Roadrunner Transportation Systems (RRTS) 8-K Roadrunner Transportation Systems Reports 2010 Third Quarter Results

FOR IMMEDIATE RELEASE

ROADRUNNER TRANSPORTATION SYSTEMS REPORTS
2010 THIRD QUARTER RESULTS

Cudahy, WI — November 2, 2010 — Roadrunner Transportation Systems, Inc. (NYSE: RRTS), a leading non-asset based transportation and logistics services provider, today reported financial results for the three and nine months ended September 30, 2010.

The following table sets forth summary financial results for the three and nine months ended September 30 for RRTS. The pro forma data assumes (i) the IPO and sale of additional shares upon exercise of the underwriters’ overallotment option occurred at the beginning of 2010, and (ii) that RRTS’ current income tax rate of 38% is applied throughout each of the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010				2009		2010					2009
(In thousands, except per share data)	Pro Forma		Actual		Actual		Pro Forma		Actual			Actual
Total revenues	$	163,690	$	163,690	$	124,670	$	466,222	$	466,222		$	355,390
Net revenues (total revenues less purchased transportation costs)	$	35,061	$	35,061	$	26,520	$	102,490	$	102,490		$	76,922
Depreciation and amortization		747		747		745		2,364		2,364			2,163
Other operating expenses		26,328		26,328		21,019		75,137		75,137			63,194
Acquisition transaction expenses		57		57		520		389		389			520
IPO related expenses		—		—		—		—		1,500			—
Operating income	$	7,929	$	7,929	$	4,236	$	24,600	$	23,100		$	11,045
Operating income before acquisition transaction expenses and IPO related expenses	$	7,986	$	7,986	$	4,756	$	24,989	$	24,989		$	11,565
Loss on early extinguishment of debt	$	—	$	—	$	—	$	—	$	15,916		$	—
Provision (benefit) for income taxes	$	2,803	$	2,991	$	371	$	8,816	$	(432	)	$	812
Net income (loss) available to common stockholders	$	4,573	$	4,384	$	126	$	14,384	$	(1,051	)	$	(703	)
Weighted average diluted shares outstanding		31,089		31,089		17,824		30,945		24,316			17,504
Diluted income (loss) per share available to common stockholders	$	0.15	$	0.14	$	0.01	$	0.46	$	(0.04	)	$	(0.04	)

2010 Third Quarter Results

Revenues for the third quarter of 2010 increased 31.3% to $163.7 million compared to revenues of $124.7 million for the third quarter of 2009. Operating income for the third quarter of 2010 was $7.9 million compared to $4.2 million for the third quarter of 2009. Net income available to common stockholders was $4.4 million for the third quarter of 2010, or $0.14 per diluted share, compared to net income for the third quarter of 2009 of $0.1 million, or $0.01 per diluted share. On a pro forma basis, assuming RRTS’ current income tax rate of 38% was applied throughout the third quarter of 2010, net income available to common stockholders for the quarter would have been $4.6 million, or $0.15 per diluted share.

Mark DiBlasi, President and CEO of RRTS, said,

“We generated continued growth in revenue during the third quarter, primarily driven by positive new business trends resulting in market share gains in our LTL, TL, and TMS business units as well as the effects of our acquisitions made in the second half of last year. Our positive revenue growth drove a 32.2% increase in net revenues and an 87.2% increase in operating income in the third quarter compared to the third quarter of 2009. In addition, our overall operating ratio improved from 96.6% in the third quarter of 2009 to 95.2% in the third quarter of 2010.

While most trends remain very positive throughout our business segments, the impact of the significant spike in truckload rates during the second quarter continued to have a negative effect on our LTL linehaul costs during the third quarter. Excluding fuel surcharges, our average linehaul cost per mile increased to $1.26 during the third quarter of 2010 from $1.21 in the second quarter of 2010 and $1.16 experienced from the third quarter of 2009 through the first quarter of 2010. The impact of this cost per mile increase from $1.16 to $1.26 resulted in third quarter purchased transportation costs increasing in excess of $2.7 million.

