Express-1 Expedited Solutions Reports Second Quarter 2011 Results

Express-1 Expedited Solutions, Inc. (NYSE Amex: XPO) ("Express-1" or the "Company") today announced its financial results for the second quarter of 2011. Total revenue from continuing operations for the second quarter was $44.1 million, a 9.3% increase from the same period in 2010.

Net income from continuing operations for the second quarter was $914,000, or $.03 diluted earnings per share, compared with $1,504,000, or $.05 diluted earnings per share, for the same period in 2010. Gross margin of $7,180,000 declined 1.6 percentage points year-over-year to 16.3% for the quarter, reflecting a choppy environment for the Company's Express-1 business unit, partially offset by gains in other operating segments.

Mike Welch, chief executive officer, said, "While our revenue growth in the quarter was solid, we experienced margin pressure within our Express-1 unit, including a greater reliance on high-volume, lower-rate customers, and the strategic expansion of our cross-border business. In addition, we drove 43% revenue growth in Bounce Logistics, a business model that generates a lower margin. Non-operational impacts on results included expenses related to the proposed equity investment led by Jacobs Private Equity, and a modification to the revenue recognition policy for our CGL unit that reduced both our top line and our profitability.

"Domestic demand began to strengthen late in the quarter, as reflected in our June gross margin of 16.9%. In addition, we are continuing to see significant growth in our business with Mexico, where Express-1's expertise in border logistics is a competitive advantage. We anticipate that our overall operating environment will continue to become more favorable through the balance of the year as Japan's export production recovers from the tsunami and seasonal retail activity develops."

Welch continued, "Our board has recommended the proposed investment in Express-1 led by Jacobs Private Equity. This is a tremendous opportunity for the company to carve out a major position under the new banner of XPO Logistics in three areas where we already excel: expedited transportation solutions, domestic and international freight forwarding, and premium truckload brokerage. We look forward to the stockholder vote on September 1."

Conference Call

In light of the pending equity investment, the Company's next earnings conference call will be held after the reporting of third quarter 2011 results.

Forward-Looking Statements

This press release contains forward-looking statements. Statements that are not historical facts, including statements about beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described in this press release include, among others: uncertainties as to the timing of the proposed equity investment; the possibility that competing transaction proposals will be made; the possibility that various closing conditions for the proposed equity investment may not be satisfied or waived; the possibility that the warrants contemplated by the proposed equity investment, if issued, will not be exercised; the potential inability to identify and consummate acquisitions and arrange adequate financing; the acquisition of businesses or the launch of new lines of business could increase operating expenses and dilute operating margins; increased competition 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; the general risks associated with our businesses; general economic and business conditions; and other factors. Readers are cautioned not to place undue reliance on the forward-looking statements included in this press release, which speak only as of the date hereof. Neither the Company nor any other person undertakes any obligation to update any of these statements in light of new information or future events.

 
 
Express-1 Expedited Solutions, Inc.
Consolidated Balance Sheets
             
        (Unaudited)    
        June 30, 2011   December 31, 2010
ASSETS            
Current assets:            
Cash       $ 647,000     $ 561,000  
Accounts receivable, net of allowances of $137,000 and $136,000, respectively         24,533,000       24,272,000  
Prepaid expenses         601,000       257,000  
Deferred tax asset, current         0       314,000  
Income tax receivable         859,000       1,348,000  
Other current assets         251,000       813,000  
Total current assets         26,891,000       27,565,000  
             
Property and equipment, net of $3,611,000 and $3,290,000 in accumulated depreciation, respectively         2,865,000       2,960,000  
Goodwill         16,959,000       16,959,000  
Identifiable intangible assets, net of $3,094,000 and $2,827,000 in accumulated amortization, respectively         8,280,000       8,546,000  
Loans and advances         120,000       126,000  
Other long-term assets         481,000       516,000  
Total long-term assets         28,705,000       29,107,000  
Total assets       $ 55,596,000     $ 56,672,000  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
Accounts payable       $ 8,890,000     $ 8,756,000  
Accrued salaries and wages         402,000       1,165,000  
Accrued expenses, other         2,945,000       2,877,000  
Deferred tax liabilities, current         80,000       0  
Current maturities of long-term debt and capital leases         1,667,000       1,680,000  
Other current liabilities         646,000       773,000  
Total current liabilities         14,630,000       15,251,000  
             
             
Line of credit         0       2,749,000  
Long-term debt and capital leases, net of current maturities         1,250,000       2,083,000  
Deferred tax liability, long-term         2,338,000       2,032,000  
Other long-term liabilities         426,000       544,000  
Total long-term liabilities         4,014,000       7,408,000  
             
