Roadrunner Transportation Systems Inc. announced the recent closings of three transactions completing Roadrunner’s divestiture of all truckload segment businesses. This includes the sale of Rich Logistics and Integrated Services, Inc. to an undisclosed strategic buyer, as well as the sale of Roadrunner Temperature Controlled to Laurel Oak Capital Partners.
“With the actions announced today, we have completed our evolution from a troubled roll-up to a focused, national LTL carrier. We are eternally grateful to our team for the long hours and hard work through the prolonged period of transition,” says Chris Jamroz, Executive Chairman of Roadrunner.
These divestitures complete a reorganization that involved the sale of Roadrunner Intermodal Services (November 2019), Flatbed (December 2019), Prime Distribution (March 2020) and Stagecoach (April 2020). With the previously announced completion of the spin-off of Ascent Global Logistics, Inc. (“Ascent”), Roadrunner now consists solely of its less-than-truckload operations.
Simultaneously with the completion of the Ascent spin-off, Roadrunner’s existing senior secured credit facility with BMO Bank Harris, N.A. has been terminated, and the company has entered into a new $45.0 million senior secured asset-based credit facility with Crystal Financial. Roadrunner’s divestitures and the spin-off of Ascent have reduced the company’s balance sheet liabilities by approximately $400 million, leaving the company with a net cash position.
“We enter this new stage of Roadrunner with the healthiest balance sheet in the company’s history,” said Frank Hurst, President of Roadrunner Transportation Systems.
Roadrunner Freight Update
Additionally, Frank Hurst and the Roadrunner management team have provided an update on business performance and strategy to date.
“In Q4 2019, we made a deliberate shift in our LTL strategy to focus on customers and drivers, instead of short-term profitability. This change in approach led every team member to commit to a new mantra, Ship It Like You Own It,” said Hurst. “It also required operational investments in Q4 2019 and Q1 2020, generating average losses of approximately $4 million per month. However, we dramatically improved transit times and launched a quality campaign that resulted in drastic reductions of delivery exceptions. With clearly improved service levels, our sales have continued to grow and enabled our team to onboard business with several new national accounts. Despite highly depressed volumes in March and April from COVID-19, we were able to return to growth in May and posted our first positive EBITDA month in three years, albeit a very modest level.”
Year-to-date, the company has increased the Independent Contractor count by more than 100 drivers and has achieved the lowest 12-month turnover in recent history. The company has also launched a new analytical tool of driver performance metrics called RoadPRO to promote safety, service and operational results within the fleet.
“We plan to continue prioritizing service levels over profitability for the foreseeable future and will take advantage of our strong balance sheet to continuously redeploy profits generated into new technology, continuous lane enhancement and an improved driver and team member experience,” Hurst adds. “Our Ship It Like You Own It mantra embodies how we treat customers’ freight, and it is gratifying to see that our customers are noticing.”
As previously announced, Roadrunner Freight recently opened new facilities in Riverside, CA on July 22 and in Philadelphia on August 3 that offer significant enhancements to the company’s nationwide LTL network. A new Chicago service center, with double the capacity of the current Chicago facility, will also open later this month.
“We have seen COVID-driven disruptions in pockets of our network in June and July, despite our focus on quality service. This is partially due to large growth in e-commerce volume, which created facility and staffing constraints in a few markets. Our new facilities are already making a positive impact and any service issues experienced will be rectified in the near future. I appreciate our customers’ patience as we make the necessary changes to support these increased volumes of freight,” said Hurst.
“We are thrilled to be a standalone business and are grateful to our customers, business partners and team members who have stuck with us through our transformation,” continued Hurst. “I am proud to say we have never been as strongly positioned for the future as we are today.”