Express-1 Expedited Solutions Reports Strong Q3 Results: Revenue Increases 143%, Operating Income Rises 160%

Express-1 Expedited Solutions, Inc. (AMEX:XPO)today reported its earnings for the third quarter, ended September 30, 2008.

Express-1 Expedited Solutions, through its four operating companies (Express-1, Bounce Logistics, Express-1 Dedicated and Concert Group Logistics), provides the following premium transportation services: same-day delivery, timesensitive shipping, premium freight brokerage and dedicated transportation throughout North America, as well as domestic and international freight forwarding.

Express-1 Expedited Solutions reported a 143% increase in revenue during the third quarter of 2008 to $32.4 million, compared to $13.4 million for the same period in the prior year. The acquisition of Concert Group Logistics, which had a transaction date of January 1, 2008, contributed $14.3 million to revenues for the period. For the third quarter, the Company's Express-1 operations expanded revenues by $2.1 million or 18% over the same three-months in 2007. Bounce Logistics gained traction and contributed $3.0 million to the overall increase in revenues. Bounce Logistics is a start-up premium truckload brokerage operation that began operations in March 2008. The Company's other business unit, Express-1 Dedicated, increased revenues slightly during the period. When combined, the Express-1 Expedited Solutions' business units delivered record revenue and operating profit during the period and the Company continued to grow at a healthy pace in the current weak economy.

During the same period, income from operations substantially increased by 160% to $2.0 million versus $778,000 during the same period of 2007. Net income improved 131% to $1.2 million or $0.04 per diluted share for the third quarter of 2008 compared to $499,000 or $0.02 per diluted share for the same period in 2007.

"Throughout 2008, our Company has significantly changed its geographical and operating footprints. The acquisition of Concert Group Logistics and the start-up of Bounce Logistics has begun to dramatically improve our results. We're pleased with our growth and profitability for the third quarter, and happy to share the success of our business units. Given we're in such a difficult freight environment, these results are a strong testament to our business model and the team we have in place throughout our Company," stated Michael Welch, the Company's Chief Executive Officer.

Welch added, "I am extremely pleased with the results we are starting to see from our two new business units, Concert Group Logistics and Bounce Logistics. Each of these businesses has continued to grow throughout 2008. We believe this will set the stage for a potentially stronger 2009, as these two units continue to develop. Complementing the new operations is the continued strong performance within our two historical business units, Express-1 and Express-1 Dedicated. We've continued to expand cross selling activities between our business units and are now offering an expanded array of premium services to our broad base of customers. We're just now capitalizing on the full breadth of our expanded business model and optimistically anticipate that we will see revenue and income continue to expand during the coming quarters."

Chief Financial Officer Mark Patterson said, "Our Company has continued to demonstrate the significant operating leverage within our model by holding the rate of growth within our Selling, General and Administrative expenses below those of our top line. Increasing by $1.0 million or 44% during the period, our Selling, General and Administrative expenses grew at a rate that is over 300% lower than the rate of growth for our revenue. As a percentage of revenue, SG&A costs continue to decline and represented 10% of consolidated revenue during the third quarter of 2008 versus over 17% during the same period in 2007. Our teams are completing the planned integration from the Concert Group Logistics acquisition and Bounce Logistics start-up. At the same time, our entire organization is focused upon lowering our overall back office costs, in an effort to support our desired levels of profitability. Our entire organization is focused upon controlling cost. We're very proud of the efforts and commitment of the entire team."

Outlook

"Looking towards the end of 2008, our business unit Presidents continue to be focused on delivering results that meet the targets we've established. Jeff Curry at Express-1, Brian Glaser at Express-1 Dedicated, Gerry Post at Concert Group Logistics and Tim Hindes at Bounce Logistics each lead a team of professionals that are committed to continuing the momentum we've established over the past twelve quarters," Welch said. "Market expansion and attention to customer service are critical to expanding our revenue. Our non-asset based business model has proven itself over many years and in all types of economic climates. We remain optimistic that we'll be able to deliver the results we committed to at the start of 2008. By remaining focused on our model and our goals, we should be able to continue growing our Company and our profits in future periods."

Conference Call/Webcast Information

Management will conduct a conference call November 6, 2008 at 10:00 a.m. Eastern to discuss the Company's third quarter financial results. Those interested in accessing a live or archived Webcast of the call should visit the Company's Website at www.express-1.com. Those wishing to take part in the live teleconference call can dial 877-407-9210 (U.S.) or 201-689-8049 (International). A playback will be available through midnight on November 11, 2008. To listen to the playback, please call 877-660-6853. Use account number 286 and conference ID number 300248.

