Express-1 Expedited Solutions Reports Record Profitability and Solid Top-Line Growth in the Second Quarter of 2006; Company Delivers 38% Increase in Expedited Transportation Revenue and Highest Gross

Express-1 Expedited Solutions, Inc. (The Company) (AMEX: XPO) today announced its financial results for the quarter ended June 30, 2006.

For the second quarter of 2006, the Company reported that revenues increased to $11.1 million from $10.3 million in the second quarter of 2005. The Company's GAAP net income for the second quarter of 2006 was $848,000, or $0.03 per share. This compares with a net loss of $1.2 million, or $0.05 per share, for the second quarter last year, including $375,000 in restructuring charges. EBITDA for the second quarter of 2006 was $1.2 million, compared with an EBITDA loss of $370,000 for the year-ago quarter. Please refer to Table 1 for a reconciliation of net income, as reported, to EBITDA.

"The Company continued to execute its growth strategy during the second quarter, and we delivered record profitability on the strength of our expedited transportation business," said Michael Welch, the Company's president and chief executive officer. "In 2005, we made the decision to divest some unprofitable operations and focus squarely on growing our core business - expedited transportation solutions for time-critical shipments. Our second-quarter results demonstrate that our strategy is on target. Our Express-1 fleet size increased 28% from the second quarter of 2005, and utilization rates improved by 9%. This combination of growing truck count and higher number of loaded miles per truck per week generated a 38% increase in Express-1 revenue. At the same time, our Evansville operation posted 18% revenue growth."

"Express-1 continues to outperform the expedite industry in the competency most critical for business success - attracting, recruiting and retaining qualified drivers," said Welch. "Thanks to stronger brand awareness of Express-1 and our gains in market share, our owner-operators have experienced steady increases in loaded miles per week. In addition, during the second quarter we rolled out a series of steps designed to improve cash flow and quality of life for Express-1 drivers. Along with a rate increase and utilization bonus program for miles run per month, these initiatives included a faster payment schedule and more convenient access to cash while on the road. To enhance our driver recruiting, we introduced a rewards program for Express-1 drivers who refer owner-operators of straight trucks to us. As a result of Express-1's growing reputation as a driver-friendly organization, we substantially expanded the size of our fleet at a time of severe constraints in owner-operator availability."

The Company's Chief Financial Officer Mark Patterson said, "Our second-quarter results reflect significantly stronger operating leverage in our core business. As a result of our transition to a variable cost model and greater reliance on independent contractors to supply our fleet, gross margin increased to 25.7% from 21.7% for the second quarter of 2005. Coupled with the elimination of prior restructuring expenses, these cost reduction initiatives enabled us to deliver substantial increases in EBITDA and net income for the quarter."

Additional Second-Quarter Financial Information

  • Operating expenses, which consist primarily of payment for owner-operator and partner trucking services, fuel, maintenance and insurance costs, increased to $8.3 million for the second quarter of 2006 from $8.1 million a year earlier.
  • Gross profit for the second quarter of 2006 improved to $2.9 million, or 25.7 percent of consolidated revenue, from $2.2 million, or 21.7 percent of consolidated revenue, for the second quarter of 2005.
  • Selling, general and administrative expenses (SG&A) were $1.9 million, down 41 percent from $3.3 million for the second quarter of 2005. Approximately $375,000 in restructuring charges were recorded in the second quarter of 2005 and are included in SG&A expenses for that period.
  • Operating ratio improved by 18 percent to 91.2 percent for the second quarter of 2006, from 111.4 percent for the year-earlier quarter.

Outlook and Financial Guidance

"The Company has grown significantly faster than the expedited industry during the first half of 2006, and our objective is to continue to outperform during the second half of the year," Welch said. "Our recent efforts to increase our truck count through enhanced driver recruiting and retention have created strong momentum on the capacity side as we begin the third quarter. At the same time, we continue to make excellent progress in diversifying our customer base. Our sales and customer service organization is well-positioned to generate and support increased business volume across an expanding fleet. In addition, reflecting our broadening relationships with third-party carriers, the brokerage component of our business continues to gain strength. We look forward to leveraging these positive dynamics to extend the Company's growth and profitability gains throughout the year."

Express-1 Expedited Solutions, Inc. reiterated its previously announced guidance for full year 2006. The Company continues to expect that revenue for 2006 will be in the range of $39 million to $42 million, representing approximately 17% to 18% growth in the Company's remaining operations. The Company expects full-year net income in the range of $0.10 to $0.12 per share based on its current shares outstanding.

Conference Call/Webcast Information

Management will conduct a conference call this morning at 10:00 a.m. ET to discuss the Company's second-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 201-689-8049 or 877-407-9210. A playback will be available through midnight on August 11, 2006. To listen to the playback, please call 201-612-7415 or 877-660-6853. Use account number 286 and conference ID number 208301.

