Roadrunner Transportation Systems' CEO Discusses Q4 2012 Results - Earnings Call Transcript
February 6, 2013 9:42 PM ET
Roadrunner Transportation Systems, Inc. (RRTS)
Q4 2012 Earnings Call
February 06, 2013 4:30 pm ET
Mark DiBlasi – President and Chief Executive Officer
Peter Armbruster – Chief Financial Officer
Scott Dobak – Vice President - Sales and Marketing
Jon Langenfeld – Robert W. Baird
Tom Albrecht – BB&T Capital Markets
David Ross – Stifel Nicolaus
Matt Sherwood – Cooper Creek Partners
John Larkin – Stifel Nicolaus
Ben Hartford – Robert W. Baird
Greetings, and welcome to the Roadrunner Transportation Systems 2012 Fourth Quarter Conference Call. Today’s call is being recorded. At this time, I will turn the call over to President and CEO, Mark Blasi. Please go ahead sir.
Thank you. Good afternoon, everyone. Thanks for joining us today for the Fourth Quarter 2012 Earnings Conference Call. With me today is Peter Armbruster, our CFO, and after some comments from Peter and me, we will open up the call to any questions that you might have. Before we begin, I’m going to turn it over Peter at this time to discuss the Safe Harbor Act.
Thanks, Mark. Before we begin, I'd like to remind everyone that a number of statements made today will be forward-looking statements that relate to future events or performance including our first quarter 2013 guidance. These statements reflect our current expectations, and we do not undertake to update or revise these forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied in these or other statements will not be realized.
Please be cautioned that these statements involve risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the integration of acquired companies; competition in the transportation industry; the impact of the current economic environment; our dependence upon purchased power; the unpredictability of and potential fluctuation of the price and availability of fuel; the effects of governmental or environmental regulations; insurance in excess of prior experience level; and other “Risk Factors” set forth in our SEC filings.
Okay. Thanks, Peter. I’m going to begin with some overall comments on the company and strategy. First of all, I’ll take a few minutes to briefly discuss the strategic composition of the company and for those of you that are not familiar with us, which we believe has driven and drives our long-term performance. And then provide some color on the quarter, current trends, and strategic initiatives in the business. We believe our asset like business model is positioned perfectly for continued market share gains. We provide a one-stop solution or à la carte service to meet our customers’ individual needs. We offer a full complement of solutions including customized and expedited less-than-truckload, truckload and logistics, freight consolidation, inventory management, transportation management solutions, intermodal drayage and expedited services.
We utilize a proprietary web-enabled technology systems and a broad network of transportation providers comprised of both independent contractors and purchase power to serve a very diverse customer group. Although we service large national accounts, we primarily focus on small to mid-size shippers. And our business model is scalable and flexible and our cost structure is variable and requires minimal investment in transportation equipment and facilities, which enhances our free cash flow and returns on our invested capital and assets.
We report through three business segments less than truckload, truckload and logistics, and transportation management solutions. These segments complement each other by allowing us to offer all services across all zip codes. By cross-selling each segment services, we are able to build density in a more rapid rate and expand our operations into new geographic regions. It also helps us to positively impact our organic growth by cross-selling through all of operating segments.
We are a carrier and we have a large amount of capacity dedicated to us. We control a significant amount of that capacity in our network by utilizing independent contractors and smaller carriers where we represent a substantial portion of their business. We believe that this provides us with a strategic advantage over other non-asset-based providers as we expect capacity to continue to tighten in the future.
In terms of our Q4 business, Peter will go over some of the numbers in greater detail, but I will give you some business contacts by saying that for the four quarters and the trends that we are seeing in the first quarter so far in 2013.
In our LTL segment, new customer growth, expansion into new markets and existing customer growth, drove a $11.3 million or 9.6% increase in LTL revenues. In mid-June, we opened two new terminals Baltimore and Philadelphia. The start-ups went very smooth and we saw consistent growth in line with expectations throughout the fourth quarter. In September, we expanded our Huston operation and in late November we opened our Boston terminal. These also went smoothly and we expect similar consistent growth into 2013.
On August 10, we acquired Expedited Freight Systems or EFS, which is a Midwest region of the LTL carrier to complement our existing Midwest regional operation. And since that time, we’ve integrated EFS into our total LTL services and have seen nice growth in that service offering.
Tonnage was up 15.5% for the quarter. By month on a per day basis tonnage was up 9.6% in October, 17.8% in November and 17.1% in December. The fourth quarter was positively impacted by the EFS acquisition. And without the EFS acquisition, our tonnage growth for the quarter was at 3%.
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