Roadrunner Transportation Systems Reports 2012 Third Quarter Results and Announces Fourth Quarter 20

Roadrunner Transportation Systems Reports 2012 Third Quarter Results and Announces Fourth Quarter 2012 Guidance

CUDAHY, Wis.--(BUSINESS WIRE)-- Roadrunner Transportation Systems, Inc. (NYS: RRTS) , a leading asset-light transportation and logistics service provider, today reported financial results for the three and nine months ended September 30, 2012.

Roadrunner's summary financial results for the three and nine months ended September 30 are highlighted below. Third quarter diluted income per share available to common stockholders increased 34.8% over the prior year to $0.31. Excluding acquisition transaction expenses of $0.5 million related to the third quarter acquisitions of R&M Transportation (R&M), Sortino Transportation (Sortino) and Expedited Freight Systems, Inc. (EFS), diluted income per share would have been $0.32.

Three Months Ended

Nine Months Ended

(In thousands, except per share data)

September 30,

September 30,

2012

2011

2012

2011

Total revenues

$

279,165

$

226,193

$

778,284

$

605,622

Net revenues (total revenues less purchased transportation costs)

$

83,123

$

60,672

$

229,337

$

153,336

Depreciation and amortization

2,424

1,499

6,509

3,381

Other operating expenses

62,214

45,761

170,922

116,157

Acquisition transaction expenses

480

618

688

938

Operating income

$

18,005

$

12,794

$

51,218

$

32,860

Net income available to common stockholders

9,872

7,175

28,003

19,006

Weighted average diluted shares outstanding

32,260

31,758

32,220

31,576

Diluted income per share available to common stockholders

$

0.31

$

0.23

$

0.87

$

0.60


2012 Third Quarter Results

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

"Strong performance across all of our business segments generated third quarter revenue growth of 23.4% and net revenue growth of 37.0%. Due to sales and operational initiatives, our operating income growth of 40.7% outpaced revenue. Our operating ratio improved 70 basis points to 93.6% from 94.3% in the third quarter of 2011 despite the inclusion of third quarter acquisition transaction expenses and an abnormal $1.7 million sequential increase in the LTL and TL third quarter insurance costs from the second quarter of 2012, which impacted diluted earnings per share by $0.04.

"Our LTL operating ratio improved to 92.4% in the third quarter from 94.8% in the third quarter of 2011. Our continued initiatives to expand into new geographic regions, build density, improve pricing and enhance productivity, as well as the addition of EFS, resulted in a net revenue margin improvement from 23.4% in the third quarter of 2011 to 27.7% in the third quarter of 2012. While incurring integration costs associated with the consolidation of certain EFS operations on a non-recurring basis, we were still able to show substantial improvement over last year in our LTL operating ratio.

"TL revenues grew by $44.9 million, or 56.6%, from the prior year. Incremental revenues from our 2011 and 2012 acquisitions accounted for $31.9 million of the increase, with the balance of $13.0 million representing organic growth of 16.4%. The positive impact of the acquisitions and operating leverage associated with our revenue growth led to a 29.6% increase in our TL operating income. Our TL operating ratio of 94.1% was impacted by an abnormal $1.3 million sequential increase in third quarter insurance costs from the second quarter of 2012. Excluding the increased TL insurance costs, the TL operating ratio would have been 93.1%.

"TMS revenue grew $2.2 million, or 10.4%, from the prior year. Organic growth and pricing accounted for $0.6 million of the increase, with the balance related to our late February 2012 acquisition of Capital Transportation Logistics. The operating leverage associated with this growth led to a 14.7% increase in TMS operating income. Our TMS operating ratio improved to 88.5% from 89.0% in the third quarter of 2011."

2012 Fourth Quarter Guidance

In commenting on guidance for the fourth quarter of 2012, Peter Armbruster, CFO of Roadrunner, said, "We anticipate our revenues for the fourth quarter to be in the range of $275 million to $290 million, representing an increase of 16% to 22% from the fourth quarter of 2011. Further, we expect diluted income per share available to common stockholders to be between $0.27 and $0.31, compared to diluted income per share available to common stockholders of $0.22 in the prior year quarter. Our guidance range considers the uncertain economic conditions and the potential effects of the severe weather situation on the East Coast."

2012 Third 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 4.9% to $132.5 million for the third quarter of 2012 from $126.2 million for the third quarter of 2011. On a per day basis, for the third quarter of 2012, LTL revenues improved 6.6% and LTL tonnage improved 8.3% over the third quarter of 2011. LTL revenue per hundredweight, excluding EFS shipments, was up 4.1% including fuel and 4.3% excluding fuel in the third quarter of 2012. LTL net revenues for the third quarter of 2012 were $36.7 million, or 27.7% of LTL revenues, compared to $29.6 million, or 23.4% of LTL revenues, for the third quarter of 2011. LTL operating income was $10.0 million, or 7.6% of LTL revenues, for the third quarter of 2012 compared to $6.5 million, or 5.2% of LTL revenues, for the third quarter of 2011.

Summary LTL operating statistics for the three and nine months ended September 30 are shown below.

