Document
0001426945FALSE00014269452019-10-232019-10-23

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 23, 2019
 
ECHO GLOBAL LOGISTICS, INC.
(Exact name of registrant as specified in its charter)

Delaware   001-34470    20-5001120
(State or other jurisdiction of
incorporation)   (Commission File Number)  (I.R.S. Employer Identification No.)
 

600 West Chicago Avenue
Suite 725
Chicago, Illinois      60654
(Address of principal executive offices)     (Zip Code)

(800) 354-7993
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per shareECHONASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act (§240.12b-2 of this chapter).
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 



Item 2.02 Results of Operations and Financial Condition.*
 
On October 23, 2019, Echo Global Logistics, Inc. issued a press release announcing financial results for its fiscal quarter ended September 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)
 
Exhibits:
 
  Exhibit No.
 
 
 
Description
 
99.1*
 
 
 
Press Release dated October 23, 2019.
 
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.




Exhibit Index
 
Exhibit No.
 
 
 
Description
 
99.1*
 
 
 
 
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
ECHO GLOBAL LOGISTICS, INC.
Dated: October 23, 2019By/s/ Kyle Sauers
 Name:Kyle Sauers
Title:Chief Financial Officer


Document
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13159573&doc=8
October 23, 2019

Echo Global Logistics Reports Third Quarter 2019 Results
CHICAGO, Oct. 23, 2019 /PRNewswire/ -- Echo Global Logistics, Inc. (NASDAQ: ECHO), a leading provider of technology-enabled transportation management services, today reported financial results for the quarter ended September 30, 2019.
"Our teams performed well this quarter in what continues to be a softer freight market," said Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer at Echo. "We again grew truckload ("TL") contract freight and less than truckload ("LTL") volumes, while also reducing our selling, general and administrative costs this quarter both sequentially and on a year over year basis."

Third Quarter 2019 Highlights
Revenue decreased 12.9% to $561.4 million from the third quarter of 2018; Net revenue(1) decreased 12.8% to $97.0 million from the third quarter of 2018
LTL revenue increased 0.8% from the third quarter of 2018
Managed Transportation revenue decreased 4.7% to $128.1 million and Transactional revenue decreased 15.1% to $433.3 million from the third quarter of 2018
Net revenue margin(1) increased to 17.3% in the third quarter of 2019 from 17.2% in the third quarter of 2018
Net income decreased to $4.8 million, compared to $9.4 million in the third quarter of 2018
Fully diluted EPS decreased to $0.18 in the third quarter of 2019; non-GAAP fully diluted EPS(1) decreased to $0.39 in the third quarter of 2019
Adjusted EBITDA(1) declined 22.5% to $21.8 million, compared to $28.2 million in the third quarter of 2018
_____________________
(1)Represents a non-GAAP financial measure. For the definition and a discussion of each non-GAAP financial measure contained in this release, see "Non-GAAP Financial Measures." For a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure, see the "Reconciliation of Non-GAAP Financial Measures" section of this release.




Summarized financial results and select operating metrics are as follows:
Three Months Ended September 30,
Dollars in millions, except per share data20192018% change
(unaudited) 
Transactional revenue$433.3  $510.3  (15.1)%
Managed Transportation revenue128.1  134.5  (4.7)%
Revenue561.4  644.8  (12.9)%
Transportation costs464.5  533.6  (13.0)%
Net revenue(1)
97.0  111.2  (12.8)%
Commission expense29.1  33.2  (12.4)%
Change in contingent consideration0.1  0.1  6.7 %
Acquisition-related transaction costs—  0.3  (100.0)%
Stock compensation expense2.5  2.4  7.6 %
Other selling, general and administrative46.1  49.9  (7.6)%
Selling, general and administrative expenses77.7  85.7  (9.3)%
Depreciation6.8  6.0  14.0 %
Amortization2.8  3.3  (14.4)%
Depreciation and amortization9.6  9.2  3.9 %
Income from operations9.7  16.3  (40.6)%
Cash interest expense1.3  1.6  (22.6)%
Non-cash interest expense1.6  2.2  (27.5)%
Interest expense2.8  3.8  (25.4)%
Income before provision for income taxes6.8  12.5  (45.3)%
Income tax expense(2.0) (3.1) (35.8)%
Net income$4.8  $9.4  (48.4)%
Fully diluted EPS$0.18  $0.33  (45.0)%
Diluted shares
26.5  28.2  
Note: Amounts may not foot due to rounding.
(1)See the "Reconciliation of Non-GAAP Financial Measures" and "Non-GAAP Financial Measures" sections of this release.





