Hobbled transportation and logistics provider Roadrunner Transportation Systems Inc. has made its latest move to return to profitability, announcing today that it has sold its intermodal business unit to a competitor, Universal Logistics Holdings Inc., for $51.25 million.
Roadrunner's intermodal services line provides drayage and chassis management services to transport freight between ocean ports, rail ramps, and shipping docks through 23 terminals nationwide. The business had revenue of approximately $125 million for the trailing 12 months ended September 30, and was part of the company's truckload segment.
The maneuver is the second effort by the Downers Grove, Illinois-based company to slash the size of its truckload division in recent months. In October, Roadrunner announced plans to downsize its unprofitable dry van business line by year-end 2019, reducing the company's dry van tractor and trailer fleets by over 50% and laying off some 10% of the company's total workforce.
Those two moves follow management stumbles at the company including being compelled in 2018 to restate its unrealistic 2016 earnings report, then admitting that computer hackers had stolen data from company accounts, also in 2018.
Following the sale of its intermodal unit, Roadrunner will now use the proceeds to repay finance leases and debt associated with Roadrunner Intermodal Services and to pay transaction costs, with the remaining amount available for general corporate purposes.
"The divestiture of Roadrunner Intermodal Services is another step forward in our strategy to simplify our portfolio by focusing on our value-added logistics and asset-light LTL segments to improve our operating performance and returns on invested capital," Roadrunner CEO Curt Stoelting said in a release. "Universal Logistics is an established transportation and logistics company that shares our dedication to customer service and is a good fit for the intermodal services business."
In a statement, Warren, Michigan-based Universal Logistics said the deal will push its own intermodal drayage business up to an estimated fleet of over 2,500 tractors, transacting business from 49 U.S. terminals and producing future annual revenues in excess of $500 million. Those figures do not include the impact of any potential "synergies," a common business term for the layoffs that may occur after company mergers, Universal Logistics said.
"The acquisition of Roadrunner Intermodal is extremely exciting for us. Roadrunner Intermodal has been a strong competitor over the years, servicing several of the same markets as Universal," Universal Logistics CEO Jeff Rogers said in a statement. "We see a great deal of opportunity to integrate these two best-in-class drayage providers, while adding a significant amount of additional capacity to our network."