Roadrunner Transportation Systems, Inc. (NYSE: RRTS) announced the departure of its Chief Financial Officer Terence R. Rogers effective at the end of August.
The asset-light logistics service provider said, “Rogers’ departure is not related to any issues or disagreement regarding the company’s financial disclosures, accounting policies or practices,” in the press release.
RRTS said that they have started a search process to fill the role and that if needed, the company’s Chief Executive Officer Curt Stoelting would fill in as “principal financial officer” until a new CFO is named.
It’s been a difficult road for RRTS to say the least.
Accounting Scandal
Recall, Rogers came in to fill the CFO role in May 2017 after former CFO, Peter Armbruster, was terminated for accounting discrepancies.
In April 2019, Armbruster was indicted on conspiracy to make false statements, falsifying the company’s books, records and accounts, and conspiracy to commit securities fraud and wire fraud. The Armbruster indictment is part of a June 2018 indictment of former Roadrunner controllers Mark Wogsland and Bret Naggs on similar charges.
The three have been charged by the Securities & Exchange Commission with fraud for “manipulating the company’s financial results in order to meet earnings targets and projections.”
Former Chief Executive Officer Mark DiBlasi was eventually replaced by Stoelting in May 2017. While DiBlasi has not been criminally charged, he was named in lawsuits from RRTS shareholders that allege he and Armbruster falsified financial reports to inflate the company’s earnings, thereby propping up the share price of RRTS in order to sell their personal shares of company stock.
RRTS has restated financials for multiple periods which meaningfully reduced previously reported results.
Good and bad for Roadrunner thus far in 2019
In February 2019, RRTS was able to initiate a capital restructuring in which it completed a $450 million rights offering where the net proceeds from the offering were used to redeem preferred stock, pay unpaid dividends and add more than $30 million to general corporate purposes. The offering essentially allowed RRTS to lower its debt load by $389 million by replacing dividend-paying preferred shares with common stock shares.
In April 2019, the company announced a 1-for-25 reverse stock split in order to comply with New York Stock Exchange listing requirements. The NYSE requires a security price of at least $1 per share. If shares of a listed company fall below this threshold for 30 consecutive trading days, the exchange can begin de-listing measures.
In May 2019, RRTS reported a disappointing first quarter 2019 result. The company reported an 11 percent year-over-year decline in revenue along with a $20.8 million operating loss, more than $7 million worse than the prior year period. Management said that the revenue decline was expected due to a slowdown in the ground expedited market and lower volumes in its less-than-truckload segment given restructuring and planned service outages.
Stoelting on Rogers’ service, “On behalf of the Board of Directors and executive team, we thank Terry for his contributions to the company. Terry joined Roadrunner at a difficult time and was tasked with getting our filings current and completing our recapitalization, which was successfully accomplished earlier this year. We appreciate Terry’s willingness to stay on through the transition and wish him all the best in his future endeavors.