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 the following risks: 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.

Use of GAAP and Non-GAAP Measures

In addition to results presented in accordance with generally accepted accounting principles (GAAP), the Company has included "EBITDA", a non-GAAP financial measure. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. In addition, the Company excludes from its EBITDA calculation the cumulative effect of a change in accounting principle, discontinued operations, and the impact of restructuring and certain other charges, and includes in the EBITDA calculation selected financial data related to various Company acquisitions. A reconciliation of EBITDA to the most directly comparable GAAP financial measure is set forth herein.

Management believes the use of non-GAAP financial measures provides useful information to investors to assist them in understanding the underlying operational performance of the Company. Specifically, management believes EBITDA is a useful measure of operating performance before the impact of investing and financing transactions, making comparisons between companies' earnings power more meaningful and providing consistent period-over-period comparisons of the Company's performance. The Company uses these non-GAAP financial measures internally to measure its ongoing business performance and in reports to bankers to permit monitoring of the Company's ability to pay outstanding liabilities.

            Express-1, Expedited Solutions Inc.
                        EBITDA Reconciliation

                                                 Three Months Ended
                                                     June 30,
                                              ------------ -----------
                                                   2006        2005
                                              ------------ -----------

  Net income (loss) as reported               $   848,000 $(1,211,000)
  Income tax (benefit) provision              $         0 $         0
  Interest expense                            $    63,000 $    52,000
  Depreciation and amortization               $   254,000 $   414,000
  Restructuring, exit and consolidation
   expenses                                   $         0 $   375,000

                                              ------------------------
  EBITDA                                      $ 1,165,000 $  (370,000)

                 Express-1 Expedited Solutions, Inc.
                       Statements of Operations
                             (unaudited)

                        Three Months Ended        Six Months Ended
                     -------------------------------------------------

                       June 30,     June 30,    June 30,    June 30,
                         2006         2005        2006        2005
                      ----------- ------------ ----------- -----------

Revenues
   Operating
   revenue           $11,120,000 $ 10,290,000 $20,675,000 $20,639,000

Expenses:
   Direct expenses     8,257,000    8,057,000  15,386,000  16,435,000

                     -------------------------------------------------
      Gross profit     2,863,000    2,233,000   5,289,000   4,204,000

   Sales, general and
    administrative
    expense            1,939,000    2,903,000   3,634,000   5,912,000
   Restructuring,
    exit and
    consolidation
    expense                    -      375,000           -   3,958,000

                     -------------------------------------------------
      Total sales,
       general and
       administrative
       expense         1,939,000    3,278,000   3,634,000   9,870,000

Other expense             13,000      114,000     142,000     119,000
Interest Expense          63,000       52,000     108,000      76,000

                     -------------------------------------------------
Income (loss) before
 income tax provision    848,000   (1,211,000)  1,405,000  (5,861,000)

Income tax (benefit)
 provision                     -            -           -           -

                     -------------------------------------------------
Net income (loss)    $   848,000 $ (1,211,000)$ 1,405,000 $(5,861,000)
                     =========== ============ =========== ===========

Basic income (loss)
 per common share           0.03        (0.05)       0.05       (0.22)
                      ----------- ------------ ----------- -----------

Basic weighted
 average common
 shares outstanding   26,285,034   26,730,034  26,285,034  26,717,672
                      ----------- ------------ ----------- -----------

Diluted income (loss)
 per common share           0.03        (0.05)       0.05       (0.22)
                      ----------- ------------ ----------- -----------

Diluted weighted
 average common
 shares outstanding   26,441,809   26,730,034  26,398,952  26,717,672
                      ----------- ------------ ----------- -----------

                  Express-1 Expedited Solutions, Inc.
                            Balance Sheet
                                                            
                                               June 30,   December 31,
                                                 2006         2005
                                             ------------- -----------
Assets
 Current assets:
       Cash and cash equivalents            $      82,000 $   386,000
       Accounts receivable, net of
        allowances of $504,000 and $732,000,
        respectively                            5,646,000   4,434,000
       Prepaid expenses                           194,000     326,000
       Other current assets                        42,000      77,000
       Deferred tax asset, current                500,000     500,000
                                             ------------- -----------
 Total current assets                           6,464,000   5,723,000

 Property and equipment, net of accumulated
  depreciation                                  2,401,000   2,229,000

 Goodwill                                       3,567,000   3,567,000
 Identified intangible assets                   4,411,000   4,629,000
 Loans and advances                               166,000     439,000
 Deferred tax asset, long term                  1,504,000   1,504,000
 Other long term assets                           406,000     363,000
                                             ------------- -----------
                                            $  18,919,000 $18,454,000
                                             ------------- -----------

