Roadrunner Transportation Services acquires Morgan Southern

Deal will help RRTS make inroads in intermodal sector
image
By Jeff Berman, Group News Editor
February 09, 2011 - LM Editorial

Non asset-based third-party logistics services provider Roadrunner Transportation Services (RRTS) recently announced it has acquired all of the outstanding stock of Morgan Southern, a privately-held provider of intermodal transportation and related services for roughly $20 million.

Based in Conley, Georgia, Morgan Southern serves several key intermodal markets with 19 terminals in the United States and a customer base comprised of direct shippers, intermodal marketing companies (IMC), steamship lines, and other port and rail related transportation industries.

During its fourth quarter earnings conference call yesterday, RRTS President and CEO Mark DiBlasi said that the acquisition provides a new service offering to the company’s truckload segment and expands its geographic profile.

“It also enables us to capitalize on favorable trends in the intermodal sector driven by growth in international trade and continued improvements in rail efficiency,” he said. “Aside from these overall strategic factors, our rationale for acquiring Morgan Southern is as follows: the domestic intermodal drayage market has generated approximately $4 billion in annual revenues, with several companies—or IMCs—having internal operations and the balance being fragmented.”

This, said DiBlasi, presents both risk and opportunity in the sector. And he added that in RRTS’ view high-quality companies will have growth opportunities at the expense of competitors. Morgan Southern, he added, has an excellent industry reputation for quality and service. He cited how even in instances where customers have internal drayage operations and plans to expand them, they still anticipated growth with Morgan Southern, which he expects to grow significantly with the backing of RRTS.

Morgan Southern management will continue to be led by Ben Kirkland, head of operations since 1996. DiBlasi explained that the fit with the management team and the culture of Morgan Southern eliminates one of the largest and most underappreciated risks of any acquisition.

In 2010, Morgan Southern generated approximately $57 million in revenue and $4 million in EBITDA. RRTS expects the acquisition to be accretive to its net earnings in 2011 and beyond.

Stifel Nicolaus analyst David Ross wrote in a research note that this deal has multiple potential benefits for RRTS.

“Due to seamless management transition, the company believes it can grow the [Morgan Southern] revenue base in 2011,” wrote Ross. “Roadrunner will give them more resources to grow (in addition to a much bigger account base) than they had in past under conservative private owner, and MS can leverage the company’s salesforce and provider relationships.”

Morgan Southern was advised during the sales process by EVE Partners, an Atlanta-based transportation and logistics M&A firm.



About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Disruptions at West Coast ports, which were resolved at the end of February, may have distorted the numbers

Growth firmly remains in the cards for both the manufacturing and non-manufacturing sectors in 2015. That was the main takeaway from the December 2014 Semiannual Economic Forecast from the Institute for Supply Management (ISM), which, in many ways, picked up where its companion Spring 2014 report published last April left off.

First quarter revenue of $1.776 billion was down 4.8 percent annually but up 4.6 percent in constant currency. And adjusted EBITDA at $51 million saw an 18.6 percent annual gain, with a 23.3 percent increase in constant currency.

Heading into 2015, the intermodal sector was faced with the same challenges it had exiting 2014, namely the West Coast port labor disruption and harsh winter weather. But even with these obstacles volumes still managed to show overall growth on an annual basis, according to the most recent edition of the Intermodal Market Trends & Statistics Report from the Intermodal Association of North America (IANA).

Forget cost cutting. Innovation and sustainability are the most important factors in business today. The companies that get it right can still win in a flat economy, says ISM CEO Tom Derry.

About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA