The asset-light transportation and logistics services provider posted a net income of $1.8 million for the quarter and $4.9 million for the first six months of the year, year-over-year declines of 89.1 percent and 83.8 percent, respectively.
Roadrunner Transportation Systems, Inc.’s net income in second quarter 2016 plummeted 89.1 percent to $1.8 million compared with the second quarter of 2015, according to the company’s most recent unaudited financial statements.
The Cudahy, Wis.-based asset-light transportation and logistics services provider reported diluted earnings per share (EPS) of $0.05 per share for the quarter compared to $0.42 per share the previous year, well below consensus analyst estimates of $0.25 per share. Quarterly revenues slipped 6.7 percent to $483.4 million compared with second quarter 2015.
Roadrunner noted its second quarter results included $0.05 per share in downsizing costs.
For the first six months of 2016, the company posted net income of $4.9 million on $949.1 million in revenues, year-over-year declines of 83.8 percent and 5.7 percent, respectively. Diluted EPS, which included $0.10 per share in downsizing costs, stood at $0.13 per share for the first half compared to $0.76 per share during the same 2015 period.
Roadrunner CEO Mark DiBlasi attributed the decrease in quarterly revenues primarily to continued declines in freight rates and volumes across most end markets and lower fuel surcharge revenue.
The company’s truckload logistics (TL) division saw second quarter operating income drop 68.5 percent to $6.2 million compared with second quarter 2015. TL revenues slid just 1.3 percent year-over-year to $282.2 million, primarily due to lower fuel surcharge revenues, which were partially offset by increases in expedited ground freight brokerage revenues.
“Excess capacity and lower margins, especially in our OEM ground and air expedite businesses, continued to impact our TL segment,” said DiBlasi. “Our TL segment also incurred $2.5 million of downsizing costs during the second quarter of 2016 from the continued reduction and consolidation of a specific operation due to a major decline in volume from a significant customer.”
Operating income in Roadrunner’s less-than-truckload (LTL) segment stood at $0.8 million in second quarter of 2016 compared to $8.4 million in the same 2015 period as revenues dropped 11.9 percent to $122.3 million. The company attributed the decrease in LTL revenues to a combination of lower fuel surcharge revenue (down $5.3 million from first quarter 2016), and weak freight demand in the general industrial markets Roadrunner serves.
“Trends in our LTL segment remain mostly unchanged with continued market impacts from weak freight demand in the general industrial markets we serve and lower fuel surcharge revenue,” DiBlasi explained. “During the quarter, our LTL segment incurred $0.6 million of downsizing costs from reducing the number of long haul employee drivers and trucks in favor of more cost effective purchase power and independent contractors.
“Although expected revenue increases have been muted by the current freight environment, we still expect improvement in LTL results during the second half of 2016 as a result of service and productivity initiatives launched in the first half of 2016,” he added.
The Global Solutions segment reported operating income fell 22.1 percent to $6.7 million for the quarter as revenues decreased 16.3 percent to $83.6 million compared with the second quarter of 2015. DiBlasi attributed the revenue decline to a decrease in domestic transportation management and lower international freight forwarding volumes and rates, which were partially offset by increases in warehousing and consolidation.
“During the second quarter, we incurred $3.1 million of downsizing costs in our TL and LTL segments ($0.05 impact on diluted earnings per share),” he added. “We expect approximately $2.5 million of additional downsizing costs to be incurred in the third quarter of 2016. We expect these downsizing activities will benefit our financial results in future periods.”
Looking forward to the rest of 2016, Roadrunner Chief Financial Officer Peter Armbruster said the company is lowering its full year earnings projections due to “continuing market trends and historically low freight rates in many end markets.”
“We expect to achieve EBITDA, excluding downsizing costs of approximately $7.0 million, of approximately $110 million for 2016 and anticipate diluted earnings per share available to common stockholders, excluding the impact of downsizing costs, to be in the range of $0.70 to $0.85 for 2016,” said Armbruster. “Our revised guidance assumes that: (i) historic seasonal patterns will increase volumes and slightly improve rates in certain end markets during the second half of 2016; (ii) new business awards will build throughout the year; (iii) cost saving initiatives will benefit results in the second half; and (iv) we do not consummate any new acquisitions. We expect capital expenditures net of proceeds for 2016 to be in the range of $15 million to $25 million.”
Roadrunner earnings plummet in Q2, first half 2016
