Roadrunner's Management Presents at Deutsche Bank dbAccess 2013 Global Industrials and Basic Materials Conference (Transcript)

Roadrunner Transportation Systems, Inc. (NYSE:RRTS)

Deutsche Bank dbAccess 2013 Global Industrials and Basic Materials Conference

June 12, 2013 4:30 PM ET


Peter Armbruster - Chief Financial Officer

Scott Dobak - President, LTL Division


Rob Salmon - Deutsche Bank

Rob Salmon - Deutsche Bank

Welcome to the Roadrunner Transportation presentation. I’m Rob Salmon. I’m on Justin Yagerman transportation team over here and I’m going to turn it over to Scott Dobak, President of Roadrunner’s LTL Division and Peter to kick off the presentation.

Scott Dobak

Thanks, Rob, and good afternoon, everybody. I just like to start today, first and foremost, just to give an overview of who Roadrunner is today and where we are going into the future. And to start with, today we are the leading light asset transportation provider in North America.

The company had significantly changed over the last five to seven years. If you go back even five years ago we were $300 million, somewhat one dimensional company, primarily focused on long-haul LTL. And in the course over the last five years, we have significantly broadened our portfolio services to today we now not only have LTL services but we also have truckload services along with truckload brokerage, intermodal, in the intermodal drayage services along with freight consolidation and then also a TMS services, which is our traditional third-party solution services.

We finished 2012 at just over a $1 billion, so in that five-year period we went from $300 million to just over $1 billion. And it’s really been done in two combinations, number one, starting with the acquisition strategy. We are probably one of the most aggressive acquirers in the transportation sector today. If you go back to the IPO which launched in May of 2010, we’ve had 15 acquisitions post-IPO. We had eight acquisitions in 2012 alone and we also had two acquisitions in the first half of this year so far, through this year we had two small acquisitions.

So the acquisition strategy which I’ll get into some of the details of what we look at from an acquisition standpoint has been a large part of that growth that’s part probably gets more attention than anything.

But other piece of the segment is our organic growth and we are not only growing through acquisition but organic growth. We are the leading growth transportation company in the industry today. On an organic standpoint we are growing at roughly about 10% growth modules right now. So we feel very good about where we are going from a growth standpoint.

We continue to broaden our footprint throughout North America in all of our segment between truckload, TMS and also on the LTL side, so that we have a broad footprint. It’s a very scalable model. What really makes the model unique more than anything else is the fact that we run the model with independent contractors and so we do control the assets as capacity provider in the marketplace.

The one thing we really try to emphasize more than anything is when you are thinking of Roadrunner please don’t think of us just as a brokerage model, because we are not brokerage model. We do have brokerage services, but most importantly we do control the capacity because our belief and our strategy is that as capacity continues to tighten in the marketplace our ability to control the capacity along with having the independent contractor model really allow us to continue to scale up as we continue to grow and really benefit us with the variable cost model that we have in place today.

Because of the strong variable cost model that we have in place it allows for us to have very strong free cash flow and a very high return on invested capital. Both are really moving in very favorable position for us.

And as we continue to scale up, the management team, which I’ll get into some detail on the future slide has really continued to broaden as well. As we continue to grow the company we bringing on more and more high level managers to manage the business as the company continues to grow into the future.

As I mentioned before, the strategy is two-fold both from an acquisition and an organic standpoint. When you look at, starting on the organic side, in 2012, we grew as a company at 27%. 9% of that growth was on the organic side and 18% was on the acquisition side. And in 2013 so far, very close to that, our organic growth so far on the year-to-date basis is sitting at about 8.5% of our total 26.5% in our growth.

One of the big strategies with the organic growth is as I described from the last slide as we broaden our portfolio services. And I’ll get into the detail on this on the coming slides but today we have about 250 sales people and our ability to go out in clustering our sales force, I have roughly about 100 sales people on the LTL side and we have a little over 30 sales people on the TMS side. Their ability to understand the entire portfolio and to be able to go out and position that portfolio with all of our customers is key to the organic growth.

We have many customers who are only buying LTL from us as we continue to grow with the truckload services. Most customers who have LTL have truckload. Many of our customers who are buying from us from a TMS standpoint are having us manage their outsource transportation spend, have a position in both LTL and truckload. We want to make sure that we take advantage of that today.

The neat thing about that is going forward we’re only just beginning a very small percentage just over 10% of our customer base right now is buying more than one service from us. So we feel that we have a lot of upside scale from an organic growth standpoint just under cross selling piece in and of itself.

On the acquisition strategy side, I mentioned before I will get into profile on a coming minutes of what we’re looking for. The strategy itself will allow us to continue to grow our customer base and to continue to increase our capacity. One of the real keys for us as we go out and look at an acquisition, not only is it going to be complementary to existing service that allows us to provide for a new service in the market place but it also allows us to increase our capacity.

And as I mentioned earlier, capacity we think is key. A lot of the acquisitions that were taken place for us today are on the truckload side. And as we acquire these truckload providers, we are bringing the drivers along with them. If you go back to 2009 the depth of the reception, we had a little over 100, excuse me, 1100 drivers in our pool of drivers back in 2009. And today Roadrunner has now 3300 independent contractors running under our operating authority.

So we basically tripled our capacity over the last four years from a growth standpoint with our drivers. So the acquisition strategy really is helping to play out and improve our scale of margins.

As a company, a public traded company today, we report in three segments. We’re reporting our LTL segment, our truckload and logistic segments and our TMS segment. In 2012, the LTL segment was just over $500 million in revenues. The truckload group was just under $500 million and the TMS group was roughly $100 million. How that’s going to change in 2013, we’re anticipating that truckload will now be about 48% of our total revenues. LTL is going to be 42% of our revenue and then the TMS group will remain roughly about 8% to 9% of our total business or total revenue overall.

We’re focused on the small-to-medium size customer, the way our market, our business model works. It’s very, very attractive to that small-to-mid size customer. We do play with some of the Fortune 500 customers. We do business with them. But if you look at our overall customer base which today is about 35000 customers that we do business with, majority of them are small-to-medium sized customer.

It is extremely important also to understand that within that customer base, there is no single customer that makes up more than 3% of the total revenue of the company. So we’re not over leveraged or overly imbalanced with one specific customer. And then even within a specific segment, we get asked quite a bit, are we focusing on one segment compared to the other.

We do not have one segment that’s more than 18% of our total revenue and the segment that is at the 18%, is in the food industry primarily around frozen food industry. When you look at our truckload sector, roughly 75% of our total fleet in the truckload sector is refrigerated vans and so we play very heavy into that market. So that’s where our largest segment is on the food services side.

We feel very good about being in the refrigerated industry because we feel that provides great flexibility to us as a company. When you think about the refrigerated market, you can use a refrigerator unit to haul both frozen load or dry van load. But if you’re primarily heavily leveraged on the dry van side, obviously you can handle dry van but you can’t do anything with food on the refrigerated side.

We feel very comfortable on the refrigerated side and the food side, not that food is completely recession proof but it’s much more recession proofed compared to home electronics and other things that’s primarily move on dry vans. So we’re continuing to focus and emphasize on expanding our fleet on the refrigerated side. Today, it’s primarily focused in the mid west and we look potentially to expand in the future of having that fleet and other regions of the country going forward.

As far as purchase power providers, as I mentioned earlier we have 3300 independent contractors that run with intermodal and explain how we work them in across the portfolio of companies that we have today. But we are also running on what we call purchase power, the outside capacity that comes in to help move our loads.

Today, we have over 10,000 contracts with different purchase power providers from the largest meaning the JB Hunt and Schneiders of the world all the way down to very small companies that only have a small number of trucks in their fleet but we use them in cases where they maybe backhaul lanes for those purchase power providers or lanes where our independent contractors don’t want to run and it is very difficult to come back out.