We are taking measures to mitigate the impact of the increased truckload rates on our LTL linehaul costs by leveraging our independent contractor base on high cost lanes, expanding our carrier base and improving yield through LTL rate increases. Our focus on improving yield resulted in a 2.1% increase in revenue per hundredweight including fuel surcharges sequentially from second quarter levels. With the LTL rate environment improving, we are seeing this yield increase accelerating in the fourth quarter as we implement our pricing initiatives.”

2010 Third Quarter Segment Information

RRTS has three operating segments: less-than-truckload (“LTL”), truckload brokerage (“TL”) and transportation management solutions (“TMS”). Set forth below is selected segment financial information excluding intercompany eliminations and corporate expenses:

For the LTL segment, revenues of $107.2 million in the third quarter of 2010 increased 28.1%, compared to $83.7 million for the third quarter of 2009. This reflects quarter-over-quarter tonnage growth of 19.2% and growth in revenue per hundredweight, including fuel surcharges, of 7.3%. LTL net revenues for the third quarter of 2010 were $25.6 million, or 23.8% of LTL revenues, compared to $20.7 million, or 24.8% of LTL revenues for the third quarter of 2009. The decline in net revenue percent is principally attributable to the increase in average linehaul cost per mile associated with the spike in truckload rates and a 0.6% decline in weight per shipment quarter-over-quarter, partially offset by LTL price increases in 2010. LTL operating income was $5.2 million for the third quarter of 2010, compared to $3.2 million for the third quarter of 2009.

The following table sets forth summary LTL operating statistics for the three and nine months ended September 30.

	Three Months Ended September 30,									Nine Months Ended September 30,
							%									%
	2010			2009			Change			2010			2009			Change
Operating ratio		95.2	%		96.2	%					94.3	%		96.6	%
Tonnage (in tons)		328.2			275.3			19.2	%		955.0			767.4			24.4	%
Shipments (in thousands)		483.3			403.1			19.9	%		1,378.8			1,123.8			22.7	%
Revenue per hundredweight (incl. fuel)	$	16.38		$	15.26			7.3	%	$	16.08		$	15.26			5.3	%
Weight per shipment (lbs.)		1,358			1,366			(0.6	%)		1,385			1,366			1.4	%
Linehaul cost per mile (excl. fuel)	$	1.26		$	1.16			8.2	%	$	1.21		$	1.18			2.5	%

Note: Other than operating ratio, the statistics above do not include adjustments for undelivered freight required for financial statement purposes in accordance with RRTS’ revenue recognition policy.

For the TL segment, revenues of $39.1 million in the third quarter of 2010 increased 18.6%, compared to $33.0 million for the third quarter of 2009. TL net revenues for the third quarter of 2010 were $4.5 million, or 11.5% of TL revenues, compared to $3.9 million, or 11.9% of TL revenues, for the third quarter of 2009. TL operating income was $1.6 million for the third quarter of 2010, compared to $1.3 million for the third quarter of 2009.

For the TMS segment, revenues for the third quarter of 2010 were $18.0 million, compared to $8.6 million for the third quarter of 2009. TMS net revenues for the third quarter of 2010 were $5.0 million, or 27.6% of TMS revenues, compared to $1.9 million, or 21.8% of TMS revenues, for the third quarter of 2009. TMS operating income was $1.8 million, or 10.0% of TMS revenues, for the third quarter of 2010, compared to $0.5 million, or 5.4% of TMS revenues, for the third quarter of 2009. The growth in TMS revenues, net revenues, and operating income primarily resulted from the acquisitions made in the second half of 2009 coupled with customer growth exceeding 16% quarter-over-quarter.

Conference Call

A conference call is scheduled for Tuesday, November 2, 2010 at 4:30 p.m. Eastern Time. To access the conference call, please dial 866-730-5764 (U.S.) or 857-350-1588 (international) approximately 10 minutes prior to the start of the call. Callers will be prompted for passcode 50294894#. The conference call will also be available via live webcast under the Investor Relations section of RRTS’ website, www.rrts.com.

