RRTS acquires Stagecoach Cartage and Distribution

Non asset-based third-party logistics services provider Roadrunner Transportation Systems Inc. (RRTS) said this week it has acquired El Paso, Texas-based Stagecoach Cartage and Distribution for $35 million along with an earn-out at $5 million.

Stagecoach provides regional, intermodal, and over-the-road truckload services throughout the southwestern United States and Mexico, according to RRTS, whom added Stagecoach also provides warehousing and transloading solutions to customers through its network of strategically located facilities in south-central and west Texas.

Stagecoach generated revenues of approximately $34 million during the 12 months ended June 30, 2015, with EBITDA in excess of $7 million and is expected to be accretive to Roadrunner’s earnings in 2015. Stagecoach has approximately 250 employees and five locations.  They offer a variety of services and serve a wide range of customers, most of whom highly value their cross-border capabilities.

“Stagecoach was an attractive acquisition target because of its strong presence in Mexico,” RRTS President and CEO Mark DiBlasi told LM. “Roadrunner had some presence in Mexico through Active Aero Group and Rich Logistics. This acquisition expands that presence and allows for additional growth opportunities. Additionally, Stagecoach is a well-run company with a great leadership team, which is always something that we are looking for.”

RRTS has served the southwest and Mexico for a long time with its LTL freight division, as well as with AAG and Rich logistics. DiBlasi said RRTS just started LTL freight service out of Phoenix last month, adding that it has developed an outstanding presence in Mexico with its OEM business and other shippers in Mexico.

“The acquisition will allow us to enhance and expand our service with key accounts,” he explained.

As for the expected benefits of bringing Stagecoach into the fold for RRTS customers, DiBlasi observed that Stagecoach brings one more high-quality service company to its customers, coupled with RRTS being able to add efficiency to its Mexico and southwestern U.S. service.

In recent years, RRTS has been very active on the acquisition front, but this deal marks its first one in 2015.

“The company’s deal pace has slowed a bit, which we believe reflects both a more competitive M&A market and a higher debt level,” wrote Stifel Nicolaus analyst David Ross in a research note. “In addition, management has turned its focus to integrating and fixing operations from previous deals, which we view as a positive. On the flip side, as with Active Aero last fall, this deal is more asset-intensive—a departure from Roadrunner’s stated asset-light focus (although the company has been trending toward a blended capacity solution for some time).”

Ross noted that Stagecoach has roughly 145 power units and slightly less than 300 trailers. And he also pointed out that it manages roughly 900,000 square-feet of warehousing space along the U.S.-Mexico border, including temperature controlled/freezer storage, along with providing intermodal, bulk, transloading, cartage, customs brokerage, and LTL services, all within the niche U.S./Mexico border space, which he explained should help to make Roadrunner more competitive with customers looking for a NAFTA solution.