Now, I’ll get into some of the details of what we do to make sure that we’re balancing that capacity to run a line haul and keep our CPM or cost per mile in focus that are within line of our goals at all times.

I want to start with the LTL model because probably the three segments is probably the most unique in the sense that it’s much different than your traditional asset-based hub and spoke carrier in the industry today. As I mentioned before, we are by far the largest light asset, LTL carrier in the market place. But really makes the model so unique is the use of the independent contractor.

All of my drivers on the pick up side, and today we have 26 facilities throughout the United States we’ll be opening up our 27th next Monday, and I’ll get into that in a second, but all of the drivers that are picking up freight within my network, on the LTL side, are independent contractors. Those drivers come to work for us, they bring a tractor and a trailer with them.

We owned about 600 trailers on the LTL side because of many customers who have drop requirement and switch load requirement. So we do have asset within the LTL side of things. But we are using independent contractors to pick freight up. Those ICs only get paid based on the amount of freight they pick up. So everyday that they’re out there, they are getting paid based on the number of shipments and the amount of tonnage they pick up on a daily basis compared to an asset base carrier, where that driver goes out, he really doesn’t give up a darn if he is picking up three shipments that day or if he is picking up 30 shipments, he is getting paid the same hourly rate, no matter how much freight he is picking up. Our drivers come back with three bills. It’s really bad day. And they’re not going to be very happy.

So many times we say it, our drivers are sometimes the very best sales people we have because (inaudible)customers docked, and there is two or three skids sitting there waiting to be picked up they’ll actively try to get those skids in addition to the freight they are trying to pick up that day because that is literally money in their pockets, the more freight that they can get on their trailer each and every day.

So therefore the freight is consolidated and then (inaudible) we run a very unique point-to-point model. We have no distribution centers or [bread box] [ph] within the entire model. So when the freight is consolidated at [origin] [ph], I’ll use the example of Chicago, here in Chicago which happens to be our largest facility, when the freight is consolidated in Chicago, Chicago is loading that freight directly to destination throughout the United States. They are not loading it to another relay light point and they are not loading it through another hub. If they’re loading to Southern California, it’s all going to the L.A. basin and that freight from here goes out for delivery.

So when we close the door and put a lock in that trailer and that trailer does not open back up till gets to destination. So the benefits for that not only are to improve transport time, we’re also having less handlings and in an LTL industry the more handlings you have, the less profit you have, because obviously handling freight reduces your margins.

You also have less claims because you are no longer moving the freight. Majority of all claims that’s happened in the LTL industry happens at the time of the movement of the freight. It’s not like the trucks going down the road if the trailer is properly loaded you’re not going to damage the freight.

So we can reduced transport times, reduce cost and then obviously reduced claims that’s a huge win to be able to go with that. And so then when the freight runs through the line haul network today about 50% of the line haul network is being utilized because 3300 independent contractors I spoke about earlier, the balance of them are being run by purchased power providers there is 9,000 to 10,000 contracted that I was talking about.

And then today we’re starting to play more and more with intermodal as well because we’re starting to see where intermodal or rail is allowing us to be able to provide the service that customers are looking for and quite honestly we can move it over the rail at a lower CPM or cost per mile than we can even with an independent contractor in many cases.

So, our first loyalty is to keep those ICs moving because we never want to lose them, they’re very valuable piece of our company, we know the driver is the life blood of the company, but we will definitely supplement with intermodal or rail compared to going with purchased power.

So it’s a big part of my cost and obviously linehaul is the largest expense in LTL roughly using equating to about 40% of your total cost. So we measure our CPM down to the tenth of the penny every single day. Our managers are judged on their ability to drive down CPM and run the most efficient load into forward-haul network as possible each and every day.

So now I’m going to freight reach destination its either being delivered by one of my 26 terminals or if its going into the region of the country because again please remember we cover every single geographic zip code in the United States and Canada but we only have 26 facilities.