Liabilities and Stockholders' Equity
 Current liabilities:
          Accounts payable                  $   1,202,000 $   924,000
          Accrued salaries and wages              391,000     397,000
          Accrued expenses, other               1,012,000   2,721,000
          Current maturities of long term
           debt                                   177,000     242,000
          Other current liabilities               252,000      97,000
                                             ------------- -----------
 Total current liabilities                      3,034,000   4,381,000

                                            --------------------------
 Line of credit                                 2,805,000   1,764,000
 Notes payable and capital leases, net of
  current maturities                              140,000     824,000
 Other long-term liabilities                      190,000     199,000
                                             ------------- -----------
 Total long-term liabilities                    3,135,000   2,787,000

 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;
       26,465,034 shares issued and
       26,285,034 outstanding                      26,000      26,000
      Additional paid-in capital               20,371,000  20,312,000
      Accumulated deficit                      (7,540,000) (8,945,000)
      Treasury stock, at cost, 180,000
       shares held                               (107,000)   (107,000)

                                            --------------------------
 Total stockholders' equity                    12,750,000  11,286,000
                                             ------------- -----------
                                            $  18,919,000 $18,454,000
                                             ------------- -----------

                       Selected Financial Data
              For the three months ended, June 30, 2006

                                      Express-1  Evansville
                                      Expedited   Dedicated Corporate
                                     ---------------------------------
Operating Revenues                   $9,868,000 $ 1,252,000         -
Direct Expenses                       7,268,000     989,000         -
Sales, general and administrative
 expenses                             1,515,000     163,000   365,000
Restructuring expenses                        -           -         -
                                     ----------------------- ---------
Net income (loss) before provision
 (benefit) for taxes                 $1,085,000 $   100,000 $(365,000)
                                      ========== =========== =========

Restructuring expenses               $        - $         - $       -
Depreciation and amortization           207,000      47,000         -
Interest expense, net                         -           -    63,000
Taxes                                         -           -         -
                                     ---------------------------------

EBITDA                               $1,292,000 $   147,000 $(302,000)
                                      ========== =========== =========

                       Selected Financial Data
              For the three months ended, June 30, 2006
                                                           Express-1
                                         Core              Expedited
                                                          Solutions,
                                       Business   Other       Inc.
                                     ---------------------------------
Operating Revenues                   $11,120,000 $      - $11,120,000
Direct Expenses                        8,257,000        -   8,257,000
Sales, general and administrative
 expenses                              2,043,000  (28,000)  2,015,000
Restructuring expenses                         -        -           -
                                     ------------ --------------------
Net income (loss) before provision
 (benefit) for taxes                 $   820,000 $ 28,000 $   848,000
                                      =========== ======== ===========

Restructuring expenses               $         - $      - $         -
Depreciation and amortization            254,000        -     254,000
Interest expense, net                     63,000        -      63,000
Taxes                                          -        -           -
                                     ---------------------------------

EBITDA                               $ 1,137,000 $ 28,000 $ 1,165,000
                                      =========== ======== ===========

                       Selected Financial Data
              For the three months ended, June 30, 2005

                                               Evansville
                                     Express-1  Dedicated  Corporate
                                   -----------------------------------
Operating Revenues                 $ 7,160,000 $1,065,000 $         -
Direct Expenses                      5,415,000  1,037,000           -
Sales, general and administrative
 expenses                            1,546,000    113,000     785,000
Restructuring expenses                       -          -     375,000
                                   ----------------------- -----------

Net income (loss) before provision
 (benefit) for taxes               $   199,000 $  (85,000)$(1,160,000)
                                    =========== ========== ===========

Restructuring expenses             $         - $        - $   375,000
Depreciation and amortization          194,000    103,000      83,000
Interest expense, net                        -          -      52,000
Taxes                                        -          -           -
                                   -----------------------------------

EBITDA                             $   393,000 $   18,000 $  (650,000)
                                    =========== ========== ===========

                       Selected Financial Data
              For the three months ended, June 30, 2005

                                       Core
                                                           Segmentz,
                                     Business     Other       Inc.
                                   -----------------------------------
Operating Revenues                 $ 8,225,000 $2,065,000 $10,290,000
Direct Expenses                      6,452,000  1,605,000   8,057,000
Sales, general and administrative
 expenses                            2,444,000    625,000   3,069,000
Restructuring expenses                 375,000          -     375,000
                                    ---------------------- -----------

Net income (loss) before provision
 (benefit) for taxes               $(1,046,000)$ (165,000)$(1,211,000)
                                    =========== ========== ===========

