and intangible assets, net 764,570 767,812
Other noncurrent assets 7,266 6,183 Total other assets
771,836 773,995
Total assets $ 1,351,292 $
1,319,556
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities: Current maturities of long-term debt $
15,000 $ 15,000 Accounts payable 152,676 104,357 Accrued expenses
and other liabilities 46,259 48,657 Total current
liabilities 213,935 168,014
Long-term debt, net of
current maturities 389,180 417,830
Other long-term
liabilities 121,156 120,405 Total liabilities 724,271
706,249
Stockholders’ investment: Common stock $.01
par value; 100,000 shares authorized; 38,335 and 38,266 shares
issued and outstanding 383 383 Additional paid-in capital 398,165
397,253 Retained earnings 228,473 215,671 Total
stockholders’ investment 627,021 613,307
Total
liabilities and stockholders’ investment $ 1,351,292 $
1,319,556
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161102006613/en/
Roadrunner Transportation Systems, Inc.Peter ArmbrusterChief
Financial Officer414-615-1648orReputation PartnersMarilyn
Vollrath414-376-8834ir@rrts.com
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