Reconciliation of Non-GAAP Financial MeasuresThree Months Ended September 30,
Dollars in millions, except per share data20192018% change
(unaudited)
Revenue$561.4  $644.8  (12.9)%
Transportation costs464.5  533.6  (13.0)%
Net revenue(1)
$97.0  $111.2  (12.8)%
Net income$4.8  $9.4  (48.4)%
Depreciation6.8  6.0  14.0 %
Amortization2.8  3.3  (14.4)%
Non-cash interest expense1.6  2.2  (27.5)%
Cash interest expense1.3  1.6  (22.6)%
Income tax expense2.0  3.1  (35.8)%
EBITDA(1)
$19.3  $25.5  (24.5)%
Acquisition-related transaction costs—  0.3  (100.0)%
Change in contingent consideration0.1  0.1  6.7 %
Stock compensation expense2.5  2.4  7.6 %
Adjusted EBITDA(1)
$21.8  $28.2  (22.5)%
Fully diluted EPS$0.18  $0.33  (45.0)%
Change in contingent consideration0.00  0.00  13.6 %
Amortization0.11  0.12  (8.8)%
Acquisition-related transaction costs—  0.01  (100.0)%
Non-cash interest expense0.06  0.08  (22.8)%
Stock compensation expense0.10  0.08  14.6 %
Tax effect of adjustments(0.05) (0.07) (25.9)%
Non-GAAP fully diluted EPS(1)
$0.39  $0.55  (28.5)%
Operating Metrics
Net revenue margin(1)
17.3 %17.2 % bps  
Total employees2,603  2,651  (1.8)%
Sales employees and agents1,741  1,761  (1.1)%
TL revenue %65.7 %69.1 %(344) bps  
LTL revenue %29.9 %25.8 %407  bps  
Note: Amounts may not foot due to rounding.
(1)See the "Non-GAAP Financial Measures" section of this release for the definition and a discussion of each Non-GAAP financial measure.

2019 Fourth Quarter and Full Year Guidance
"We expect revenue for the fourth quarter to be between $500 million and $540 million and we are updating our full year 2019 revenue guidance to be in the range of $2.155 billion to $2.195 billion, unchanged from our previous guidance at the midpoint," said Kyle Sauers, Chief Financial Officer at Echo.




Conference Call
A conference call, with accompanying presentation slides, will be broadcast live on October 23, 2019 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer; Dave Menzel, President and Chief Operating Officer; and Kyle Sauers, Chief Financial Officer, will host the call. To participate in the call, dial 877-303-6235 (toll free) or 631-291-4837 (toll) and reference "Echo Global Logistics." To listen to a live webcast of the call, visit the Echo website at http://ir.echo.com. A replay of the webcast will be available for one year following the live webcast in the Investor Relations section of the Echo website. To listen to an audio replay, call 855-859-2056 (toll free) or 404-537-3406 (toll) and enter conference ID 5492216. The audio replay will be available through October 30, 2019.

Non-GAAP Financial Measures
This release includes the following financial measures defined as "Non-GAAP financial measures" by the Securities and Exchange Commission (the "SEC"): Net revenue, net revenue margin, EBITDA, Adjusted EBITDA and Non-GAAP fully diluted EPS. Net revenue is calculated as revenue less transportation costs. Net revenue margin is calculated as net revenue (as previously defined) divided by revenue. EBITDA is defined as net income excluding the effects of depreciation, amortization, cash and non-cash interest expense and income taxes. Adjusted EBITDA is defined as EBITDA (as previously defined) excluding the effects of acquisition-related transactions costs, changes in contingent consideration and stock compensation expense. Non-GAAP fully diluted EPS is defined as fully diluted EPS excluding changes in contingent consideration, amortization, acquisition-related transactions costs, non-cash interest expense, stock compensation expense and the tax effect of these adjustments. We believe such measures provide useful information to investors because they provide information about the financial performance of the Company's ongoing business.
Net revenue, net revenue margin, EBITDA, Adjusted EBITDA and Non-GAAP fully diluted EPS are used by management in its financial and operational decision-making and evaluation of overall operating performance. These measures may be different from similar measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure, see "Reconciliation of Non-GAAP Financial Measures" included in this release.