Forward-Looking Statements

This press release contains forward-looking statements that may be subject to various risks and uncertainties. Such forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs, as well as assumptions made by and information currently available to management. These forward-looking statements, which may include statements regarding our future financial performance or results of operations, including expected revenue growth, cash flow growth, future expenses, future operating margins and other future or expected performance are subject to risks. These risks include: that our recent reorganization fails to result in projected operating efficiencies; the acquisition of businesses or the launch of new lines of business, which could increase operating expenses and dilute operating margins; increased competition, which could lead to negative pressure on our pricing and the need for increased marketing; the inability to maintain, establish or renew relationships with customers, whether due to competition or other factors; the inability to comply with regulatory requirements governing our business operations; and to the general risks associated with our businesses.

In addition to the risks and uncertainties discussed above, you can find additional information concerning risks and uncertainties that would cause actual results to differ materially from those projected or suggested in the forward-looking statements in the reports that we have filed with the Securities and Exchange Commission. The forward-looking statements contained in this press release represent our judgment as of the date of this release and you should not unduly rely on such statements. Unless otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in the filing may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements.

 
Express-1 Expedited Solutions, Inc.

Consolidated Balance Sheets


 

     

(Unaudited)

     
      September 30,     December 31,
    2008   2007
Assets            
Current assets:            
Cash and cash equivalents   $ 1,868,000     $ 800,000  
Accounts receivable, net of allowances of $212,000 and $77,000, respectively     17,119,000       5,663,000  
Prepaid expenses     238,000       492,000  
Other current assets     887,000       149,000  
Deferred tax asset, current     594,000       1,549,000  
Total current assets     20,706,000       8,653,000  
             

Property and equipment, net of $2,202,000 and $1,734,000 in accumulated depreciation, respectively

    3,226,000       2,312,000  
             
Goodwill     16,040,000       7,737,000  

Identified intangible assets, net of $1,586,000 and $1,279,000 in accumulated amortization, respectively

    6,647,000       3,950,000  
Loans and advances     73,000       104,000  
Deferred tax asset, long term     -       377,000  

Other long term assets

    1,212,000       591,000  
    $ 47,904,000     $ 23,724,000  
             
Liabilities and Stockholders' Equity            
Current liabilities:            
Accounts payable   $ 6,176,000     $ 892,000  
Accrued salaries and wages     598,000       660,000  
Accrued acquisition earnouts     -       2,210,000  
Accrued expenses, other     2,225,000       861,000  
Current maturities of long term debt     1,247,000       50,000  
Other current liabilities     1,005,000       199,000  
Total current liabilities     11,251,000       4,872,000  
             
Line of credit     8,254,000       -  

Notes payable and capital leases, net of current maturities

    1,700,000       34,000  
Deferred tax liability, long term     250,000       -  
Other long-term liabilities     527,000       616,000  
Total long-term liabilities     10,731,000       650,000  
             
Stockholders' equity:            
Preferred stock, $.001 par value; 10,000,000 shares no shares issued or outstanding     -       -  

Common stock, $.001 par value; 100,000,000 shares authorized; 32,215,218 and 27,008,768 shares issued and 32,035,218 and 26,516,037 shares outstanding

    32,000       27,000  
Additional paid-in capital     26,298,000       21,152,000  
Accumulated deficit     (301,000 )     (2,870,000 )
Treasury stock, at cost, 180,000 shares held     (107,000 )     (107,000 )
             
Total stockholders' equity     25,922,000       18,202,000  
    $ 47,904,000     $ 23,724,000  

 

 
Express-1 Expedited Solutions, Inc.
Consolidated Statements of Operations
(Unaudited)
   
    Three Months Ended   Nine Months Ended
                         
     

Sept. 30,

   

Sept. 30,

   

Sept. 30,

   

Sept. 30,

      2008     2007     2008     2007
                         
Revenues                        
Operating revenue   $ 32,438,000   $ 13,359,000     $ 88,369,000   $ 38,694,000
                         
Expenses                        
Direct expenses     27,136,000     10,310,000       73,701,000     29,111,000
                       

 