So if it’s loading at Chicago and it’s going to Boise, Idaho and I don’t have a facility in Boise, Idaho that shipment is then going to be delivered by one of 200 delivery partners that we have throughout the United States to run our EDI networks to run our computer network, so that’s full visibility to customers, the customer never knows that it’s one of my terminals delivering freight or just one of my delivery partners that are delivering the freight, and in many cases those delivery partners Roadrunner is a big portion of the overall business.

So they’re very linked into us. They act if they are just an extension of our company and it’s allowed us to really increase and grow our business model. So like I said a very unique model, we’re going to continue to scale it up.

We just opened up this week in Kansas City market. This past Monday we opened up the State for Kansas, Nebraska and Western Missouri where through the partners that we have delivering there, they can consolidate all that freight in Kansas we’ll be able to load into the forward-haul to the West Coast and back to the east to our St. Louis facility to able to run that freight very efficiently.

Next Monday we’re opening up Upstate New York through the Buffalo and Rochester region. We’ll have four uptown state coverage in New York after next Monday. Today, we handle the Metro New York area where we’re opening up in that region that we able to go with forward-haul.

And one other piece I just want to talk about, in addition to just opening up these new facilities taking new topline revenue and bottom-line profit. The unique thing about opening these facilities between New York and Kansas City we don’t put physical assets in those facilities. I’m using existing delivery partners in both of those regions who are out delivering freight each and every day for us they’ll now become a pickup partner.

So we don’t have to put in the assets on the ground. We don’t have to buy any buildings. We don’t have to bring any type of our personnel into there. We just use that delivery partner to be a pickup partner.

We do business now with all the major third parties echo logistics who is going to be presenting right up to myself. They are major customer of ours. We do a lot of business with that. We do a lot of business with C.H. Robinson.

We pre-sell these openings 30 to 45 days ahead of time through the major third parties. They put those zip codes into their optimization tool and the first day we opened up just like we did on Monday in Kansas City, we’re immediately getting freight by not having any sales people, any operation staff or any brick and mortar in that facility, and our partners who helps us peddling and delivering freight for us now is getting freight to come back in.

And so it’s a win-win for the partners instead of his driver coming back empty, he is picking up shipments everyday for us and then obviously consolidating them. We run the linehaul and put it into the forward-haul market. So it’s a real win, it not only drives topline revenue improve the profit but it also allows us to better utilize our independent contractors.

Next piece is our truckload services, which is our largest, I should say fastest growing segment of the three. Just like we reported three segments within the truckload and logistics segment, we also break that out into three components.

The largest being the truckload services group and that’s primarily your traditional truckload plus brokerage operation makes it up 68% of the total business within the truckload services group. Of these 3,300 independent contractors, 1,300 of them are dedicated or run primarily within the truckload services group.

As I mentioned before, 75% of their equipment within truckload services is refrigerated, another 15% is flatbed and the last 10% is dry van. As I mentioned before we like the flexibility just because what we can do both on dry and refrigerated loads with the refur operation.

And then from a brokerage standpoint today, we have 15 company offices and 75 agent offices throughout the United States. Brokerage is growing very fast for us. But we are really, we keep a very close eye on it, because there is going to be in our opinion some squeezing of margins on the brokerage side if capacity truly does tying up and we’ll get into that in various in the coming slides.

The second piece is our intermodal operation. It is primarily a drayage operation. We are not an IMC. We do not go out and compete with the IMCs. The IMCs are our customers, companies such as Mode and the Hub Group, they are our customer. We do not compete against them.

So they will go out and use us for capacity. We have 20 facilities throughout the United States at all the major ports through United States and the major rail heads. So we are moving both loads coming from offshoring and then also loads that are moving domestic forwarding or on our intermodal will be move through more than southern our intermodal space. So it’s been a real nice growth piece for us as well.

The third piece is our freight consolidation and inventory management. This is the logistic arm of the truckload group. Primarily what we are doing there is, we are going out and dealing with customers who deal with big box retailers. I would look at this or subscribe this way if the guys who are selling the Wal-Mart that are either at the top of the shelf or at the bottom of the shelf, not the guys that are high level, not approximately gamble. It’s not the class of the world.

