Roadrunner Transportation Systems' Q2 earnings rise 37% versus a year ago to US$14M as revenues grow 26.4% to US$331.9M; company anticipating Q3 revenues to be up 27%-36% year-over-year

CUDAHY, Wisconsin , August 1, 2013 (press release) – Roadrunner Transportation Systems, Inc. (RRTS), a leading asset-light transportation and logistics service provider, today reported financial results for the three and six months ended June 30, 2013.

Roadrunner's summary financial results for the three and six months ended June 30 are highlighted below. Second quarter 2013 net income available to common stockholders increased 37.0% over the prior year quarter to $14.0 million. Second quarter diluted income per share available to common stockholders increased 15.6% over the prior year to $0.37. Excluding acquisition transaction expenses of $0.3 million related to the second quarter acquisitions of Wando Trucking and Adrian Carriers, diluted income per share would have been $0.38.

The difference between Roadrunner's 37.0% increase in net income available to common stockholders for the three months ended June 30, 2013 and the 15.6% increase in diluted income per share available to common stockholders for the three months ended June 30, 2013 results from the December 2012 stock offering which increased the weighted averaged diluted shares outstanding by 3.9 million shares and impacted diluted income per share by $0.05.

               
        Three Months Ended     Six Months Ended
(In thousands, except per share data)       June 30,     June 30,
        2013   2012     2013   2012
Total revenues       $ 331,908     $ 262,546       $ 631,288     $ 499,119
Net revenues (total revenues less purchased transportation costs)       $ 103,986     $ 76,671       $ 197,024     $ 146,214
Depreciation and amortization       3,846     2,125       7,201     4,085
Other operating expenses       75,452     55,903       145,998     108,708
Acquisition transaction expenses       290     70       290     208
Operating income       $ 24,398     $ 18,573       $ 43,535     $ 33,213
Net income available to common stockholders       13,970     10,200       24,552     18,131
Weighted average diluted shares outstanding       37,307     32,186       36,442     32,182
Diluted income per share available to common stockholders       $ 0.37     $ 0.32       $ 0.67     $ 0.56
                                     

2013 Second Quarter Results

In discussing the company's second quarter performance, Mark DiBlasi, President and CEO of Roadrunner, said,

“Strong performance across all of our business segments generated second quarter revenue growth of 26.4% and net revenue growth of 35.6%. Due to sales and operational initiatives, our operating income growth of 31.4% outpaced revenue. Our operating ratio improved 30 basis points to 92.6%, compared to 92.9% in the second quarter of 2012.

“Our LTL operating ratio remained the same quarter-over-quarter and improved sequentially to 91.9% in the second quarter of 2013 from 93.2% in the first quarter of 2013. Our continued initiatives to expand into new geographic regions, build density, improve pricing, and enhance productivity, as well as the addition of Expedited Freight Systems (EFS) in August 2012, resulted in a net revenue margin improvement from 25.8% in the second quarter of 2012 to 28.8% in the second quarter of 2013.

“Our continued performance initiatives led to our TL operating ratio improving to 93.0% in the second quarter of 2013 from 93.9% in the second quarter of 2012. TL revenues grew by $50.2 million, or 45.2%, from the prior year quarter. Incremental revenues from our 2012 and 2013 acquisitions accounted for $43.3 million of the increase, with the remaining $6.9 million representing organic growth of 6.2% from our existing business. The positive impact of the acquisitions and operating leverage associated with our revenue growth led to a 66.2% increase in our TL operating income quarter-over-quarter.

“TMS revenue grew $3.8 million, or 16.6%, in the second quarter of 2013 from the prior year quarter, primarily due to our 2013 acquisition of Adrian Carriers. This growth, along with a $0.7 million contingent purchase price adjustment, led to a 43.4% increase in TMS operating income quarter-over-quarter."