Gross margin     5,302,000     3,049,000       14,668,000     9,583,000
                           

Sales, general and administrative expense

    3,276,000     2,271,000       10,080,000     6,763,000
Income from operations     2,026,000     778,000       4,588,000     2,820,000
                         
Other expense (income)     21,000     (33,000 )     36,000     1,000
Interest expense (income)     94,000     13,000       273,000     71,000
Income before income tax provision     1,911,000     798,000       4,279,000     2,748,000
                         
Income tax provision     759,000     299,000       1,710,000     1,034,000
                         
Net income   $ 1,152,000   $ 499,000     $ 2,569,000   $ 1,714,000
                         
Earnings per common share                        
Basic income per common share     0.04     0.02       0.08     0.06
Diluted income per common share     0.04     0.02       0.08     0.06
                         
Weighted average common shares outstanding                        
Basic weighted average common shares outstanding   31,949,262     26,737,547       31,241,644     26,629,119
Diluted weighted average common shares outstanding   32,093,521     27,321,640       31,182,990     27,349,458
                         

Included within the expenses above are depreciation and amortization of $288,000 and $198,000 for the three months ended September 30, 2008 and 2007, and $847,000 and $649,000 for the nine months ended September 30, 2008 and 2007, respectively.

                         

 

Express-1 Expedited Solutions, Inc.
Summary Financial Table
For the Three Months Ended September 30,
(Unaudited)
                       
  Quarter to Date   Quarter to Quarter Change   Percent of Revenue
    2008       2007     In Dollars   In Percentage   2008 2007
Revenues                      
Express-1 $ 14,187,000     $ 12,052,000     $ 2,135,000     17.7 %     43.7 % 90.2 %
Express-1 Dedicated   1,321,000       1,307,000       14,000     1.1 %     4.1 % 9.8 %
Concert Group Logistics   14,341,000       -       14,341,000     -       44.2 % -  
Bounce Logistics   3,013,000       -       3,013,000     -       9.3 % -  
Intercompany Eliminations   (424,000 )     -       (424,000 )   -       -1.3 % -  
Total Revenues   32,438,000       13,359,000       19,079,000     142.8 %     100.0 % 100.0 %
                       
Direct Expenses                      
Express-1   10,840,000       9,298,000       1,542,000     16.6 %     33.4 % 69.6 %
Express-1 Dedicated   972,000       1,012,000       (40,000 )   -4.0 %     3.0 % 7.6 %
Concert Group Logistics   13,127,000       -       13,127,000     -       40.5 % -  
Bounce Logistics   2,621,000       -       2,621,000     -       8.1 % -  
Intercompany Eliminations   (424,000 )     -       (424,000 )   -       -1.3 % -  
Total Direct Expenses   27,136,000       10,310,000       16,826,000     163.2 %     83.7 % 77.2 %
                       
Gross Margin                      
Express-1   3,347,000       2,754,000       593,000     21.5 %     10.3 % 20.6 %
Express-1 Dedicated   349,000       295,000       54,000     18.3 %     1.1 % 2.2 %
Concert Group Logistics   1,214,000       -       1,214,000     -       3.7 % -  
Bounce Logistics   392,000       -       392,000     -       1.2 % -  
Total Gross Margin   5,302,000       3,049,000       2,253,000     73.9 %     16.3 % 22.8 %
                       
Selling, General & Administrative                      
Express-1   1,610,000       1,790,000       (180,000 )   -10.1 %     5.0 % 13.4 %
Express-1 Dedicated   128,000       117,000       11,000     9.4 %     0.4 % 0.9 %
Concert Group Logistics   714,000       -       714,000     -       2.2 % -  
Bounce Logistics   390,000       -       390,000     -       1.2 % -  
Corporate   434,000       364,000       70,000     19.2 %     1.3 % 2.7 %
Total Selling, General & Administrative   3,276,000       2,271,000       1,005,000     44.3 %     10.1 % 17.0 %
                       
Income From Operations                      
Express-1   1,737,000       964,000       773,000     80.2 %     5.4 % 7.2 %
Express-1 Dedicated   221,000       178,000       43,000     24.2 %     0.7 % 1.3 %
Concert Group Logistics   500,000       -       500,000     -       1.5 % -  
Bounce Logistics   2,000       -       2,000     -       -   -  
Corporate   (434,000 )     (364,000 )     (70,000 )   -19.2 %     -1.3 % -2.7 %
Total Income From Operations   2,026,000       778,000       1,248,000     160.4 %     6.2 % 5.8 %
                       
