Seeking Alpha
, Twitter (20 clicks)
Gold, currencies, macro, commodities
Profile| Send Message|
( followers)

Summary

  • 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.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Roadrunner Transportation Systems Earnings