Stockholders' equity:            
Preferred stock, $.001 par value; 10,000,000 shares; no shares issued or outstanding         0       0  
Common stock, $.001 par value; 100,000,000 shares authorized; 33,191,561 and 32,687,522 shares issued, respectively; and 33,011,561 and 32,507,522 shares outstanding, respectively            
        33,000       33,000  
Additional paid-in capital         28,116,000       27,208,000  
Treasury stock, at cost, 180,000 shares held         (107,000 )     (107,000 )
Accumulated earnings         8,910,000       6,879,000  
Total stockholders' equity         36,952,000       34,013,000  
Total liabilities and stockholders' equity       $ 55,596,000     $ 56,672,000  
                     
                     

 

Express-1 Expedited Solutions, Inc.
Consolidated Statements of Operations
                           
                           
      Three Months Ended       Six Months Ended
      June 30, 2011     June 30, 2010       June 30, 2011     June 30, 2010
Revenues                          
Operating revenue     $ 44,094,000     $ 40,340,000       $ 85,602,000     $ 71,982,000
Expenses                          
Direct expense       36,914,000       33,101,000         71,215,000       59,144,000
Gross margin       7,180,000       7,239,000         14,387,000       12,838,000
Selling, general and administrative expense       5,537,000       4,598,000         10,744,000       8,673,000
Operating income       1,643,000       2,641,000         3,643,000       4,165,000
Other expense       33,000       34,000         62,000       54,000
Interest expense       47,000       88,000         96,000       108,000
Income before income tax provision       1,563,000       2,519,000         3,485,000       4,003,000
Income tax provision       649,000       1,015,000         1,454,000       1,665,000
Net income     $ 914,000     $ 1,504,000       $ 2,031,000     $ 2,338,000
                           
                           
                           
Basic earnings per common share                          
Net income     $ 0.03     $ 0.05       $ 0.06     $ 0.07
Diluted earnings per common share                          
Net income     $ 0.03     $ 0.05       $ 0.06     $ 0.07
Weighted average common shares outstanding                          
Basic weighted average common shares outstanding       33,010,881       32,044,116         32,857,654       32,039,706
Diluted weighted average common shares outstanding       34,333,656       32,645,399         34,211,517       32,602,367
                                   
                                   

 

Express-1 Expedited Solutions, Inc.
Summary Financial Table
For the Three Months Ended June 30, 2011 and 2010
(Unaudited)
                                  Percent of
      Three Months Ended June 30,       Quarter to Quarter Change       Business Unit Revenue
      2011     2010       In Dollars     In Percentage       2011   2010
Revenues                                      
Express-1     $ 23,060,000       $ 20,557,000         $ 2,503,000       12.2 %       52.2 %   51.0 %
CGL       15,722,000         16,074,000           (352,000 )     -2.2 %       35.7 %   39.8 %
Bounce       6,687,000         4,675,000           2,012,000       43.0 %       15.2 %   11.6 %
Intercompany eliminations       (1,375,000 )       (966,000 )         (409,000 )     42.3 %       -3.1 %   -2.4 %
Total revenues       44,094,000         40,340,000           3,754,000       9.3 %       100.0 %   100.0 %
                                       
Direct expenses                                      
Express-1       18,573,000         15,720,000           2,853,000       18.1 %       80.5 %   76.5 %
CGL       14,051,000         14,426,000           (375,000 )     -2.6 %       89.4 %   89.7 %
Bounce       5,665,000         3,921,000           1,744,000       44.5 %       84.7 %   83.9 %
Intercompany eliminations       (1,375,000 )       (966,000 )         (409,000 )     42.3 %       100.0 %   100.0 %
Total direct expenses       36,914,000         33,101,000           3,813,000       11.5 %       83.7 %   82.1 %
                                       
Gross margin                                      
Express-1       4,487,000         4,837,000           (350,000 )     -7.2 %       19.5 %   23.5 %
CGL       1,671,000         1,648,000           23,000       1.4 %       10.6 %   10.3 %
Bounce       1,022,000         754,000           268,000       35.5 %       15.3 %   16.1 %
Total gross margin       7,180,000         7,239,000           (59,000 )     -0.8 %       16.3 %   17.9 %
                                       
Selling, general & administrative                                      
Express-1       2,473,000         2,355,000           118,000       5.0 %       10.7 %   11.5 %
CGL       1,272,000         1,093,000           179,000       16.4 %       8.1 %   6.8 %
Bounce       850,000         613,000           237,000       38.7 %       12.7 %   13.1 %
Corporate       942,000         537,000           405,000       75.4 %       2.1 %   1.3 %
Total selling, general & administrative       5,537,000         4,598,000           939,000       20.4 %       12.6 %   11.4 %
                                       