If the guy is trying to get into the big box retailers that don’t have enough density to load direct to the big box retailers, an example is where Wal-Mart has 46 DCs throughout the United States, a customer doesn’t have enough density to load off 46. What that customer does is they load full truckload into one of our facilities, our largest being in Plainfield, Indiana, just outside of Indianapolis west of [Indy’s].

We have a 1.2 million square foot facility there that we will inventory the freight for the customer that bring full truckloads in then Wal-Mart will send the PO orders to our team. We fulfill PO fulfillment for Wal-Mart along with that customer and hundreds of other customers and build full truckload to make sure that we are hitting Wal-Mart and maybe due date, comparing their guaranteed delivery dates through this combination.

So for the customer the real benefit is, they are able to compete with the product and gambles of the world from a transportation spend standpoint because we are taking what would have been LTL shipment coming from the whole system, combining them making truckload shipment to load in directly to the Wal-Mart, RDCs or the other big box retailers.

We are working, again understanding that the customer, our customer is the customer fulfilling with the big box retailer, but we do work with all the big box retailers. We are working with Target, a lot of the food, grocery warehouses and then also of course Wal-Mart being the largest in that piece.

So its another growing business, nice piece about that also is just only four major players in that market segment and our company prime by far probably the leader as far as from the quality standpoint.

The last piece is our TMS offering, that is our traditional truckload, excuse me, our traditional third-party services. It is not an optimization play. We don’t go out and plug every LTL carrier out there when our customer go out and bid on freight between our third-party solution and every other third-party player out there.

This is a true customize one-off solution for each customer. It can go to whole scope to where customer will outsource their entire logistic spend to our TMS group. We become their logistic arm and manage every piece of that asset for them for fee or can be a smallest just a freight order and pay service for customer. It really varies on a customer by customer basis, what that customer is looking for, but it really does allow for us through that TMS group.

As I mentioned before, big part of our organic growth is cross-selling in the TMS group because of where they go into primarily my sales force on TMS side is dealing with the sea level in the organization. So they have the ability to go in and provide true cost savings across our entire portfolio services to customer compared to some of our local LTL rep who don t have a chance to really, don’t have the opportunity to leave it people that level and have lesser ability to sell across the entire platform.

As I mentioned to kind of jump into this but just to reiterate, today we have as you can see here over 200 sales people between the three segments, a huge key to our organic growth. It’s a continued cross-selling and our ability to go out and grow market share with customer who are only purchasing one-third from us today, to go out and take true force of those 200 plus sales people to get into this 35,000 customers and our customer base continues to expand overall that 35,000 continues to grow on a month-after-month basis. So we really do expect to see the growth with the cross selling to be a big part of that organic growth which again right now is sitting at right about double-digit for us today.

On the acquisition strategy, I just want to touch on it because this is critical. Because if you think about acquisitions and you think about transportation, we usually think about trained rep because in most cases acquisitions in our industry have not worked very well. So there has always been that concern about our ability to have -- take on the number of acquisitions we have and to make them all run as efficiently as possible.

As we mentioned, we’ve had 15 acquisitions post IPO. And when you look at H1, I can tell you for the reason they have been successful is the discipline that we take into and the approach that we take. And as we look at each acquisition, the first thing that we really look at is the companies we are buying are well run, well managed and profitable companies.

We do not allow, try to buy a company, try to turn it around and get it as a loan multiple and then think we’re going to sit out and make it profitable. Each company that we acquire is already well run. It is going to have positive contributions and it will be accretive immediately when we take on that company.

We do not expect two to three year run rate to get it to profitability. The management team for each one of these acquisitions and this is critical will be staying intact. We don’t buy companies where the management team is looking to just go out, take their money and leave and have us build out the company.

The management stays intact and almost every acquisition we have, we have an aggressive earnout for the company we’re acquiring. So that that management team is property incented from an EBIT standpoint to hit the goals that they have, to get the earnouts. Earnouts usually last three to five years depending on how each one of those is set up.

