Roadrunner Transportation Systems (NYSE: RRTS) reported Q1 EPS of ($1.78). Revenue for the quarter came in at $507.1 million versus the consensus estimate of $569 million.

CEO Comments on First Quarter Results

“While we saw market softness in the first quarter in some of our well-performing businesses, our longer-term improvement plans are being executed and we continue to invest in our businesses. Although some of our businesses can exhibit volatility between quarters driven primarily by market conditions, our overarching focus is to invest in all segments to achieve better than average industry margins. We are encouraged by our team’s progress, especially with an improved balance sheet that now provides us enhanced financial flexibility,” said Curt Stoelting, Chief Executive Officer of Roadrunner.

“We continued to make progress in our LTL segment, where revenue declined primarily due to planned service area reductions. These reductions support our ongoing efforts to eliminate unprofitable freight and increase density in key lanes. As a result of these efforts, LTL yield and Adjusted EBITDA increased compared to the prior year quarter due to pricing actions, improved linehaul, pick-up and delivery costs and reduced SG&A costs. We expect revenue trends to improve in future quarters,” said Stoelting.

Stoelting continued, “We faced difficult revenue comparisons in our Active On-Demand ground expedite offering, which had revenue declines of approximately $60 million in the first quarter of 2019 compared to the prior year first quarter peak demand. We continued to experience strong demand for air expedite, one of our top performing services, but our performance was negatively impacted by lower than normal capture rates on our owned fleet due to aircraft maintenance and availability. The reduced volume on our fleet was a primary driver of the lower profitability in our TES segment in the first quarter of 2019 compared to the first quarter of 2018. We are encouraged that our recently integrated temperature-controlled business increased profit contribution within the TES segment in the current quarter compared to both the prior year first quarter and the fourth quarter of 2018. We are currently working to integrate multiple dry van operations in order to increase productivity and profitability.”

Stoelting added, “Profits in our Ascent segment declined marginally year over year, primarily due to lower volume in Domestic Freight Management, which was not fully offset by improved brokerage spreads and investment spending in International Freight Forwarding, as we invest to add additional sales resources.”

“With the completion of the rights offering and debt refinancing in the first quarter, we now have the capital structure to support our longer-term focus and business plans, which we believe will enable a full operational recovery followed by additional growth and optimization opportunities. These efforts will be supported by two new board member nominees, Don Brown and Chris Jamroz, both of whom have significant industry and business experience,” he concluded.

Financial Outlook

The company remains focused on its longer-term business plans and goals to deliver higher levels of profitability and sustainable returns on invested capital. Over the longer-term, the company expects segment margins will increase to be in line with peer group margins and that structural changes currently being implemented will result in profitability that is more resilient and will better position Roadrunner for success throughout natural industry cycles.

For earnings history and earnings-related data on Roadrunner Transportation Systems (RRTS) click here.