Roadrunner Transportation Systems made headlines for years with a series of acquisitions that helped the company grow in size, but new management says the increasing complexity and lack of internal controls caused the company to overstate its net income by millions of dollars.
The company, which was based in Cudahy until its corporate offices moved to Illinois last year, said Wednesday it had overstated its net income by $66.5 million from 2011 through the third quarter of 2016, including by 47 percent in 2015 and 37 percent in 2014.
Roadrunner first revealed problems with its accounting in early 2017. At the time, the company said the problem dated back to 2014 and would result in $20 million to $25 million in adjustments to its results. The issues were believed to be in just two business units, but as the audit committee of Roadrunner’s board investigated it found problems across the company. About 80 percent of the issues were ultimately in five businesses and the corporate operation.
Curt Stoelting, Roadrunner chief executive officer, called the restatement “a difficult but important step.”
“In the past, both Roadrunner’s accounting practices and business practices were not adequate. One of the main causes of the restatement was that Roadrunner completed over 25 acquisitions of non-public companies without some very basic tools,” Stoelting said, adding the company had no comprehensive integration plans or standardized finance and IT systems.
Stoelting said fixing the problems has a “a low-degree of difficulty and a high likelihood of preventing similar problems” in the future.
“The fix is to implement basic best practices and systems that most public companies have had in place for many years,” he said.
Roadrunner has seen substantial turnover of its executive team with at least 12 new leaders in the C-suite and in businesses. Stoelting was named CEO in May. Even with all the changes, the company said it may still find some issues as it finalizes its 2017 results.
Terry Rogers, Roadrunner chief financial officer, said the company is also cooperating with Securities and Exchange Commission and Department of Justice investigations into its restatements.
