- Revenue decline in first quarter
2019 primarily due to expected market moderation in ground expedite
compared to peak demand in first quarter 2018 and lower volumes in
Less-Than-Truckload (LTL) segment due primarily to planned service
area reductions
- LTL segment improved Adjusted EBITDA
as a result of restructuring efforts
- Truckload & Express Services
(TES) and Ascent Global Logistics (Ascent) segments earned
marginally lower Adjusted EBITDA due to difficult
comparisons
- Capital structure improvements
completed during the quarter enabling increased investments in all
three segments
- Adding new board member nominees
with significant industry experience
- Longer-term outlook unchanged and
improvement plans in place
Roadrunner Transportation Systems, Inc. (“Roadrunner” or the
“company”) (NYSE: RRTS), a leading asset-right transportation and
asset-light logistics service provider, today announced results for
the first quarter ended March 31, 2019 and the filing of its
Quarterly Report on Form 10-Q.
First Quarter Results
Revenues for the first quarter ended March 31, 2019 were $507.1
million, compared to revenues of $570.0 million for the first
quarter ended March 31, 2018. Operating loss was $20.8 million in
the first quarter of 2019 compared to $13.4 million in the first
quarter of 2018. Net loss was $27.0 million in the first quarter of
2019 compared to $23.6 million in the first quarter of 2018. In
addition to the lower revenues, net loss in the first quarter of
2019 was also impacted by higher depreciation expense of $6.5
million, a loss on debt restructuring of $2.3 million, and a
software impairment charge of $0.8 million, partially offset by a
decrease in interest expense of $5.7 million primarily due to the
waiver of interest on the company’s preferred stock until it was
fully redeemed after completion of the company’s $450 million
rights offering in February.
Diluted loss per share available to common stockholders was
$1.78 for the first quarter of 2019, compared to diluted loss per
share of $15.37 for the first quarter of 2018. On April 5, 2019,
the company executed a 1-for-25 reverse stock split which
retroactively adjusts all share and per common share data for all
periods presented. After reflecting the impact of the reverse stock
split, the weighted average common stock outstanding used in the
calculation of diluted loss per share was significantly higher in
the first quarter of 2019 due to the company’s issuance of 36
million shares of common stock in the rights offering.
Adjusted EBITDA for the first quarter of 2019 declined to $0.7
million compared to $3.1 million in the first quarter of 2018.
Adjusted EBITDA for the quarters ended March 31, 2019 and 2018 was
calculated as follows:
(In thousands)
Three Months Ended March 31, 2019
TES LTL Ascent
Corporate/Eliminations
Total Net (loss) income $ (4,413 ) $ (5,868 ) $ 5,267
$ (21,985 ) $ (26,999 ) Plus: Total interest expense 692 34 92
3,064 3,882 Plus: Provision for income taxes — — 13 58 71 Plus:
Depreciation and amortization 11,187 638 1,682 2,035 15,542 Plus:
Impairment charges — — — 778 778 Plus: Long-term incentive
compensation expenses — — — 1,731 1,731 Plus: Loss on debt
restructuring — — — 2,270 2,270 Plus: Corporate restructuring and
restatement costs — — — 3,432 3,432
Adjusted EBITDA $ 7,466 $ (5,196 ) $ 7,054 $
(8,617 ) $ 707
Three Months Ended March 31,
2018 TES LTL Ascent
Corporate/Eliminations
Total Net (loss) income $ 4,389 $ (8,720 ) $ 6,677 $
(25,989 ) $ (23,643 ) Plus: Total interest expense 11 36 30 9,466
9,543 Plus: Provision for income taxes — — — 670 670 Plus:
Depreciation and amortization 6,296 913 1,188 668 9,065 Plus:
Long-term incentive compensation expenses — — — 577 577 Plus:
Corporate restructuring and restatement costs
—
—
—
6,913
6,913 Adjusted EBITDA $ 10,696 $ (7,771 ) $
7,895 $ (7,695 ) $ 3,125
Comparison of First Quarter 2019 to
2018
TES LTL Ascent
Corporate/Eliminations
Total Adjusted EBITDA Improvement/ (Decline) $ (3,230)
$ 2,575 $ (841) $ (922) $ (2,418)
For more information about Adjusted EBITDA, see “Non-GAAP
Financial Measures” below and the company’s SEC filings.
