Update: Roadrunner Transportation Systems Earnings


Roadrunner Transportation Systems missed EPS estimates by one penny, but beat on revenues by $20 million.

I’m not as bullish as I was back in March due to flat EPS growth. Shares are flat since my article came out.

I’m happy with the revenue beat, but I was expecting faster EPS growth.

Roadrunner Transportation Systems (NYSE:RRTS) saw Q2 revenues increase 38.6% from last year to $460.2 million. The big jump in revenues comes as Roadrunner has been busy on the acquisition front. EPS growth was not as strong. Roadrunner reported EPS of $0.38, which was only one penny higher than last year and missed the consensus estimate of $0.39. EBITDA increased 15.7% to $32.7 million.

Roadrunner posted growth in all three of its operating segments. Its largest segment, truckload logistics, increased revenues 43.1% to $230.8 million. TL operating income increased from $11.4 million last year to $16.1 million this year. The second-largest segment is Roadrunner's less-than-truckload segment. This business is also posting the slowest revenue growth. LTL revenues increased only 2.5% to $150.2 million. LTL operating income actually dropped to $7.9 million from $11.8 million last year. The third segment is also its fastest-growing segment. The transportation management solutions segment saw revenues increase 203.4% to $81.8 million. Operating income increased to $6.1 million from $4.0 million last year.

One overhang on the stock is that Roadrunner's private equity owners still own 39% of the company. I mentioned this in my article back in March. They have been gradually reducing their ownership via share offerings. Another overhang is that the trucking industry as a whole is having trouble finding enough drivers. The good news for Roadrunner is that its driver turnover ratio is half the industry average. The outlook for next quarter is 25% to 32% revenue growth and EPS in the range of $0.37 to $0.41. Again, nice revenue growth, but EPS will be about the same as Q2. Overall, I still think shares deserve to trade in the low $30s, but I think it will now take longer than the 12 to 18 months that I had originally forecast due to the slower EPS growth.

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