DOWNERS GROVE, Ill. — Roadrunner Transportation Systems Monday said it was downsizing its unprofitable dry van business, which is part of the company’s truckload segment.
The downsizing includes reducing dry van company tractor and trailer fleets by over 50%, closing five terminal locations and eliminating approximately 450 positions.
Employees subject to the workforce reduction will receive either severance or a 60-day notice.
In conjunction with the downsizing activities, the company said it expected to incur one-time pretax operations restructuring costs of between $12 million and $16 million, excluding the gain or loss on the sale of equipment and the write-down of assets.
The downsizing activities are expected to reduce lease obligations and debt and be substantially complete by year-end 2019, with workforce reductions effective over the next 60 to 90 days, the company said.
The reduction in force represents approximately 10% of the company’s total workforce.
“The decision to downsize the dry van business is a significant step in executing our strategy to emphasize our value-added logistics and asset-light LTL segments and increase our returns on invested capital,” said Curt Stoelting, Roadrunner CEO. “We factored in the impact of this downsizing as part of the strategic review of our Truckload segment. We believe downsizing the dry van business will improve operating margins and cash flow, reduce lease obligations and debt, improve internal controls and allow greater focus on the significant value-creation opportunities within our other businesses,”
Roadrunner Transportation Systems is an asset-right transportation and asset-light logistics provider offering a full suite of services and solutions under the Roadrunner, Active On-Demand and Ascent Global Logistics brands.
The Roadrunner brand offers less-than-truckload, over-the-road truckload and intermodal services. Active On-Demand offers premium mission-critical air and ground logistics solutions. Ascent Global Logistics offers domestic freight management, retail consolidation, international freight forwarding and customs brokerage.
The downsizing comes some two months after the company said in its second quarter conference call that it was narrowing its strategic focus to the logistics and asset-light LTL segments.
During the call, the company said it had:
- Revenues of $480.7 million in second quarter 2019 vs. $558.0 million in second quarter 2018. It said revenue declined primarily because of declines of $63.3 million in air and ground expedited logistics at Active On-Demand as well as reduced truckload shipment volumes and rate mix at Ascent and lower volumes at certain truckload operating units, while LTL revenues were flat.
- Operating loss of $137.8 million in second quarter 2019 vs. $11.4 million in second quarter 2018. Second quarter 2019 included $108.3 million of goodwill, intangible asset, software and asset impairment charges. Excluding impairment charges, the higher consolidated operating loss in the second quarter of 2019 was attributable to a decrease of over $10 million in operating results at Active On-Demand as well as declines in LTL and Ascent, partially offset by improved operating results in truckload.
• A net loss of $141.9 million in second quarter 2019 vs. $42.0 million in second quarter 2018. The company said in addition to the consolidated operating loss explanations above, the consolidated net loss in the second quarter of 2019 was impacted by a decrease in interest expense of $29.6 million, due to the absence of interest on the company’s preferred stock, which was fully redeemed after completion of the company’s rights offering in February 2019, and a lower benefit from income taxes.
Lyndon Finney’s publishing career spans over 55 years beginning with a reporter position with the Southwest Times Record in Fort Smith, Arkansas, in 1965. Since then he’s been a newspaper editor at the Southwest Times Record, served five years as assistant managing editor of the Arkansas Democrat-Gazette in Little Rock and from November 2004 through December 2019 served as editor of The Trucker. Between newspaper jobs he spent 14 years as director of communications at Baptist Health, Arkansas’ largest healthcare system. In addition to his publishing career he served for 46 years as organist at Little Rock’s largest Baptist church.