Three Months Ended September 30,

Nine Months Ended September 30,

% Change

% Change

2012

2011

% Change

Per Day

2012

2011

% Change

Per Day

Operating ratio

92.4

94.8

92.4

94.5

Tonnage (in thousands of tons)

359.4

337.2

6.6

%

8.3

%

1,013.7

949.5

6.8

%

7.3

%

Shipments (in thousands)

547.6

512.5

6.8

%

8.5

%

1,550.1

1,434.5

8.1

%

8.6

%

Revenue per hundredweight (incl. fuel)

$

18.26

$

18.34

(0.4

%)

$

18.65

$

18.10

3.0

%

Revenue per hundredweight (excl. fuel)

$

14.97

$

15.01

(0.3

%)

$

15.25

$

14.87

2.6

%

Weight per shipment (lbs.)

1,313

1,316

(0.2

%)

1,308

1,324

(1.2

%)

Linehaul cost per mile (excl. fuel)

$

1.24

$

1.25

(0.8

%)

$

1.24

$

1.24

0.0

%

Operating Days

63

64

191

192

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 segment revenues increased 56.6% to $124.2 million for the third quarter of 2012 from $79.3 million for the third quarter of 2011. 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 Prime Logistics, D&E Transport, CTW Transport, R&M and Sortino. For the third quarter, Prime Logistics, D&E Transport, CTW Transport, R&M and Sortino collectively contributed incremental revenues of $31.9 million to the TL segment. Overall, TL net revenues for the third quarter of 2012 were $39.6 million, or 31.9% of TL revenues, compared to $25.6 million, or 32.3% of TL revenues, for the third quarter of 2011. TL operating income was $7.3 million, or 5.9% of TL revenues, for the third quarter of 2012 compared to $5.6 million, or 7.1% of TL revenues, for the third quarter of 2011.

TMS segment revenues for the third quarter of 2012 increased 10.4% to $24.0 million from $21.7 million for the third quarter of 2011. TMS net revenues for the third quarter of 2012 were $6.8 million, or 28.4% of TMS revenues, compared to $5.4 million, or 25.1% of TMS revenues, for the third quarter of 2011. TMS revenue growth during the quarter was primarily attributable to new and existing customer growth and the acquisition of Capital Transportation Logistics. For the third quarter, Capital Transportation Logistics contributed revenue of $1.6 million to the TMS segment. TMS operating income was $2.7 million, or 11.5% of TMS revenues, for the third quarter of 2012, compared to $2.4 million, or 11.0% of TMS revenues, for the third quarter of 2011.

Conference Call

A conference call is scheduled for Wednesday, October 31, 2012 at 4:30 p.m. Eastern Time. To access the conference call, please dial 866-277-1181 (U.S.) or 617-597-5358 (International) approximately 10 minutes prior to the start of the call. Callers will be prompted for passcode 68866964. 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 November 7, 2012, and can be accessed by dialing 888-286-8010 (U.S.) or 617-801-6888 (International). Callers will be prompted for passcode 83237201. 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 RRTS' 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, Roadrunner's acquisitions, and Roadrunner's expected revenues and diluted earnings per share available to common stockholders for the fourth quarter of 2012. 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

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Revenues

$

279,165

$

226,193

$

778,284

$

605,622

Operating expenses:

Purchased transportation costs

196,042

165,521

548,947

452,286

Personnel and related benefits

30,331

23,598

86,027

61,656

Other operating expenses

31,883

22,163

84,895

54,501

Depreciation and amortization

2,424

1,499

6,509

3,381

Acquisition transaction expenses

480

618

688

938

Total operating expenses

261,160

213,399

727,066

572,762

Operating income

18,005

12,794

51,218

32,860

Interest expense:

Interest on long-term debt

1,943

1,172

5,812

2,056

Dividends on preferred stock subject to mandatory redemption

50

49

150

Total interest expense

1,943

1,222

5,861

2,206

Income before provision for income taxes

16,062

11,572

45,357

30,654

Provision for income taxes

6,190

4,397

17,354

11,648

Net income available to common stockholders

$

9,872

$

7,175

$

28,003

$

19,006

Earnings per share available to common stockholders:

Basic

$

0.32

$

0.23

$

0.91

$

0.63

Diluted

$

0.31

$

0.23

$

0.87

$

0.60

Weighted average common stock outstanding:

Basic

30,859

30,562

30,808

30,340

Diluted

32,260

31,758

32,220

31,576

ROADRUNNER TRANSPORTATION SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

September 30,

December 31,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$

2,322

$

3,315

Accounts receivable, net of allowances of $1,400 and $1,461, respectively

131,520

102,358

Deferred income taxes

4,998

9,497

Prepaid expenses and other current assets

22,133

16,400

Total current assets

160,973

131,570

Property and equipment, net of accumulated depreciation of $17,864 and $13,303, respectively

47,829

28,447

Other assets:

Goodwill

415,954

364,687

Intangible assets, net

13,080

10,381

Other noncurrent assets

12,710

8,633

Total other assets

441,744

383,701

Total assets

$

650,546

$

543,718

LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities:

Current maturities of long-term debt

$

17,000

$

14,000

Accounts payable

58,046

50,245

Accrued expenses and other liabilities

31,591

19,480

Preferred stock subject to mandatory redemption

5,000

Total current liabilities

106,637

88,725

Long-term debt, net of current maturities

176,145

122,500

Other long-term liabilities

42,492

36,540

Total liabilities

325,274

247,765

Stockholders' investment:

Common stock $.01 par value; 100,000 shares authorized; 30,956 and 30,707 shares issued and outstanding

310

30