Roadrunner Transportation Systems, Inc. · OTC:RRTS
Roadrunner Transportation Systems — IPO Roadshow (January 2019)
37 slides from Roadrunner Transportation Systems's IPO roadshow presentation, Jan 16, 2019
Slide 1: Roadrunner Transportation Systems Investor Presentation
Roadrunner Transportation Systems Investor Presentation January 16, 2019 Client Logo Here
Slide 2: Disclaimer
Disclaimer This free writing prospectus relates to the proposed offering of subscription rights to purchase shares of common stock (the “rights offering”) of Roadrunner Transportation Systems, Inc. (“Roadrunner,” “RRTS,” the “Company,” “we,” “our” or “us”), which are being registered on a Registrati
Slide 3: Disclaimer (cont’d)
Disclaimer (cont’d) Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness
Slide 4: Disclaimer (cont’d)
Disclaimer (cont’d) Although the Management Projections are presented with numerical specificity, the Management Projections reflect estimates made by our management as to future events that our management believed were reasonable at the time they were prepared and numerous assumptions with respect
Slide 5: Introduction
Introduction
Slide 6: Overview of the Proposed Backstopped Rights Offering
Overview of the Proposed Backstopped Rights Offering Sources and Uses ___________________________ Includes payment in cash of all accrued and unpaid dividends on the outstanding shares of our preferred stock, other than dividends accrued after November 30, 2018 (which funds affiliated with Elliott M
Slide 7: Expected Rights Offering Timeline
Expected Rights Offering Timeline Rights Offering Timeline Week(s) of Date Description January 28th January 30th February 1st Record Date Launch Rights Offering (Beginning of Subscription Period) February 18th February 19th Rights Expire (End of Subscription Period) February 25th February 25th Close
Slide 8: Roadrunner Overview and Investment Opportunity
Roadrunner Overview and Investment Opportunity
Slide 9: Roadrunner (“RRTS”) Overview
Roadrunner (“RRTS”) Overview RRTS is a U.S. based asset-right transportation and asset-light logistics service provider with national scale We provide customers with a full suite of services and solutions under three brands: The Roadrunner Transportation brand offers less-than-truckload (“LTL”), ove
Slide 10: RRTS Is an Attractive Investment Opportunity
RRTS Is an Attractive Investment Opportunity Attractive valuation with upside from turnarounds underway Implied Valuation in AOD and Ascent – implied pro forma enterprise value of RRTS post-rights offering is supported by Active On-Demand and Ascent Global Logistics Adj. EBITDA(1) Valuation Upside i
Slide 11: Prior Challenges Yielded Current Investment Opportunity
Prior Challenges Yielded Current Investment Opportunity Successful 2010 IPO as asset-light LTL business with total revenue of $450mm in 2009 and market capitalization of ~$413mm 25 acquisitions (with a combined purchase price in excess of $575mm) of a wide range of logistics and transportation busin
Slide 12: New Management and Turnaround Actions
New CEO, President, CFO and CIO Flattened organizational structure and organized over 20 business units into 7 operating groups Secured preferred stock investment and ABL financing totaling $540mm while successfully generating $89mm in net proceeds from a non-core business unit divestiture Recruited
Slide 13: Revenue Growth and No Meaningful Customer Attrition
Revenue Growth and No Meaningful Customer Attrition Consolidated Revenue Top Customers(1) Customer Years of Relationship 25 20 18 18 17 17 13 11 10 10 9 7 4 3 1 Top 15 Average 12 From 2015 to 2017, revenue from the Top 15 customers increased more than 30% ___________________________ Note: 2015A, 201
Slide 14: Roadrunner’s Upgraded Management Team
Roadrunner’s Upgraded Management Team Name and Title Select Prior Background Joined Roadrunner in early 2016 as President and COO and serves on the Board of Directors Previously served as CEO of RC2 Corp from 2003 to 2011 and at TOMY International for two years after they acquired RC2 Deep experienc
Slide 15: Segment Service Offerings
($ in millions) Segment Service Offerings Service Offerings by Segment Revenue as of LTM 9/30/18(2) Financial Results Truckload & Express Services (TES) Active On-Demand – market leading, asset-backed air expedite and ground expedite brokerage with tech-enabled bid boards / track & trace Over the Ro
Slide 16: Segment Revenue and Adj. EBITDA Trend
($ in millions) TES LTL Ascent Total Revenue(1) Adj. EBITDA Trend(2)(3)(4) Performing Well Active On-Demand Domestic; International; Retail Consolidation $1,254 vs. $1,051 +19% Profitable and Growing Faster than Revenue Growth Restructured Flatbed; Temp Controlled; Intermodal $281 vs. $281 0% Moving
Slide 17: Attractive Industry Positioning and Growth Opportunities
Attractive Industry Positioning and Growth Opportunities RRTS Operating Groups Industry Sector RRTS Revenue %(1) Operating Group Market Positioning Active On-Demand & Ascent Domestic Freight Management Brokerage / Third-Party Logistics 46% Market leader in on-demand air expedite with state-of-the-ar
Slide 18: Case Study: Active On-Demand
Record financial performance for LTM 9/30/18 Since acquiring AOD in 2014, operating results have increased by ~60%(1) Brokerage revenue as a % of total revenue >80%(2) Ground shipment count up 8%(3) Cost of recently added 727 of ~$600,000 with payback period of approximately 6 months Business Purpos
Slide 19: Case Study: Ascent Global Logistics
