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Roadrunner Revenues Slide In Fourth Quarter, Company Posts $58.5M Full-Year Operating Loss



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Revenue declines in two key segments drove overall revenue down in the fourth quarter, ending December 31, 2018, for Roadrunner Transportation Systems (NYSE: RRTS), to $551.5 million, a 1.6 percent decrease from $560.4 million in the fourth quarter of 2017. The company's operating loss was $22.9 million in the quarter, which included corporate restructuring and restatement costs of $6.7 million, non-cash fleet impairment charges in intermodal services of $1.6 million and a contingent purchase obligation adjustment of $1.8 million, the company said.

Net loss increased to $58.4 million in the fourth quarter of 2018 compared to $23.3 million in the fourth quarter of 2017, due primarily to the prior items above and increased interest costs of $18.1 million related to the company's preferred stock.

CEO Curt Stoelting struck an optimistic tone, though, in comments made during the company's conference call with analysts.

"We continue to see our business grow with comparable 2018 full-year revenue growth of 9.5 percent. We also are reporting improving operating trends with 2018 adjusted EBITDA improvement in the fourth quarter of $6 million and $19 million for the full year," he said. "So we continue to make progress on our operational improvements... while we are also improving our capital structure as evidenced by the recent completion of our rights offering and debt refinancing. All the above, plus the plans we have in place for our performing and underperforming businesses give us a positive financial outlook for 2019 and beyond."

Stoelting added that the company remains committed to "long-term and lasting improvement in each of our segments and in our consolidated bottom-line results." He also noted that "two-thirds of our businesses are now stable and growing."

"Active On-Demand and Ascent have led the way followed by our recently restructured flatbed, temperature-controlled and intermodal businesses. All of these businesses improved in 2018 and are positioned for success and growth in 2019. We are equally focused on our underperforming dry van businesses and less-than-truckload (LTL) segment," he said.

Diluted loss per share available to common stockholders was $1.52 for the fourth quarter of 2018, compared to diluted loss per share of $0.61 for the fourth quarter of 2017. Adjusted EBITDA for the fourth quarter of 2018 improved by $6 million to $2.9 million compared to a loss of $3.1 million for the fourth quarter of 2017.

For the full year, revenues as of December 31, 2018 were $2.2 billion. Revenues for the year ended December 31, 2017 were $2.1 billion, including $67.6 million of revenues from its Unitrans division, which was divested in September 2017. Excluding Unitrans, revenues grew 9.5 percent. Higher revenues in the Truckload & Express Services (TES) and Ascent segments contributed to the increase, which were partially offset by lower revenue in the LTL segment.

The company's stock closed at 54 cents per share.

Within TES, Roadrunner said fourth-quarter adjusted EBITDA declined by $2 million due to lower ground and air expedited revenue and margin versus the fourth quarter of 2017. Also, Terry Rogers, executive vice president and CFO, said margin pressure in the dry van business due to maintenance and other fleet-related costs was a factor. Revenue fell 4.8 percent in the quarter compared to the fourth quarter of 2017 to $301 million, led by a 25.5 percent decline in air revenue. Ground revenue fell 2.5 percent.

In the ground fleet, margin is underperforming due to maintenance and other fleet-related expenses, the company said.

"We also reported a $1.6 million fleet impairment charge related to trackers used in Intermodal Services that were held for sale," Rogers added. "While LTL adjusted EBITDA for the quarter was a loss of $8.3 million, it was an improvement over the prior year's adjusted EBITDA loss of $10.7 million."

The LTL division saw a 2.4 percent decline in revenue to $452.3 million for 2018. LTL adjusted EBITDA loss for 2018 increased slightly to $23 million from a loss of $22 million in 2017. Rogers said "contributing factors are the lower revenues and higher line haul rates due to tight market conditions for purchase power and higher spot prices paid to brokers over the course of the year."

In the fourth quarter, the division saw a 6.2 percent decrease in revenue to $108 million due to a 17.5 percent decline in shipments per day, reflecting the company's strategy of reducing its pickup and delivery footprint, reducing unprofitable freight and improving density along strategic lanes.

Excluding the impact of the Unitrans sale in 2017, the Ascent Global Logistics division posted improvements in revenue, operating income and adjusted EBITDA with the domestic freight management, international freight forward in retail consolidation all generating positive revenue and earnings. Ascent revenues excluding Unitrans were up year-over-year by 14 percent to $573.1 million and adjusted EBITDA increased by 27.7 percent to $33.5 million.

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