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 | % | |||||||||||||||