Operating income                                      
Express-1       2,014,000         2,482,000           (468,000 )     -18.9 %       8.7 %   12.1 %
CGL       399,000         555,000           (156,000 )  

 

-28.1 %       2.5 %   3.5 %
Bounce       172,000         141,000           31,000       22.0 %       2.6 %   3.0 %
Corporate       (942,000 )       (537,000 )         (405,000 )     -75.4 %       -2.1 %   -1.3 %
Operating income       1,643,000         2,641,000           (998,000 )     -37.8 %       3.7 %   6.5 %
                                       
Interest expense       47,000         88,000           (41,000 )     -46.6 %       0.1 %   0.2 %
Other expense       33,000         34,000           (1,000 )     -2.9 %       0.1 %   0.1 %
Income before tax       1,563,000         2,519,000           (956,000 )     -38.0 %       3.5 %   6.2 %
                                       
Tax provision       649,000         1,015,000           (366,000 )     -36.1 %       1.5 %   2.5 %
Net income     $ 914,000       $ 1,504,000         $ (590,000 )     -39.2 %       2.0 %   3.7 %
                                                         
                                                         

 

Express-1 Expedited Solutions, Inc.
Summary Financial Table
For the Six Months Ended June 30, 2011 and 2010
(Unaudited)
                                Percent of
      Six Months Ended June 30,     Year to Year Change       Business Unit Revenue
      2011     2010     In Dollars     In Percentage     2011     2010
Revenues                                      
Express-1     $ 43,802,000       $ 36,769,000       $ 7,033,000       19.1 %       51.1 %     51.1 %
CGL       31,461,000         29,012,000         2,449,000       8.4 %       36.8 %     40.3 %
Bounce       12,670,000         7,798,000         4,872,000       62.5 %       14.8 %     10.8 %
Intercompany eliminations       (2,331,000 )       (1,597,000 )       (734,000 )     46.0 %       -2.7 %     -2.2 %
Total revenues       85,602,000         71,982,000         13,620,000       18.9 %       100.0 %     100.0 %
                                       
Direct expenses                                      
Express-1       34,762,000         28,262,000         6,500,000       23.0 %       79.4 %     76.9 %
CGL       28,064,000         25,954,000         2,110,000       8.1 %       89.2 %     89.5 %
Bounce       10,720,000         6,525,000         4,195,000       64.3 %       84.6 %     83.7 %
Intercompany eliminations       (2,331,000 )       (1,597,000 )       (734,000 )     46.0 %       100.0 %     100.0 %
Total direct expenses       71,215,000         59,144,000         12,071,000       20.4 %       83.2 %     82.2 %
                                       
Gross margin                                      
Express-1       9,040,000         8,507,000         533,000       6.3 %       20.6 %     23.1 %
CGL       3,397,000         3,058,000         339,000       11.1 %       10.8 %     10.5 %
Bounce       1,950,000         1,273,000         677,000       53.2 %       15.4 %     16.3 %
Total gross margin       14,387,000         12,838,000         1,549,000       12.1 %       16.8 %     17.8 %
                                       
Selling, general & administrative                                      
Express-1       5,125,000         4,376,000         749,000       17.1 %       11.7 %     11.9 %
CGL       2,526,000         2,247,000         279,000       12.4 %       8.0 %     7.7 %
Bounce       1,640,000         1,035,000         605,000       58.5 %       12.9 %     13.3 %
Corporate       1,453,000         1,015,000         438,000       43.2 %       1.7 %     1.4 %
Total selling, general & administrative       10,744,000         8,673,000         2,071,000       23.9 %       12.6 %     12.0 %
                                       
Operating income                                      
Express-1       3,915,000         4,131,000         (216,000 )     -5.2 %       8.9 %     11.2 %
CGL       871,000         811,000         60,000       7.4 %       2.8 %     2.8 %
Bounce       310,000         238,000         72,000       30.3 %       2.4 %     3.1 %
Corporate       (1,453,000 )       (1,015,000 )       (438,000 )     -43.2 %       -1.7 %     -1.4 %
Operating income       3,643,000         4,165,000         (522,000 )     -12.5 %       4.2 %     5.8 %
                                       
Interest expense       96,000         108,000         (12,000 )     -11.1 %       0.1 %     0.2 %
Other expense       62,000         54,000         8,000       14.8 %       0.1 %     0.1 %
Income before tax       3,485,000         4,003,000         (518,000 )     -12.9 %       4.0 %     5.5 %
                                       
Tax provision       1,454,000         1,665,000         (211,000 )     -12.7 %       1.7 %     2.3 %
Net income     $ 2,031,000       $ 2,338,000       $ (307,000 )     -13.1 %       2.3 %     3.2 %