Roadrunner Fires Chief Financial Officer Peter Armbruster
Roadrunner Transportation Systems Inc. terminated chief financial officer Peter Armbruster on March 29, two months after the company admitted it would have to refile quarterly and annual earnings reports from 2014 forward due to accounting errors and record a goodwill impairment charge up to $200 million on two previous acquisitions.
Ambruster joined Roadrunner in 2005 but was under fire after he admitted to two accounting errors since last autumn, the bigger of which was announced in late January as the result of an audit from accounting firm Deloitte & Touche. Privately, some noted that Armbruster was introduced but never spoke on a conference call hosted by Roadrunner President Curtis Stoelting for industry analysts and investors shortly after the announcement. The company expects to make an announcement in the near future regarding Armbruster’s successor.
Roadrunner revealed in January an accounting error concerning unrecognized expenses from two acquistions from 2011 — Morgan Southern and Bruenger — among the first of more than 20 acquisitions in the following 3½ years. Stoelting said the impact would likely be between $20 million and $25 million on the operating income. The company also announced it would record an additional goodwill impairment charge between $175 million and $200 million.
Paul Schlegel, executive vice president of Roadrunner Temperature Controlled, addressed the situation with Transport Topics last month when the company announced it would consolidate Morgan Southern-Bruenger and R&M Transportation into one entity: Roadrunner Temperature Controlled.
“Part of the financial concerns exist because we didn’t necessarily take advantage of the consolidation of those companies and get rid of the duplication of efforts across our network,” Schlegel said. “Our effort is designed to deliver significantly better results because we’re not going to be crossing trucks or bidding against each other.
“When you have multiple small refrigerated carriers, they’re going to bump up against the same customers,” he said. “All you’re doing when you’re running them separately is that you’re driving your own rates down because you’re competing with companies that are under the same umbrella. We’re not going to be doing that anymore.”
Armbruster’s departure was revealed in a one-line statement within a filing to the Securities and Exchange Commission on April 3 discussing an agreement with creditors on short-term lending needs.
Creditors have extended the deadline on any issues related to Roadrunner defaulting on its loans to May 19, giving the company access to working capital loans in the short term. The sides are working on amendments to the long-term loan agreement after Roadrunner failed to meet required ratios between earnings and debt because of the accounting error.
“Today’s announcement marks another step towards our long-term credit solution,” Stoelting said. “Extending the interim agreement helps us to remain focused on serving our customers and clients while we conclude successful negotiations with our lender group.”
As of March 31, Roadrunner held $274 million in term loans and $218.2 million in revolving credit with lenders.
“The Amendment also changes certain credit agreement covenants and other provisions, requires certain company reporting and information and imposes other obligations on the company,” the filing stated, including a 10 page agreement elaborating on the new terms and conditions.
The Cudahy, Wis., company ranks No. 16 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