Interest Expense   94,000       13,000       81,000     623.1 %     0.3 % 0.1 %
Other Expense   21,000       (33,000 )     54,000     163.6 %     0.1 % -0.2 %

Income Before Income Tax Provision

  1,911,000       798,000       1,113,000     139.5 %     5.9 % 6.0 %
                       

Tax Provision

  759,000       299,000       460,000     153.8 %     2.3 % 2.2 %
Total Net Income $ 1,152,000     $ 499,000     $ 653,000     130.9 %     3.6 % 3.7 %
                       

 

Express-1 Expedited Solutions, Inc.
Summary Financial Table
For the Nine Months Ended September 30,
(Unaudited)
                   
  Year to Date - September   Year to Year Change   Percent of Revenue
  2008 2007   In Dollars   In Percentage   2008 2007
Revenues                  
Express-1 $ 41,964,000   $ 34,902,000     $ 7,062,000     20.2 %   47.5 % 90.2 %
Express-1 Dedicated   3,861,000     3,792,000       69,000     1.8 %   4.4 % 9.8 %
Concert Group Logistics   39,304,000     -       39,304,000     -     44.5 % -  
Bounce Logistics   4,241,000     -       4,241,000     -     4.8 % -  
Intercompany Eliminations   (1,001,000 )   -       (1,001,000 )   -     -1.1 % -  
Total Revenues   88,369,000     38,694,000       49,675,000     128.4 %   100.0 % 100.0 %
                   
Direct Expenses                  
Express-1   32,145,000     26,138,000       6,007,000     23.0 %   36.4 % 67.6 %
Express-1 Dedicated   3,006,000     2,973,000       33,000     1.1 %   3.4 % 7.7 %
Concert Group Logistics   35,843,000     -       35,843,000     -     40.6 % -  
Bounce Logistics   3,708,000     -       3,708,000     -     4.2 % -  
Intercompany Eliminations   (1,001,000 )   -       (1,001,000 )   -     -1.1 % -  
Total Direct Expenses   73,701,000     29,111,000       44,590,000     153.2 %   83.4 % 75.2 %
                   

Gross Margin

                 
Express-1   9,819,000     8,764,000       1,055,000     12.0 %   11.1 % 22.6 %
Express-1 Dedicated   855,000     819,000       36,000     4.4 %   1.0 % 2.1 %
Concert Group Logistics   3,461,000     -       3,461,000     -     3.9 % -  
Bounce Logistics   533,000     -       533,000     -     0.6 % -  
Total Gross Margin   14,668,000     9,583,000       5,085,000     53.1 %   16.6 % 24.8 %
                   
Selling, General & Administrative                  
Express-1   5,388,000     5,248,000       140,000     2.7 %   6.1 % 13.6 %
Express-1 Dedicated   393,000     389,000       4,000     1.0 %   0.4 % 1.0 %
Concert Group Logistics   2,322,000     -       2,322,000     -     2.6 % -  
Bounce Logistics   724,000     -       724,000     -     0.8 % -  
Corporate   1,253,000     1,126,000       127,000     11.3 %   1.4 % 2.9 %
Total Selling, General & Administrative   10,080,000     6,763,000       3,317,000     49.0 %   11.4 % 17.5 %
                   
Income From Operations                  
Express-1   4,431,000     3,516,000       915,000     26.0 %   5.0 % 9.1 %
Express-1 Dedicated   462,000     430,000       32,000     7.4 %   0.5 % 1.1 %
Concert Group Logistics   1,139,000     -       1,139,000     -     1.3 % -  
Bounce Logistics   (191,000 )   -       (191,000 )   -     -0.2 % -  
Corporate   (1,253,000 )   (1,126,000 )     (127,000 )   -11.3 %   -1.4 % -2.9 %
Total Income From Operations   4,588,000     2,820,000       1,768,000     62.7 %   5.2 % 7.3 %
                   
Interest Expense   273,000     71,000       202,000     284.5 %   0.3 % 0.2 %
Other Expense   36,000     1,000       35,000     -3500.0 %   0.0 % -  

Income Before Income Tax Provision

  4,279,000     2,748,000       1,531,000     55.7 %   4.8 % 7.1 %
                   
Tax Provision   1,710,000     1,034,000       676,000     65.4 %   1.9 % 2.7 %
Total Net Income $ 2,569,000   $ 1,714,000     $ 855,000     49.9 %   2.9 % 4.4 %