If you are unable to listen to the live call, a replay will be available through November 9, 2010, and can be accessed by dialing 888-286-8010(U.S.) or 617-801-6888(international). Callers will be prompted for passcode 34753915#. An archived version of the webcast will also be available under the Investor Relations section of the Company’s website, www.rrts.com.

About Roadrunner Transportation Systems, Inc.

RRTS is a leading non-asset based transportation and logistics services provider offering a full suite of solutions, including customized and expedited less-than-truckload, truckload, transportation management solutions and intermodal brokerage, and domestic and international air. For more information, please visit: www.rrts.com.

Safe Harbor Statement

This release contains forward-looking statements that relate to future events or performance. These statements reflect the company’s current expectations, and the company 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 the company’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, competition in the transportation industry, the impact of the current economic crisis, the company’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, and other “Risk Factors” set forth in the company’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,
	2010		2009		2010			2009
Revenues	$	163,690	$	124,670	$	466,222		$	355,390
Operating expenses:
Purchased transportation costs		128,629		98,150		363,732			278,468
Personnel and related benefits		15,826		13,171		45,514			38,895
Other operating expenses		10,502		7,848		29,623			24,299
Depreciation and amortization		747		745		2,364			2,163
Acquisition transaction expenses		57		520		389			520
IPO related expenses		—		—		1,500			—
Total operating expenses		155,761		120,434		443,122			344,345
Operating income		7,929		4,236		23,100			11,045
Interest expense:
Interest on long-term debt		504		3,199		7,752			9,344
Dividends on preferred stock subject to mandatory redemption		50		50		150			150
Total interest expense		554		3,249		7,902			9,494
Loss on early extinquishment of debt		—		—		15,916			—
Income (loss) before provision (benefit) for income taxes		7,375		987		(718	)		1,551
Provision (benefit) for income taxes		2,991		371		(432	)		812
Net income (loss)		4,384		616		(286	)		739
Accretion of Series B preferred stock		—		490		765			1,442
Net income (loss) available to common stockholders	$	4,384	$	126	$	(1,051	)	$	(703	)
Earnings (loss) per share available to common stockholders:
Basic	$	0.15	$	0.01	$	(0.04	)	$	(0.04	)
Diluted	$	0.14	$	0.01	$	(0.04	)	$	(0.04	)
Weighted average common stock outstanding:
Basic		30,052		17,574		24,316			17,504
Diluted		31,089		17,824		24,316			17,504

ROADRUNNER TRANSPORTATION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(Dollars in thousands, except share amounts)

	September 30,			December 31,
	2010			2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,254		$	2,176
Accounts receivable, net		72,948			57,887
Deferred income taxes		1,578			1,578
Prepaid expenses and other current assets		11,761			8,501
Total current assets		87,541			70,142
PROPERTY AND EQUIPMENT, NET		7,000			7,518
OTHER ASSETS:
Goodwill		246,889			244,671
Other noncurrent assets		6,542			10,950
Total other assets		253,431			255,621
TOTAL ASSETS	$	347,972		$	333,281
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt	$	—		$	8,768
Accounts payable		36,835			31,184
Accrued expenses and other liabilities		11,504			12,152
Total current liabilities		48,339			52,104
LONG-TERM DEBT, net of current maturities		27,814			130,167
OTHER LONG-TERM LIABILITIES		5,446			4,627
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION		5,000			5,000
Total liabilities		86,599			191,898
REDEEMABLE COMMON STOCK
Redeemable common stock $.01 par value; 259,800 shares issued and outstanding		—			1,740
STOCKHOLDERS’ INVESTMENT:
Common stock $.01 par value; 100,000,000 shares authorized; 30,095,710 and 20,024,310 shares issued and outstanding		301			200
Additional paid-in capital		261,649			139,734
Retained deficit		(577	)		(291	)
Total stockholders’ investment		261,373			139,643
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ INVESTMENT	$	347,972		$	333,281

Contact

Roadrunner Transportation Systems, Inc.
Peter Armbruster
Chief Financial Officer
414-615-1648
ir@rrts.com

Vollrath Associates, Inc.
Marilyn Vollrath
414-221-0210