When we’re looking at acquisition, it has to be a complementary service for us. We’re looking for light non-asset company that will complement an existing service. The other piece that we’re looking at is an acquisition that could allow us to get into a new market. When you look at where we’re at today in the portfolio services we have, there are certain markets we don’t play into today. And the acquisition strategy will allow us potentially in the future to look at new areas that today we’re not servicing and allow us to get into.

And then the most important and the piece that we look at more than anything is the cultural fit. And it might sound like a soft side issue but I can tell you right now that is everything I just listed, the place we look at more than anything else is that cultural fit because you can go out and buy a company but if you cannot properly integrate it into your operation, it’s not going to work.

And a lot of the failures happen because the integration process doesn’t work in transportation, either it is not the right cultural fit, the platforms don’t speak to one another and there could be a lot of different reasons why an acquisition doesn’t work from an integration standpoint.

We have literally walked away from deals because we knew that the management team is not going to be the cultural fit as the leadership of our organization. And we’ve actually mixed the deals and not gone forward because we did not see the long-term fit and the value and the effects of the management team are not going to line up with ours and will walk from the deal that how serious we are about that cultural fit, how much we stress making sure that there is going to be that right cultural fit.

We have stayed disciplined to this profile what we’re doing with our acquisition. And we truly believe that’s what allowed to have the success we’ve had with the 24 total acquisitions since 2006 and 15 since IPO itself. Here is a list of those acquisitions since the IPO. You just take a look at who these companies are.

The one thing we are seeing is we are really becoming what I would consider preferred buyer in the transportation sector because we’ve had such success. And it appears almost every time we announced an acquisition, our phone start ringing, our CEO, Mark DiBlasi or Peter Armbruster getting call from another company that potentially wants to be acquired. And we quickly turn that over to HCI team which is the private equity group that took us public and still is our prime shareholder.

The HCI group does all the initial diligence on an acquisition. My time, Peter’s time, Mark’s time is not tied up on the phone end of an acquisition. HCI has the experience and the know-how and they are the team of three to four people who do all the initial diligence on a potential acquisition. And once we get to the point where the leadership with Roadrunner Transportation System gets involved, we will get involved in the diligence till the deals actually close and then obviously we’re involved in the actual integration of the organization.

So HCI plays a critical role here. As HCI, question comes up quite a bit, what will happen if HCI starts to move away, sell their interest in our company which of course they will at some point. They are private equity group. We already have a gentleman in place by the name of [Tom Joy] who works for Peter, who will be leading our M&A work. He is heavily involved in all the M&A work that we’re doing today. So that he is going to have the experience and scale to allow the M&A/acquisition strategy going forward to continue to proceed if and when that day comes at HCI may not be as involved with the company as they are today.

So when you look at the company where we’re going into the future really is four -- let's talk about some of these but really a four prong approach is how we’re going to continue to have margin expansion and hit our earnings per share. I’ve talked about the organic growth side of things already, cross selling and what we’re going to be doing with that.

When you look at the increase in our customer base, just to walk through that very quickly, we increased our customer base by 34% in 2010 and then you can see 24% in 2011, 17% in 2012. And so far year-to-date in 2013, we’ve expanded our customer base by 19% so far this year.

We’ll continue to grow our customer base on the LTL side. I talked about that already. The acquisition strategy, again one thing I’ll leave as a takeaway on that our pipeline today is fuller than it was at the same time period last year. There is a lot of activity. There is a lot of opportunity. And I think as you see the year play out, we had eight acquisitions I mentioned earlier in 2012. And so you’re going to see an accelerated acquisition strategy going forward.

Quickly because I’m kind of running through time here, one of the other questions that comes up quite a bit and I get asked by customers constantly about and we have from investors as well is what’s going to happen from capacity standpoint. When you look at all the pressures from capacity on the driver network, you look that we outline this year increased regulations. Everybody is familiar with what’s going on with CSA hours of service, on-board electronic recorders, all of the different government regs that are coming into place making it more and more difficult to run efficient operations or to get people to be able to participate and become a driver it’s becoming more and more difficult.