Forward-Looking Statements
All statements made in this release, other than statements of historical fact, are or may be deemed to be forward-looking statements. These statements are forward-looking statements under the federal securities laws. We can give no assurance that any future results discussed in these statements will be achieved. These statements are based on current plans and expectations of Echo Global Logistics and involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. Information concerning these risks, uncertainties and other factors is contained under the headings "Risk Factors" and "Forward-Looking Statements" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018, and other filings with the SEC.







Echo Global Logistics, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
In thousands, except per share data(unaudited)(unaudited)
Revenue$561,441  $644,821  $1,653,300  $1,856,723  
Costs and expenses:
Transportation costs464,460  533,601  1,356,949  1,538,791  
Selling, general and administrative expenses77,722  85,709  238,055  250,871  
Depreciation and amortization9,594  9,230  28,855  27,168  
Income from operations9,665  16,281  29,441  39,893  
Interest expense(2,821) (3,780) (9,789) (11,284) 
Income before provision for income taxes6,844  12,501  19,652  28,609  
Income tax expense(2,001) (3,118) (6,245) (6,821) 
Net income$4,843  $9,383  $13,407  $21,788  
Basic earnings per share$0.18  $0.34  $0.50  $0.79  
Diluted earnings per share$0.18  $0.33  $0.50  $0.78  


Echo Global Logistics, Inc.
Condensed Consolidated Balance Sheets
September 30, 2019December 31, 2018
In thousands(unaudited)
Cash and cash equivalents$26,418  $40,281  
Accounts receivable, net of allowance for doubtful accounts314,785  337,426  
Other current assets12,657  16,025  
Total noncurrent assets493,407  484,593  
Total assets$847,266  $878,325  
Accounts payable$210,851  $216,280  
Other current liabilities44,049  50,627  
Convertible notes, net154,828  183,168  
Other noncurrent liabilities54,489  38,319  
Stockholders’ equity383,049  389,932  
Total liabilities and stockholders’ equity$847,266  $878,325  
Note: Amounts may not foot due to rounding.






Echo Global Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30,
20192018
In thousands(unaudited)
Net cash provided by operating activities$68,298  $63,009  
Net cash used in investing activities(18,887) (27,220) 
Net cash (used in) provided by financing activities(63,275) 1,239  
(Decrease) Increase in cash and cash equivalents(13,863) 37,028  
Cash and cash equivalents, beginning of period40,281  23,515  
Cash and cash equivalents, end of period$26,418  $60,542  
Note: Amounts may not foot due to rounding.

About Echo Global Logistics
Echo Global Logistics, Inc. (NASDAQ: ECHO) is a leading provider of technology-enabled transportation and supply chain management services. Headquartered in Chicago with more than 30 offices around the country, Echo offers freight brokerage and Managed Transportation solutions for all major modes, including truckload, partial truckload, LTL, intermodal and expedited. Echo maintains a proprietary, web-based technology platform that compiles and analyzes data from its network of over 50,000 transportation providers to serve clients across a wide range of industries and simplify the critical tasks involved in transportation management. For more information on Echo Global Logistics, visit: www.echo.com.
ECHO: Earnings
INVESTOR RELATIONS CONTACTS:
Kyle Sauers
Chief Financial Officer
Echo Global Logistics
312-784-7695
Zach Jecklin
SVP of Strategy
Echo Global Logistics
312-784-2046

MEDIA RELATIONS:
Christopher Clemmensen
SVP of Marketing
Echo Global Logistics
312-784-2132