Restructuring expenses             $   375,000 $        - $   375,000
Depreciation and amortization          380,000     34,000     414,000
Interest expense, net                   52,000          -      52,000
Taxes                                        -          -           -
                                   -----------------------------------

EBITDA                             $  (239,000)$ (131,000)$  (370,000)
                                    =========== ========== ===========

                       Selected Financial Data
               For the six months ended, June 30, 2006

                                      Express-1  Evansville
                                      Expedited   Dedicated Corporate
                                     ---------------------------------


Operating Revenues                   $18,244,000 $2,431,000 $       -
Direct Expenses                       13,358,000  1,980,000         -
Sales, general and administrative
 expenses                              2,869,000    323,000   710,000
Restructuring expenses                         -          -         -
                                     ---------------------------------

Net income (loss) before provision
 (benefit) for taxes                 $ 2,017,000 $  128,000 $(710,000)
                                      =========== ========== =========

Restructuring expenses               $         - $        - $       -
Depreciation and amortization            419,000     94,000         -
Interest expense, net                          -          -   108,000
Taxes                                          -          -         -
                                     ---------------------------------

EBITDA                               $ 2,436,000 $  222,000 $(602,000)
                                      =========== ========== =========

                       Selected Financial Data
               For the six months ended, June 30, 2006
                                                           Express-1
                                                           Expedited
                                         Core             Solutions,
                                       Business    Other      Inc.
                                     ---------------------------------


Operating Revenues                   $20,675,000 $      - $20,675,000
Direct Expenses                       15,338,000        -  15,338,000
Sales, general and administrative
 expenses                              3,902,000   30,000   3,932,000
Restructuring expenses                         -        -           -
                                     ---------------------------------

Net income (loss) before provision
 (benefit) for taxes                 $ 1,435,000 $(30,000)$ 1,405,000
                                      =========== ======== ===========

Restructuring expenses               $         - $      - $         -
Depreciation and amortization            513,000        -     513,000
Interest expense, net                    108,000        -     108,000
Taxes                                          -        -           -
                                     ---------------------------------

EBITDA                               $ 2,056,000 $(30,000)$ 2,026,000
                                      =========== ======== ===========

                       Selected Financial Data
               For the six months ended, June 30, 2005

                                               Evansville
                                    Express-1   Dedicated  Corporate
                                   -----------------------------------
Operating Revenues                 $14,067,000 $2,129,000 $         -
Direct Expenses                     10,500,000  2,056,000           -
Sales, general and administrative
 expenses                            3,186,000    237,000   1,369,000
Restructuring expenses                       -          -   3,958,000
                                   ----------------------- -----------

Net income (loss) before provision
 (benefit) for taxes               $   381,000 $ (164,000)$(5,327,000)
                                    =========== ========== ===========

Restructuring expenses             $         - $        - $ 3,958,000
Depreciation and amortization          387,000    214,000     151,000
Interest expense, net                        -          -      76,000
Taxes                                        -          -           -
                                   -----------------------------------

EBITDA                             $   768,000 $   50,000 $(1,142,000)
                                    =========== ========== ===========

                       Selected Financial Data
               For the six months ended, June 30, 2005

                                       Core                Segmentz,
                                     Business     Other       Inc.
                                   -----------------------------------
Operating Revenues                 $16,196,000 $4,443,000 $20,639,000
Direct Expenses                     12,556,000  3,879,000  16,435,000
Sales, general and administrative
 expenses                            4,792,000  1,315,000   6,107,000
Restructuring expenses               3,958,000          -   3,958,000
                                    ---------------------- -----------

Net income (loss) before provision
 (benefit) for taxes               $(5,110,000)$ (751,000)$(5,861,000)
                                    =========== ========== ===========

Restructuring expenses             $ 3,958,000 $        - $ 3,958,000
Depreciation and amortization          752,000    109,000     861,000
Interest expense, net                   76,000          -      76,000
Taxes                                        -          -           -
                                   -----------------------------------

EBITDA                             $  (324,000)$ (642,000)$  (966,000)
                                    =========== ========== ===========

 

The selected financial data above represents "reporting units" within the Company. The subtotal entitled "Core Business" represents the operations remaining after the completion of the restructuring plan, and is intended only to give the reader the ability to view what are now our ongoing operations, exclusive of the closed operations. The column entitled "Other" represents services or location revenue and expenses that have primarily been eliminated based on the restructuring plan implemented in the fourth quarter of 2004. Remaining expense items reflected within this column include real estate leases, equipment termination costs and impairment charges associated with equipment and property no longer in use. None of our reporting units met the quantitative criteria required for segment reporting. For purposes of the selected financial tables above, we have included Interest Expense and Other Expense within the line item Sales, general and administrative expenses.