Roadrunner Transportation Systems, Inc. (NYSE: RRTS) announced the sale of its intermodal unit, Roadrunner Intermodal Services, to Universal Logistics Holdings, Inc. (NASDAQ: ULH) for $51.25 million in cash on November 5.
Roadrunner continues to restructure in 2019. The company completed a re-capitalization, significantly lowering its debt load in February and completed a 1-for-25 reverse stock split in April in order to comply with New York Stock Exchange listing requirements. In September, the company announced that it would cut its unprofitable dry van operations (Rich Logistics, headquartered in Little Rock, Arkansas) by more than half, closing five terminals and terminating approximately 450 positions in efforts to reduce lease obligations and debt.
Roadrunner Intermodal Services is a provider of drayage and chassis management services, moving freight between ports, rail ramps and shipping docks. The group has 23 terminals across the U.S. and produced revenue of approximately $125 million in the last 12 months ending September 30. Roadrunner purchased more than 60 new tractors for its intermodal operations in June.
“The divestiture of Roadrunner Intermodal Services is another step forward in our strategy to simplify our portfolio by focusing on our value-added logistics and asset-light LTL [less-than-truckload] segments to improve our operating performance and returns on invested capital. Universal Logistics is an established transportation and logistics company that shares our dedication to customer service and is a good fit for the intermodal services business,” said Roadrunner’s CEO Curt Stoelting.
Roadrunner reported that it used the proceeds from the sale of this unit to again lower lease obligations and debt. Additionally, proceeds were used to pay transaction costs and fund general corporate purposes.
Warren, Michigan-based Universal Logistics reported a third quarter 2019 net loss of $8.4 million, or $0.30 per share, citing the United Auto Workers strike at General Motors Company (NYSE: GM) as costing the company $2 million per week in operating income. Additionally, a legal settlement, litigation expenses surrounding an unrelated matter and a weaker freight environment were listed as reasons for the loss.
Through September 2019, Universal Logistics has generated $278 million in intermodal revenue, logging a 42% year-over-year increase in the third quarter of 2019 with all of the incremental revenue being generated by acquired companies. The company reported a nearly 30% increase in intermodal loads along with a more than 7% increase in revenue per load excluding fuel surcharges in the quarter.
Shares of RRTS are off basically flat on the day while shares of ULH are 3% higher.
Roadrunner will release its third quarter 2019 earnings report tomorrow morning, November 6.