Rights Offering, Debt Refinancing and
Increased Liquidity
On February 26, 2019, the company completed its previously
announced $450 million rights offering. The net proceeds from the
rights offering were used to fully redeem the outstanding shares of
the company’s preferred stock, to pay related accrued and unpaid
dividends and to add over $30 million of funds for general
corporate purposes.
On February 28, 2019, the company refinanced its prior
asset-based lending (“ABL”) facility. The new ABL credit facility
consists of a $200 million asset-based revolving line of credit.
Also on February 28, 2019, the company entered into a new term loan
credit agreement (“Term Loan”). The Term Loan proceeds of
approximately $51 million were used to repay in full the previous
term loan and provide funds for general corporate purposes.
After completing the rights offering and the debt refinancing,
the company has increased funds available for working capital,
operating activities and equipment procurement purposes. The new
ABL and Term Loan facilities mature on February 28, 2024.
CEO Comments on First Quarter
Results
“While we saw market softness in the first quarter in some of
our well-performing businesses, our longer-term improvement plans
are being executed and we continue to invest in our businesses.
Although some of our businesses can exhibit volatility between
quarters driven primarily by market conditions, our overarching
focus is to invest in all segments to achieve better than average
industry margins. We are encouraged by our team’s progress,
especially with an improved balance sheet that now provides us
enhanced financial flexibility,” said Curt Stoelting, Chief
Executive Officer of Roadrunner.
“We continued to make progress in our LTL segment, where revenue
declined primarily due to planned service area reductions. These
reductions support our ongoing efforts to eliminate unprofitable
freight and increase density in key lanes. As a result of these
efforts, LTL yield and Adjusted EBITDA increased compared to the
prior year quarter due to pricing actions, improved linehaul,
pick-up and delivery costs and reduced SG&A costs. We expect
revenue trends to improve in future quarters,” said Stoelting.
Stoelting continued, “We faced difficult revenue comparisons in
our Active On-Demand ground expedite offering, which had revenue
declines of approximately $60 million in the first quarter of 2019
compared to the prior year first quarter peak demand. We continued
to experience strong demand for air expedite, one of our top
performing services, but our performance was negatively impacted by
lower than normal capture rates on our owned fleet due to aircraft
maintenance and availability. The reduced volume on our fleet was a
primary driver of the lower profitability in our TES segment in the
first quarter of 2019 compared to the first quarter of 2018. We are
encouraged that our recently integrated temperature-controlled
business increased profit contribution within the TES segment in
the current quarter compared to both the prior year first quarter
and the fourth quarter of 2018. We are currently working to
integrate multiple dry van operations in order to increase
productivity and profitability.”
Stoelting added, “Profits in our Ascent segment declined
marginally year over year, primarily due to lower volume in
Domestic Freight Management, which was not fully offset by improved
brokerage spreads and investment spending in International Freight
Forwarding, as we invest to add additional sales resources.”
“With the completion of the rights offering and debt refinancing
in the first quarter, we now have the capital structure to support
our longer-term focus and business plans, which we believe will
enable a full operational recovery followed by additional growth
and optimization opportunities. These efforts will be supported by
two new board member nominees, Don Brown and Chris Jamroz, both of
whom have significant industry and business experience,” he
concluded.
Financial Outlook
The company remains focused on its longer-term business plans
and goals to deliver higher levels of profitability and sustainable
returns on invested capital. Over the longer-term, the company
expects segment margins will increase to be in line with peer group
margins and that structural changes currently being implemented
will result in profitability that is more resilient and will better
position Roadrunner for success throughout natural industry
cycles.
Conference Call and Webcast
Roadrunner management will host a conference call to discuss the
company’s results for the quarter ended March 31, 2019 on Tuesday,
May 7, 2019 at 10:00 a.m. Eastern Time. To access the conference
call, please dial 866-763-0340 (U.S.) or 703-871-3799
(International) approximately 10 minutes prior to the start of the
call. Callers will be prompted for passcode 4994926. Presentation
materials and a live webcast of the call can be accessed on the
“events and presentations” page in the Investor Relations section
of Roadrunner's website, www.rrts.com.
