XPO earnings out...pounding the table on this one....
Express-1 Expedited Solutions Reports Record Profitability and Solid Top-Line Growth in the Second Quarter of 2006
Thursday August 3, 8:10 am ET
Company Delivers 38% Increase in Expedited Transportation Revenue and Highest Gross Margin in Its History
BUCHANAN, Mich.--(BUSINESS WIRE)--Aug. 3, 2006--Express-1 Expedited Solutions, Inc. (The Company) (AMEX: XPO - News) 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.
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