Roadrunner Transportation Systems Inc. (NYSE: RRTS) announced that it plans to voluntarily delist from the New York Stock Exchange (NYSE) and deregister from reporting requirements with the U.S. Securities and Exchange Commission (SEC).
In a Thursday press release issued after the market close, the transportation and asset-light logistics service provider released financial results for fourth-quarter and full-year 2019 and announced that it would no longer be listed on a major stock exchange.
The company sees voluntary delisting from the exchange and not having to meet reporting requirements with the SEC as a means of reducing costs.
The press release stated that Roadrunner’s shares would continue trading in the over-the-counter markets.
The company will file for delisting from the NYSE “on or about April 6” and expects its shares to cease trading “on or about April 17.”
From the release: “While continuing to qualify for listing on the NYSE, the company made the decision to voluntarily deregister its shares because it has fewer than 300 stockholders of record and believes that it is in the best interest of the company’s stakeholders to reduce legal and administrative costs associated with being listed on the NYSE and complying with on-going SEC reporting requirements.”
Fourth-quarter and 2019 results
Roadrunner reported an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $31.2 million for the fourth quarter as revenue declined 27% to $401 million in the period. The press release said the decline in revenue was mostly due to “declines in air and ground expedited logistics” and lower volumes and rates in its transportation management, less-than-truckload (LTL) and truckload (TL) units.
The company also called out the United Auto Workers labor strike against General Motors (NYSE: GM) that ended in late October as negatively impacting revenue by $31.1 million in the quarter.
Roadrunner reported a net loss of $74.2 million for the fourth quarter and $340.9 million for full-year 2019, more than twice the full-year loss recorded in 2018. The unadjusted loss included goodwill and asset impairment losses as well as expenses incurred during the company’s restructuring. Even excluding the nonrecurring charges, the core operations of the business suffered from lower revenue and margins during 2019.
The 2019 results reflect an extended period of charges taken to write down values of past acquisitions and assets in addition to costs incurred to revamp the organization and divest business units.
“In the fourth quarter, we continued to face challenging market conditions which hindered our operating performance,” said Roadrunner CEO Curt Stoelting.
The restructuring
Roadrunner has been under construction for several quarters now. The company has raised more than $300 million from its recent divestitures, the bulk of which has been used to pay down finance leases and debt.
In early 2019, Roadrunner completed a recapitalization, materially reducing its outstanding debt by almost $400 million, and executed a 1-for-25 reverse stock split to comply with NYSE listing requirements. The recapitalization left activist investor Elliott Management owning more than 90% of the company.
In April, former Roadrunner CFO Peter Armbruster joined two of the company’s controllers in an expanded indictment for an accounting scandal, which alleged manipulation of the company’s financial results in order to meet analysts’ estimates.
In September, the company announced a new CFO, assuming the role vacated by the CFO that filled the spot following the accounting scandal. In December, the company announced that its president and chief operating officer was leaving.
As 2019 progressed, Roadrunner became more focused on pursuing less capital-intensive offerings like logistics and asset-light LTL as a means of improving return on invested capital and restoring the company’s valuation.
In September, Roadrunner cut its dry van operations (Rich Logistics) by more than half, resulting in the closure of five terminals and 450 layoffs. In November, it sold its intermodal business (700 power units and 23 terminal locations) to Universal Logistics Holdings Inc. (NASDAQ: ULH) for approximately $51 million in cash.
In December, the company divested its flatbed unit for $30 million in cash and in late January of this year, Roadrunner sold its Prime Distribution Services unit to C.H. Robinson Worldwide (NASDAQ: CHRW) for $225 million in cash.
“Voluntarily delisting and deregistering is expected to not only save significant costs, but also free up management time to fully focus on executing strategies to improve operating performance, generate attractive returns on invested capital and build long-term shareholder value,” Stoelting concluded.