The conference call may include forward-looking statements.
If you are unable to listen to the live call, a replay will be
available through Tuesday, May 14, 2019 and can be accessed by
dialing 855-859-2056 (U.S.) or 404-537-3406 (International).
Callers will be prompted for passcode 4994926. An archived version
of the webcast will also be available for a period of time under
the Investor Relations section of Roadrunner's website,
www.rrts.com.
About Roadrunner Transportation Systems, Inc.
Roadrunner Transportation Systems is a leading asset-right
transportation and asset-light logistics service provider offering
a full suite of solutions under the Roadrunner®, Active On-Demand®
and Ascent Global Logistics® brands. The Roadrunner brand offers
less-than-truckload, over-the-road truckload and intermodal
services. Active On-Demand offers premium mission critical air and
ground transportation solutions. Ascent Global Logistics offers
domestic freight management, retail consolidation, international
freight forwarding and customs brokerage. For more information,
please visit Roadrunner’s websites, www.rrts.com and www.ascentgl.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, which relate to future events or performance.
Forward-looking statements include, among others, statements
regarding Roadrunner’s outlook for 2019 and beyond; the ability of
all segments to achieve better than average industry margins; the
success of the LTL segment to eliminate unprofitable freight and
increase density in key lanes; the expectation that LTL revenue
trends will improve in future quarters; the integration of multiple
dry van operations in order to increase productivity and
profitability; the ability of Roadrunner’s capital structure to
fully support Roadrunner’s long-term business plans, which
Roadrunner believes will increase the speed and likelihood of a
full operational recovery followed by additional growth and
optimization opportunities; the election on two new nominees to the
company’s board of directors; Roadrunner’s longer-term business
goals to deliver higher levels of profitability and sustainable
returns on invested capital; and Roadrunner’s expectation that its
segment margins will increase to be in line with peer group margins
and that the structural changes currently being implemented will
result in profitability that is more resilient and will better
position Roadrunner for success throughout natural industry cycles.
These statements are often, but not always, made through the use of
words or phrases such as “may,” “will,” “anticipate,” “estimate,”
“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,”
“intend,” “predict,” “potential,” “opportunity,” and similar words
or phrases or the negatives of these words or phrases. These
forward-looking statements are based on Roadrunner’s current
assumptions, expectations and beliefs and are subject to
substantial risks, estimates, assumptions, uncertainties and
changes in circumstances that may cause Roadrunner’s actual
results, performance or achievements to differ materially from
those expressed or implied in any forward-looking statement. Such
factors include, among others, risks related to the restatement of
Roadrunner’s previously issued financial statements, the
remediation of Roadrunner’s identified material weaknesses in its
internal control over financial reporting, the litigation resulting
from the restatement of Roadrunner’s previously issued financial
statements and the other risk factors contained in Roadrunner’s SEC
filings, including Roadrunner’s Annual Report on Form 10-K for the
year ended December 31, 2018. Because the risks, estimates,
assumptions and uncertainties referred to above could cause actual
results or outcomes to differ materially from those expressed in
any forward-looking statements, you should not place undue reliance
on any forward-looking statements. Any forward-looking statement
speaks only as of the date hereof, and, except as required by law,
Roadrunner assumes no obligation and does not intend to update any
forward-looking statement to reflect events or circumstances after
the date hereof.
Non-GAAP Financial Measures
EBITDA represents earnings before interest, taxes, depreciation
and amortization. Roadrunner calculates Adjusted EBITDA as EBITDA
excluding impairment and other non-cash gains and losses, other
long-term incentive compensation expenses, loss on debt
restructuring, and corporate restructuring and restatement costs
associated with legal, consulting and accounting matters, including
internal and external investigations. Roadrunner uses Adjusted
EBITDA as a supplemental measure in evaluating its operating
performance and when determining executive incentive compensation.