LTM 9/30/18 Revenue of $557mm or 11% growth vs. 2017A LTM 9/30/18 Adj. EBITDA of $32mm or 23% growth vs. 2017A(1) Well positioned for continued top and bottom-line growth Business Purpose / Background Case Study: Ascent Global Logistics Ascent is a U.S. based global logistics provider specializing i
Slide 20: Case Study: Temperature Controlled Fleet Integration
Business Purpose / Description Case Study: Temperature Controlled Fleet Integration Refrigerated carrier servicing the meat, dairy and produce markets in balanced lanes from Midwest to West and Southeast. Committed to providing cold chain transportation solutions to help large corporations and regio
Slide 21: Roadrunner’s Valuable LTL Network
Roadrunner’s Valuable LTL Network LTL Strategic Benefits Limited number of national LTL providers in the U.S. LTL market has high barriers to entry and extremely difficult to replicate national networks LTL market is sophisticated and rational from a pricing perspective Customer buying decisions are
Slide 22: Value Creation in the LTL Segment
Value Creation in the LTL Segment Improvement Steps to Date Signs of Progress Replaced entire senior leadership team, terminal managers and sales leaders Focused on core competency as a long-haul metro-to-metro provider Eliminated unprofitable service areas, and aligned sales and pricing disciplines
Slide 23: RRTS Has Limited Truckload Spot Market Exposure
RRTS Has Limited Truckload Spot Market Exposure Short (Benefit from Declines) LTL Linehaul Neutral Ascent Active On-Demand Ground Brokerage Long (Benefit from Increases) Over the Road Intermodal Contract % Spot % Dry Van 70% 30% Temp Control 80% 20% Flatbed 45% 55% Intermodal 95% 5% Impact of Moveme
Slide 24: Upside as RRTS Moves Closer to Peer Group Margins
___________________________ Note: 2015A, 2016A and 2017A total Ascent revenue respectively excludes $92mm, $87mm and $68mm related to Unitrans and Adj. EBITDA respectively excludes $10mm, $9mm and $7mm related to Unitrans. Source: Adj. EBITDA margins FactSet 2018E consensus estimates. Asset intensit
Slide 25: Financial Summary and Outlook
Financial Summary and Outlook
Slide 26: Summary Financial Results for 2018 Q3 YTD
Summary Financial Results for 2018 Q3 YTD TES revenue increase primarily due to increased air and ground expedited freight and higher truckload rates LTL’s shipments declined with reduced pickup and delivery footprint and addressing unprofitable customers, partially offset by increased yield and rev
Slide 27: Consolidated and Segment 2018 Q3 YTD Results
Consolidated and Segment 2018 Q3 YTD Results ___________________________ YTD Q3’17 total Ascent revenue excludes $68mm related to Unitrans and Adj. EBITDA excludes $7mm related to Unitrans. For a reconciliation of Adjusted EBITDA to net (loss) income reported under GAAP, please see the slides entitl
Slide 28: Financial Outlook Summary – Path to Recovery
Financial Outlook Summary – Path to Recovery TES revenue assumes truckload rates moderately increase from 2018 levels offset by increased fleet capacity Ascent benefits from increased integration of the domestic freight management business broadening the offering to the customer base and improved se
Slide 29: Consolidated Financial Outlook
Revenue(1) For Illustrative Purposes ___________________________ Note: 2015A, 2016A and 2017A total Ascent revenue respectively excludes $92mm, $87mm and $68mm related to Unitrans and Adj. EBITDA respectively excludes $10mm, $9mm and $7mm related to Unitrans. For information on the assumptions and u
Slide 30: Capex Driving Operational Improvements and Returns
Capex Driving Operational Improvements and Returns Projected Average Annual Capex 2019P – 2020P(1) ___________________________ Note: Estimates exclude conversions of operating leases to capital leases. For information on the assumptions and uncertainties applicable to the Management Projections, ple
Slide 31: RRTS Investment Opportunity / Potential Upside
RRTS Investment Opportunity / Potential Upside New Management Team in Place to Drive Strategy, Execution and Recovery Rights Offering Reflects a Key Inflection Point Improves capital structure Increases the speed and likelihood of a full recovery Well-Performing Logistics Businesses Support Post-Rig
Slide 32: Appendix A – Reconciliation for Adjusted EBITDA
Appendix A – Reconciliation for Adjusted EBITDA
Slide 33: Reconciliation for Adjusted EBITDA
Reconciliation for Adjusted EBITDA (In thousands) Twelve Months Ended December 31, 2017 TES LTL Ascent Corporate/ Eliminations Total Less: Unitrans (2) Total w/o Unitrans Net (loss) income $ 6,033 $ (26,578 ) $ 22,350 $ (92,991 ) $ (91,186 ) $ 3,497 $ (94,683 ) Plus: Total interest expense (44 ) 195
Slide 34: Reconciliation for Adjusted EBITDA (cont’d)
Reconciliation for Adjusted EBITDA (cont’d) (In thousands) Nine Months Ended September 30, 2018 TES LTL Ascent Corporate/ Eliminations Total Net (loss) income $ 2,710 $ (17,555 ) $ 21,281 $ (113,595 ) $ (107,159 ) Plus: Total interest expense 153 88 85 79,247 79,573 Plus: (Benefit from) provision fo
Slide 35: Reconciliation for Adjusted EBITDA (cont’d)
Reconciliation for Adjusted EBITDA (cont’d) ___________________________ Notes: See page 28 for detailed footnotes. 27
Slide 36: Reconciliation for Adjusted EBITDA (cont’d)
Reconciliation for Adjusted EBITDA (cont’d) EBITDA represents earnings before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA excluding impairment and other non-cash gains and losses, other long-term incentive compensation expenses, losses from debt extinguishm
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