Express-1 Expedited Solutions, Inc. (AMEX:XPO) today announced that its operating subsidiary, Express-1 Dedicated has been informed that its primary contract for dedicated services would cease effective March 2, 2009.
The contract covers service to Ford Motor Company, is administered through Schneider Logistics and was initially awarded to the Company in May of 2003. The Express-1 Dedicated team consistently performed at a superior level for service, as evidenced by the multiple awards presented by the contract customer for outstanding service.
At this time, the Company is in the preliminary stages of analyzing the impact of this loss of business on the Express-1 Dedicated business unit and its employees. The Company is hopeful that all employees will be retained by the new service provider and is working with a transition team to facilitate a smooth transition for all parties. As of October 31, 2008, the Company employed 35 full-time and 3 part-time non-union employees in its Express-1 Dedicated business unit.
Dedicated services have been provided on a daily basis with multiple pick-ups at Ford’s high velocity parts distribution center in Evansville, Indiana with nightly unattended deliveries throughout the region to local Ford Dealerships. The dedicated contract portion of business represents approximately ninety percent (90%) of the business volume within the Express-1 Dedicated business unit as measured in revenue. On a prospective basis, the contract called for approximately $3.8 million in revenue for the 2009 service year. While the Company is still evaluating whether it will remain viable to continue stand-alone operations in Evansville after this transition, its management team currently anticipates shutdown costs associated with this cessation to be minimal since the employees and building lease are anticipated to be transitioned to the new contract provider.
Commenting on the loss of business, the Company’s CEO, Mike Welch, stated, “We are all obviously disappointed with the news that the contract business has been awarded to another service provider. Brian Glaser and his team have managed this operation in an exemplary manner over the past five years, winning numerous awards and recognition from the contract customer for their excellent customer service. While we are all saddened by the news, we are encouraged that the loss was due to economic considerations and not to the service levels of our operations. At this time, our focus is on how to assist in the successful transition of our employees to the new contract provider and in successfully completing our commitment to service through the transition date. With the loss of this contract business, our reliance on the automotive sector will continue to decline. At the present time, we anticipate automotive related accounts, including domestic and foreign manufacturers, will represent less than fifteen percent of Consolidated Express-1 Expedited Solutions revenue, after the expiration of this contract.”
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.