Roadrunner believes Adjusted EBITDA is useful to investors in
evaluating its performance compared to other companies in its
industry because it assists in analyzing and benchmarking the
performance and value of a business. The calculation of Adjusted
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. Adjusted EBITDA is not a
financial measure presented in accordance with GAAP. Although
Roadrunner’s management uses Adjusted EBITDA as a financial measure
to assess the performance of its business compared to that of
others in Roadrunner’s industry, Adjusted EBITDA has limitations as
an analytical tool, and you should not consider it in isolation, or
as a substitute for analysis of Roadrunner’s results as reported
under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect
Roadrunner’s cash expenditures, future requirements for capital
expenditures or contractual commitments;
- Adjusted EBITDA does not reflect
changes in, or cash requirements for, Roadrunner’s working capital
needs;
- Adjusted EBITDA does not reflect the
significant interest expense or the cash requirements necessary to
service interest or principal payments on Roadrunner’s debt or
dividend payments on Roadrunner’s preferred stock;
- Although depreciation and amortization
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future and Adjusted EBITDA
does not reflect any cash requirements for such replacements;
and
- Other companies in Roadrunner’s
industry may calculate Adjusted EBITDA differently than Roadrunner
does, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be
considered a measure of discretionary cash available to Roadrunner
to invest in the growth of the company’s business. Roadrunner
compensates for these limitations by relying primarily on
Roadrunner’s results of operations under GAAP.
ROADRUNNER TRANSPORTATION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except par value)
March 31, 2019
December 31, 2018
ASSETS Current assets: Cash and cash equivalents $
4,612 $ 11,179 Accounts receivable, net of allowances of $8,522 and
$9,980, respectively 273,634 274,843 Income tax receivable 3,180
3,910 Prepaid expenses and other current assets 56,612
61,106 Total current assets 338,038 351,038
Property and equipment, net of accumulated depreciation of
$143,271 and $130,077, respectively 209,652 188,706
Other
assets: Operating lease right-of-use asset 122,701 — Goodwill
264,826 264,826 Intangible assets, net 40,779 42,526 Other
noncurrent assets 6,283 6,361 Total other assets
434,589 313,713
Total assets $ 982,279
$ 853,457
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
(DEFICIT) Current liabilities: Current maturities of
debt $ 8,812 $ 13,171 Current finance lease liability 17,658 13,229
Current operating lease liability 36,797 — Accounts payable 147,765
160,242 Accrued expenses and other current liabilities 105,672
110,943 Total current liabilities 316,704 297,585
Deferred tax liabilities 3,938 3,953
Other long-term
liabilities 3,228 7,857
Long-term finance lease
liability 56,334 37,737
Long-term operating lease
liability 90,767 —
Long-term debt, net of current
maturities 150,856 155,596
Preferred stock —
402,884 Total liabilities 621,827 905,612
Commitments and contingencies (Note 12) Stockholders’
investment (deficit):
Common stock $.01 par value; 44,000 and
4,200 shares authorized; 37,562 and 1,556 shares
issued and outstanding
376 16 Additional paid-in capital 844,489 405,243 Retained deficit
(484,413 ) (457,414 ) Total stockholders’ investment (deficit)
360,452 (52,155 )
Total liabilities and stockholders’
investment (deficit) $ 982,279 $ 853,457
ROADRUNNER TRANSPORTATION SYSTEMS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31, 2019 2018 Revenues $
507,148 $ 569,984
Operating expenses: Purchased
transportation costs 342,775 400,963 Personnel and related benefits
79,215 75,887 Other operating expenses 89,614 97,499 Depreciation
and amortization 15,542 9,065 Impairment charges 778 —
Total operating expenses 527,924 583,414
Operating loss (20,776 ) (13,430 )
Interest expense:
Interest expense - preferred stock — 7,115 Interest expense - debt
3,882 2,428 Total interest expense 3,882 9,543