2013 Third Quarter Guidance

In commenting on guidance for the third quarter of 2013, Peter Armbruster, CFO of Roadrunner, said, “We anticipate our revenues for the third quarter to be in the range of $355 million to $380 million, representing an increase of 27% to 36% from the third quarter of 2012. We expect diluted income per share available to common stockholders to be between $0.36 and $0.39, compared to diluted income per share available to common stockholders of $0.31 in the prior year quarter. Our diluted per share guidance represents an increase of 16% to 26% from the third quarter of 2012 diluted income per share of $0.31. We expect net income available to common stockholders to be between $13.4 million and $14.6 million, representing an increase of 36% to 48% from the third quarter of 2012. Our guidance reflects weighted average diluted shares outstanding of 37.7 million."

2013 Second Quarter Segment Information

Roadrunner has three operating segments: less-than-truckload (LTL), truckload and logistics (TL), and transportation management solutions (TMS). The following highlights exclude intercompany eliminations and corporate expenses.

LTL revenues, including fuel, increased 13.0% to $146.5 million for the second quarter of 2013 from $129.7 million for the second quarter of 2012. LTL net revenues for the second quarter of 2013 were $42.3 million, or 28.8% of LTL revenues, compared to $33.4 million, or 25.8% of LTL revenues, for the second quarter of 2012. LTL operating income was $11.8 million, or 8.1% of LTL revenues, for the second quarter of 2013 compared to $10.5 million, or 8.1% of LTL revenues, for the second quarter of 2012.

Summary LTL operating statistics for the three and six months ended June 30 are shown below.

             
      Three Months Ended June 30,     Six Months Ended June 30,
      2013   2012   % Change     2013   2012   % Change
Operating ratio     91.9     91.9           92.6     92.4      
Tonnage (in thousands of tons)     404.3     338.2     19.5 %     774.3     654.3     18.3 %
Shipments (in thousands)     628.2     515.6     21.8 %     1,200.2     1,002.5     19.7 %
Revenue per hundredweight (incl. fuel)     $ 17.88     $ 18.91     (5.4 %)     $ 17.90     $ 18.87     (5.1 )%
Revenue per hundredweight (excl. fuel)     $ 14.69     $ 15.44     (4.9 %)     $ 14.66     $ 15.40     (4.8 )%
Weight per shipment (lbs.)     1,287     1,312     (1.9 %)     1,290     1,305     (1.1 %)
Linehaul cost per mile (excl. fuel)     $ 1.23     $ 1.24     (0.8 %)     $ 1.23     $ 1.24     (0.8 )%
                             
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. Operating statistics include EFS beginning as of the date of acquisition, August 10, 2012.
 

TL revenues increased 45.2% to $161.2 million for the second quarter of 2013 from $111.0 million for the second quarter of 2012. The improvement was primarily due to increases in market pricing and load growth, increased utilization of Roadrunner's TL brokerage agent network, and the acquisitions of D&E Transport, CTW Transport, R&M/Sortino, Central Cal, A&A, DCT, and Wando Trucking. For the second quarter, these acquisitions collectively contributed incremental TL revenues of $43.3 million. Overall, TL net revenues for the second quarter of 2013 were $52.3 million, or 32.4% of TL revenues, compared to $36.5 million, or 32.9% of TL revenues, for the second quarter of 2012. TL operating income was $11.4 million, or 7.0% of TL revenues, for the second quarter of 2013 compared to $6.8 million, or 6.1% of TL revenues, for the second quarter of 2012.

TMS revenues for the second quarter of 2013 increased 16.6% to $27.0 million from $23.1 million for the second quarter of 2012. TMS net revenues for the second quarter of 2013 were $9.5 million, or 35.0% of TMS revenues, compared to $6.7 million, or 29.1% of TMS revenues, for the second quarter of 2012. TMS operating income was $4.0 million for the second quarter of 2013, compared to $2.8 million for the second quarter of 2012.

Conference Call

A conference call is scheduled for Wednesday, July 31, 2013 at 4:30 p.m. Eastern Time. To access the conference call, please dial 866-318-8614 (U.S.) or 617-399-5133 (International) approximately 10 minutes prior to the start of the call. Callers will be prompted for passcode 42036242. 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 August 7, 2013, and can be accessed by dialing 888-286-8010 (U.S.) or 617-801-6888 (International). Callers will be prompted for passcode 61295245. 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 full suite of solutions, including customized and expedited less-than-truckload, truckload and logistics, transportation management solutions, intermodal solutions, and domestic and international air. For more information, please visit Roadrunner's website, www.rrts.com.

