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Roadrunner sells flatbed unit, another step in restructuring

Roadrunner's latest divestiture nets $30 million in cash

Image: Jim Allen/FreightWaves

Roadrunner Transportation Systems, Inc. (NYSE: RRTS) announced that it has sold its flatbed unit, which operates as D&E Transport based in Clearwater, Minnesota.

The transportation and asset-light logistics service provider said that the sale of the unit for $30 million in cash was part of its ongoing restructuring plan aimed at focusing on core, less capital-intensive offerings like logistics and asset-light less-than-truckload (LTL) services.

“The divestiture of the Flatbed business unit is another step forward in our strategy to simplify our portfolio by focusing on our value-added logistics and asset-light LTL segments,” said Roadrunner’s CEO Curt Stoelting.

Flatbed fundamentals remain weak as softness in the industrial sector weighs on demand. The Flatbed Outbound Tender Reject Index measures the percentage of flatbed outbound tenders rejected in the last seven days.

Flatbed Outbound Tender Reject Index (USA) – SONAR: FOTRI.USA

The company has made numerous changes to its corporate structure since the beginning of the year in efforts to return to profitability.

Roadrunner completed a recapitalization in February, which materially lowered its debt load. The company executed a 1-for-25 reverse stock split to maintain New York Stock Exchange listing requirements in April.

In September, Roadrunner said that it would cut its dry van operations, Rich Logistics, by more than half. That resulted in the closure of five terminals and a 450-person reduction in force.

Lastly, the company sold its intermodal business unit to Universal Logistics Holdings, Inc. (NASDAQ: ULH) for $51.25 million in cash in November. That divestiture included more than 700 power units and 23 terminal locations.

Roadrunner reported a nearly $100 million net loss, or $2.60 per share, during the third quarter of 2019. Some of the loss was attributable to costs associated with its ongoing restructuring. Roadrunner has incurred $267 million in net losses so far in 2019.

The proceeds from the sale of the flatbed unit, which generated $50 million in revenue over the last 12 months serving mostly the “industrial, agriculture and general freight markets,” were used primarily to repay lease and debt obligations.

RRTS Stock Price Chart – SONAR: STOCK.RRTS

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.