Loss on debt restructuring 2,270 — Loss before
income taxes (26,928 ) (22,973 )
Provision for income taxes
71 670 Net loss $ (26,999 ) $ (23,643 )
Loss per
share: Basic $ (1.78 ) $ (15.37 ) Diluted $ (1.78 ) $ (15.37 )
Weighted average common stock outstanding: Basic 15,158
1,538 Diluted 15,158 1,538
ROADRUNNER TRANSPORTATION SYSTEMS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT (DEFICIT)
(Unaudited) Common Stock (In thousands, except
shares)
Shares Amount
AdditionalPaid-InCapital
RetainedDeficit
TotalStockholders'Investment(Deficit)
BALANCE, December 31, 2018 1,555,868 $ 16 $ 405,243 $
(457,414 ) $ (52,155 ) Issuance of restricted stock units, net of
taxes paid 5,664 — (8 ) — (8 ) Issuance of common stock 36,000,000
360 449,640 — 450,000 Common stock issuance costs — — (11,985 ) —
(11,985 ) Share-based compensation — — 1,599 — 1,599 Net loss —
— — (26,999 ) (26,999 )
BALANCE, March 31,
2019 37,561,532 $ 376 $ 844,489 $ (484,413
) $ 360,452
Common Stock (In thousands, except
shares)
Shares Amount
AdditionalPaid-InCapital
RetainedDeficit
TotalStockholders'Investment(Deficit)
BALANCE, December 31, 2017 1,536,925 $ 15 $ 403,535 $
(292,703 ) $ 110,847 Issuance of restricted stock units, net of
taxes paid 3,272 — (75 ) — (75 ) Share-based compensation — — 523 —
523 Cumulative effect of change in accounting principle — — — 886
886 Net loss — — — (23,643 ) (23,643 )
BALANCE, March 31, 2018 1,540,197 $ 15 $
403,983 $ (315,460 ) $ 88,538
ROADRUNNER
TRANSPORTATION SYSTEMS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (In
thousands)
Three Months Ended March 31, 2019
2018 Cash flows from operating activities: Net
loss $ (26,999 ) $ (23,643 ) Adjustments to reconcile net loss to
net cash used in operating activities: Depreciation and
amortization 15,756 9,262 Change in fair value of preferred stock —
6,057 Amortization of preferred stock issuance costs — 1,058 Loss
on disposal of property and equipment 37 135 Share-based
compensation 1,599 523 Loss on debt restructuring 2,270 — (Recovery
of) provision for bad debts (19 ) 1,459 Deferred tax (benefit)
provision (15 ) 568 Impairment charges 778 — Changes in: Accounts
receivable 1,228 (15,269 ) Income tax receivable 730 653 Prepaid
expenses and other assets 12,879 (2,817 ) Accounts payable (12,811
) 9,642 Accrued expenses and other liabilities (9,355 ) 2,174
Net cash used in operating activities (13,922 ) (10,198 )
Cash flows from investing activities: Capital expenditures
(8,553 ) (5,699 ) Proceeds from sale of property and equipment 768
37 Net cash used in investing activities (7,785 )
(5,662 )
Cash flows from financing activities: Borrowings
under revolving credit facilities 504,478 — Payments under
revolving credit facilities (526,643 ) — Term debt borrowings
52,218 557 Term debt payments (38,878 ) (5,427 ) Debt issuance
costs (2,005 ) — Payments of debt restructuring costs (693 ) —
Proceeds from issuance of common stock 450,000 — Common stock
issuance costs (10,514 ) — Proceeds from issuance of preferred
stock — 17,500 Preferred stock issuance costs — (1,058 ) Preferred
stock payments (402,884 ) — Issuance of restricted stock units, net
of taxes paid (8 ) (75 ) Payments on insurance premium financing
(5,951 ) — Payments of finance lease obligation (3,980 ) (570 ) Net
cash provided by financing activities 15,140 10,927
Net decrease in cash and cash equivalents (6,567 ) (4,933 )
Cash and cash equivalents: Beginning of period 11,179
25,702 End of period $ 4,612 $ 20,769
ROADRUNNER
TRANSPORTATION SYSTEMS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Three Months Ended (In thousands)
March 31,
2019 2018 Supplemental cash flow
information: Cash paid for interest $ 3,567 $ 2,154 Cash
refunds from income taxes, net $ (698 ) $ (562 ) Non-cash finance
leases and other obligations to acquire assets $ 27,428 $ 276
Capital expenditures, not yet paid $ 962 $ —
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version on businesswire.com: https://www.businesswire.com/news/home/20190507005372/en/
Reputation PartnersMarilyn Vollrath414-376-8834ir@rrts.com
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