Safe Harbor Statement

This release contains forward-looking statements that relate to future events or performance, including statements regarding Roadrunner's performance; Roadrunner's sales and operational initiatives; Roadrunner's initiatives to expand into new geographic regions, build density, improve pricing, and enhance productivity; the impact of Roadrunner's December 2012 stock offering; the impact of Roadrunner's acquisitions; and Roadrunner's expected revenues, diluted income per share available to common stockholders, net income available to common stockholders, and weighted average diluted shares outstanding for the third quarter of 2013. These statements reflect Roadrunner's current expectations, and Roadrunner does 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. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond Roadrunner's 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 the integration of acquired companies, competition in the transportation industry, the impact of the current economic environment, Roadrunner's dependence upon purchased power, the unpredictability of and potential fluctuation in the price and availability of fuel, the effects of governmental and environmental regulations, insurance in excess of prior experience levels, and other "Risk Factors" set forth in Roadrunner's most recent SEC filings.

(Tables Follow)

 
 
ROADRUNNER TRANSPORTATION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(In thousands, except per share amounts)

               
               
        Three Months Ended     Six Months Ended
        June 30,     June 30,
        2013   2012     2013   2012
Revenues       $ 331,908     $ 262,546       $ 631,288     $ 499,119
Operating expenses:                      
Purchased transportation costs       227,922     185,875       434,264     352,905
Personnel and related benefits       36,670     28,963       71,526     55,696
Other operating expenses       38,782     26,940       74,472     53,012
Depreciation and amortization       3,846     2,125       7,201     4,085
Acquisition transaction expenses       290     70       290     208
Total operating expenses       307,510     243,973       587,753     465,906
Operating income       24,398     18,573       43,535     33,213
Interest expense:                      
Interest on long-term debt       1,610     2,071       3,485     3,869
Dividends on preferred stock subject to mandatory redemption                     49
Total interest expense       1,610     2,071       3,485     3,918
Income before provision for income taxes       22,788     16,502       40,050     29,295
Provision for income taxes       8,818     6,302       15,498     11,164
Net income available to common stockholders       $ 13,970     $ 10,200       $ 24,552     $ 18,131
Earnings per share available to common stockholders:                      
Basic       $ 0.39     $ 0.33       $ 0.70     $ 0.59
Diluted       $ 0.37     $ 0.32       $ 0.67     $ 0.56
Weighted average common stock outstanding:                      
Basic       35,585     30,821       35,289     30,782
Diluted       37,307     32,186       36,442     32,182
                             
 
ROADRUNNER TRANSPORTATION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands)

               
               
        June 30,
2013
    December 31,
2012
ASSETS              
Current assets:              
Cash and cash equivalents       $ 5,423       $ 11,908
Accounts receivable, net of allowances of $1,182 and $1,476, respectively       152,752       122,947
Deferred income taxes       3,595       3,800
Prepaid expenses and other current assets       22,257       26,461
Total current assets       184,027       165,116
Property and equipment, net of accumulated depreciation of $25,663 and $20,108, respectively       93,176       68,576
Other assets:              
Goodwill       459,808       442,143
Intangible assets, net       14,374       12,710
Other noncurrent assets       10,363       12,263
Total other assets       484,545       467,116
Total assets       $ 761,748       $ 700,808
LIABILITIES AND STOCKHOLDERS’ INVESTMENT              
Current liabilities:              
Current maturities of long-term debt       $ 17,000       $ 17,000
Accounts payable       63,571       54,887
Accrued expenses and other liabilities       27,874       29,132
Total current liabilities       108,445       101,019
Long-term debt, net of current maturities       158,000       144,500
Other long-term liabilities       65,330       63,210
Total liabilities       331,775       308,729
Stockholders’ investment:              
Common stock $.01 par value; 100,000 shares authorized; 35,838 and 34,371 shares issued and outstanding       358       344
Additional paid-in capital       338,362       325,034
Retained earnings       91,253       66,701
Total stockholders’ investment       429,973       392,079
Total liabilities and stockholders’ investment       $ 761,748       $ 700,808
                     

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