The escalating age right now, the average age of an over-the-road truck driver is 56 years old in United States. And so the age of the drivers are continuing to increase because less and less people are getting into the industry and that’s putting pressure on the capacity in of itself. All of this has taken place about a really, any true uptake in economy, I know Mark does many of these conferences he keeps talking about the day when the economy is going to turnaround which I still haven’t seen that.

So we feel that if that capacity -- if the economy continues or does start to improve, I see that uptake capacity is going to tighten up much more.

Safety regs, I talk about that with CSA. Customers have huge concern on that companies with four CSA ratings. We really are not getting biz from customers today and then just the overall increased cost to run operators to get into the business makes it very, very difficult. All of those pressures we feel are going to put a lot of pressure on the players in the marketplace who do not own or control the capacity and that’s primarily the brokers community that’s the ones who are going to really be squeezed when this happens.

That’s why we talk about all the time in our company that the drivers are the life blood of this organization. I talked about going from 1,100 independent contractors to 3,300 over the last four years. We have a very low turnover rate. The average turnover rate in the truck industry today is about 110% to 111% is the average. Some are much higher than that, some are lower.

Our turnover rate today at Roadrunner is about 50%. We have a very low turnover rate. We pay our drivers in the top tier today. We’ll continue to do that because we want to protect independent contractors both the singles and the teams. We also give them consistent miles. Drivers have to be having miles each and every week if they’re going to stay on board. So we’ve got consistent miles, consistent dispatch.

We pay their insurance and we also have they’re running under our operating authority. So we believe our strategy of continuing both through acquisitions and recruiting additional independent contractors. We believe by controlling that capacity it is going to serve us well as the capacity continues to tighten. We’ll be able to play it off both in the truckload and in the LTL segment.

Leadership team, I’ll go quickly through this to just let everybody know. We continue to invest in our management team. We continue to invest in the people that are coming on board. We know that we have people who can manage bigger operations than they manage today and we feel very confident in the leadership team and brining on more and more people.

Because of our success, because of our growth, it’s much easier to recruit people in. We literally have people that have, because each of have so many years of experience of 27 years of experience in this business, we have the ability to go out and recruit and bring people in. We have people really want to become part of it. So we do have the scale. We’ll be able to do that going forward.

Long-term, we just want to talk about a little bit where we are at both from the revenue and operating income and margin standpoint, if you look at our CAGR on the revenue side, its 30% up from 2009 to 2011. As I mentioned before, we cross the $1 billion threshold in 2012 and both our operating margin and our operating income have parallel what we’ve seen from a growth standpoint.

Going forward just looking at the full year 2012 revenue, as I mentioned before grew at 27%, 9% of that was on the organic side. First quarter very similar 26%, operating income improved 47% to $69 million in 2012 and it was up 31% in the first quarter of this year. Our EPS improved by 41% in 2012 and was up 16% in the first quarter.

But I just wanted to make quick note, if you look at that, we did a small offering back in the fourth quarter of 2012 and if you took out the diluted shares and truly compare that with share by share bases that 16% improvement would have been 28% and our EPS would have been at $0.32 taking out that diluted shares.

I just want to warp up, just because I know I’m running right out of time. I’m going to go right to the last slide and just quickly go through that. If you look at our three companies today, we are very well-positioned into the future. LTL is going to continue to grow not through acquisition but through organic growth and expansion of footprint.

Our majority of the acquisitions you are going to see from our company will be on truckload services side and the TMS side. And we truly believe by having that acquisition strategy, we continue to be able to grow those two segments out in the near future that we will be able to continue not only continue the topline trajectory from the growth standpoint but from a margin contribution standpoint going forward. We feel we are going to be in very good position to grow into the future.

So, with that, I know I just took up all the time but thank you very much.

Question-and-Answer Session

[No Q&A session for this event]

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