Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Roadrunner Transportation Systems, Inc. | rrts-20180402x8xkpressrele.htm |
| EX-99.1 - EXHIBIT 99.1 - Roadrunner Transportation Systems, Inc. | rrts-20180402xex991xpressr.htm |
First Three Quarters of 2017 Results
& Business Update
April 2, 2018
This presentation 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 the anticipated filing of
Roadrunner’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and Form 10-Q for the
quarterly period ending March 31, 2018; Roadrunner’s strategies for long-term growth and shareholder value creation;
operating metric improvements within certain business units of Roadrunner’s TL and Ascent segments beginning in the
fourth quarter of 2017 and continuing into 2018; Roadrunner’s current plans to simplify operations and improve its go-
to-market strategy; Roadrunner’s other operational improvement strategies; Roadrunner’s investment in information
technology infrastructure to support its integration efforts, strengthen its internal controls and enable future growth;
Roadrunner’s expectation that its 2017 Adjusted EBITDA will exceed the reported amount for its 2016 Adjusted
EBITDA; and improvements in the rate environment. 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, 2016. 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.
Safe Harbor Statement
2
1. 2017 First Three Quarters Financial Results
2. Business Trends
3. Future Guideposts
4. Question & Answer Session
Agenda for Today’s Call
3
Financial Summary
• Revenues of $1,530.9 million vs. $1,482.0 million in 2016
• Net operating loss of $14.1 million vs. $352.5 million in 2016. 2017 operating loss includes:
– Increase in purchased transportation costs to $1,033.2 million in 2017 from $982.0 million in 2016
– Gain on sale of Unitrans of $35.4 million
– Restructuring and restatement costs of $23.6 million associated with legal, consulting and accounting matters,
including internal and external investigations, SEC and accounting compliance and restructuring
– Increase of $5.2 million in legal reserves related to recently settled independent contractor litigation and pre-
divestiture litigation related to Unitrans
– Non-cash impairment charges of $4.4 million in 2017 related to the revaluation of the goodwill of Ascent
segment following the sale of Unitrans, compared to non-cash impairment charges of $372.1 million in 2016
• Net loss of $67.9 million vs. $321.5 million in 2016. In addition to the items above, the 2017 net loss was
impacted by:
– Increased interest expense including issuance costs of $16.1 million associated with the sale of preferred stock
in May 2017 which was reflected as interest expense
– Loss from debt extinguishment of $15.9 million:
– $9.8 million loss from early debt repayment on the prior senior credit facility
– Early payment premiums on the redemption of preferred stock totaling $6.1 million using proceeds from
the ABL facility and the sale of Unitrans in Q3 of 2017
Summary of First Three Quarters 2017 Results
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Segment Results
• TL revenues of $926.0 million vs. $890.8 million in 2016. Operating income of $0.1
million vs. operating loss of $143.4 million in 2016
– 2016 operating loss included goodwill impairment charges of $157.5 million
– 2017 operating income included increased equipment leasing and maintenance costs, fuel costs and insurance
claims than in 2016
• LTL revenues of $348.4 million vs. $355.6 million in 2016. Operating loss of $14.2
million vs. $194.1 million in 2016
– 2016 operating loss included goodwill impairment charges of $197.3 million
– 2017 operating loss included higher line-haul and other operating expenses than in 2016
• Ascent revenues of $261.5 million vs. $250.3 million in 2016. Operating income of
$15.9 million vs. $3.0 million in 2016
– Operating income included non-cash impairment charges of $4.4 million in 2017 and $17.2 million in 2016
Summary of First Three Quarters 2017 Results
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2017 EBITDA
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First Nine Months 2017 vs. 2016
2017 2016
Net loss (67,859)$ (321,457)$
Plus: Total interest expense 45,382 17,060
Plus: Benefit from income taxes (7,516) (48,092)
Plus: Depreciation and amortization 27,834 27,636
Plus: Impairment charges 4,402 372,081
Plus: Share-based compensation expense 1,647 1,653
Plus: Long-term incentive compensation 163 -
Plus: Adjustments to contingent purchase obligations - (2,458)
Plus: Gain on sale of Unitrans (35,440) -
Plus: Loss from debt extinguishments 15,876 -
Plus: Restructuring and restatement costs 23,591 -
Adjusted EBITDA 8,080$ 46,423$
Nine Months Ended
September 30,
(in thousands)
Raised more than $540 million in new financing in 2017
• Preferred stock investment – recorded as debt for GAAP purposes
• No mandatory redemption payments until 2023
• Allows for deferred payment of dividends; if deferred earns interest until paid
• Asset-based lending (ABL) facility – supported by accounts receivable and rolling stock
• Covenant light requirements enables focus on operational improvements
Sold Unitrans for Cash Considerations of $95 million
• Non-core business unit
• Divestiture completed on September 15, 2017
• Net proceeds of $88.5 million used to reduce debt and provide additional liquidity
Current Status
• In compliance with ABL and preferred stock investment agreements
• Available borrowing capacity under the ABL facility and the standby commitment from the preferred stock investor
Capital In Place to Support the Operational Turnaround
7
Business Trends
8
Business Trends
9
Truckload Logistics Less-Than-Truckload Ascent Global Logistics
• Difficult market conditions in first
three quarters of 2017,
particularly at Express Ground,
Intermodal and Temp Control
• Improving rate environment in
Q4 which has accelerated in
2018
• Favorable top and bottom line
trends in this segment driven by
rate and productivity
improvements, partially offset by
capacity decline
• Investment cycle focused on
customer experience and longer
term success vs short term financial
performance
• Use of purchased power a detriment
as truckload rate environment
improves
• Pleased with progress on capabilities
and customer experience
• Focused on improving yields and the
quality of revenue
• Patience required as financial
recovery will take time to take hold
• Sale of Unitrans in September with
$6.6 and $9.3 million of EBITDA in
2017 (thru 9/15) and 2016,
respectively
• Continuing top and bottom line
growth in this asset free segment
• New era launched on March 15 with
integration of Roadrunner Truckload
Plus with Ascent’s LTL, international
and retail consolidation capabilities
• Provides our teams and customers
with improved access to technology
enabled, asset-backed truckload,
LTL, flatbed, international
transportation and retail
consolidation capabilities
Future Guideposts
10
5 Key Phases – Tracking and Reporting our Progress
Business Improvement Guideposts
11
5. OPTIMIZATION
2018 Simplification & Integration
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Key Initiatives
• Operations
– Improve operational performance in Truckload segment
– Integrate and expand Ascent Global Logistics segment
– Invest in longer-term recovery of LTL segment
– Simplify and combine operations and improve go-to-market approach in Express
Services (air and ground expedite) business platform
• Invest in our fleets and drivers
– New equipment and better control
– Increased driver/contractor pay and retention
• IT investments
– Improved system integration and customer-facing technology in each segment
– IT upgrades that will support integration, strengthen internal controls and enable
future growth
• Financial Goals
– Implement key operating and ROIC metrics across all business units
– Move EBITDA margins closer to industry norms
Future Communications
Topics for our Next Conference Call
• 2017 10-K and 2018 Q1 Results & Analysis
– Expect to file in Q2 2018 – will provide business updates
– Expect to remain current with quarterly and annual filings beginning in Q2
Other Communications
• Future announcements related to simplification and integration
13
Q&A
14