Roadrunner Q4 operating profit up as company hopes to turn LTL corner

Investment bank Stifel says LTL is the company’s “problem child,” something Roadrunner CEO Mark DiBlasi said has been addressed with operational changes in the second half of 2014.    The asset-light trucking company Roadrunner Transportation Systems earned $24.2 million in operating profit in the fourth quarter of 2014, a 33.3 percent year-over-year increase.
   For the calendar year, Roadrunner’s operating profit rose 12.1 percent year-over-year, to $95.7 million. 2014 revenue for the carrier rose 37.5 percent, to $1.9 billion, and by 45.1 percent, to $532.5 million, in the fourth quarter.
   “Revenues for (truckload), our largest revenue segment, grew by $131.4 million, or 73.0 percent, during the fourth quarter of 2014,” said Mark DiBlasi, president and chief executive officer of Roadrunner. “The positive impact of our recent TL acquisitions and organic revenue growth led to a 70.8 percent increase in TL operating income quarter-over-quarter.”
   DiBlasi said Roadrunner’s LTL revenue grew by $5.4 million, or 4 percent, during the fourth quarter of 2014.
   “Our LTL operating ratio deteriorated from 96.1 in the fourth quarter of 2013 to 98.0 in the fourth quarter of 2014, principally due to increased purchased power rates,” he said. “We have implemented extensive operational and pricing initiatives, which resulted in an increase in net revenues by over 300 basis points in December, compared to October and November. We expect these operational and pricing initiatives to continue into 2015 and to favorably impact our 2015 LTL operating ratio.”
   The investment bank Stifel, whose transportation and logistics group tracks Roadrunner among a host of other trucking firms, said the LTL segment has been a “problem child” for the company.
   “The problem continues to be the company’s LTL segment, but new LTL management was inserted in 3Q14, and the CEO cited several turnaround initiatives either recently completed or underway,” Stifel said in a note to investors Wednesday. “So, we expect margins to improve in 2015, but not back to historical peaks. While we disagree with the company’s acquisition strategy, as the acquisition pace slows, there may be an opportunity this year to improve margins in existing businesses.”
   Stifel noted that Roadrunner’s “LTL initiatives to improve margin performance completed in December include upgrading operations and sales talent, centralizing linehaul and load-planning, centralizing and upgrading the pricing department, and getting better real-time data.
   “In January, the company cited significant net revenue margin improvement versus November,” Stifel said.