Roadrunner to Focus on 3PL, LTL After Net Losses in 2Q
[Stay on top of transportation news: Get TTNews in your inbox.]
Roadrunner Transportation Systems Inc. will narrow future operations to logistics and less-than-truckload after a disappointing second quarter, company officials said in an Aug. 7 news release.
Roadrunner reported a net loss of $141.9 million for 2Q 2019, which ended June 30. That breaks down to $3.77 on a per share basis. The results compare with a net loss of $42 million, or $27.24 per share, in 2Q of 2018.
Revenue for 2Q 2019 declined 13.9% to $480.7 million, compared with $558 million for 2Q 2018. Revenue declines were primarily driven by low demand in air- and ground-expedited logistics, said Roadrunner CEO Curt Stoelting.
Stoelting
“As we have stated in the past, active on-demand is a well-positioned logistics business that can exhibit short-term volatility,” said Stoelting. “Historically, these variations moderate over longer periods and do not impact our ability to capture improved revenue and profits as expedited demand improves.”
Downers Grove, Ill.-based Roadrunner said its LTL business showed improvement.
“We continued to make progress in our asset-light LTL segment in the second quarter,” said Stoelting. “Excluding backhaul and fuel surcharge revenue, LTL revenue grew by 3.4% in the second quarter.”
Going forward, Stoelting said Roadrunner will focus more on its logistics and asset-light LTL segments and less on the truckload segment.
He added, “In the second quarter, yield improvements and lower bad debts were offset by increased equipment repair and personnel related costs as we reduced deferred maintenance and built a stronger foundation for future growth.”
The company’s 2Q operating loss was $137.8 million, compared with $11.4 million in the year-ago quarter. Included in the 2019 operating loss was $108.3 million of goodwill, intangible asset, software and asset impairment charges.
Roadrunner ranks No. 17 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Roadrunner has been sorting out its financial reports after alleged fraudulent filings by a former chief financial officer.
In April, the Securities and Exchange Commission formally charged former CFO Peter Armbruster and two of his associates with accounting fraud and misleading investors about the company’s financial results.
Armbruster was accused of hiding expenses by improperly deferring and spreading them across multiple quarters to minimize the impact on net earnings.
Armbruster was alleged to have arbitrarily reduced certain liabilities, creating an income “cushion” that could be used in future quarters to offset expenses, according to a complaint filed in U.S. District Court for the Eastern District of Wisconsin in Milwaukee on April 3.
Two of Armbruster’s associates, Bret Naggs and Mark Wogsland, who worked as controllers in Roadrunner’s truckload business, failed to write off millions of dollars in overvalued assets and overstated receivables as part of the scheme, federal officials allege.
The trio also misled Roadrunner’s outside auditor, resulting in financial reports that overstated the company’s profits, it is alleged by SEC officials.
Roadrunner terminated Armbruster in 2017 and brought in Stoelting to head a new management team. The company also relocated its headquarters from Cudahy, Wis., to Downers Grove, Ill., and has restated its financial results dating to 2011.
