Echo Global Logistics
Aug 3, 2010
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Echo Global Logistics Reports Second Quarter 2010 Results

CHICAGO, Aug 3, 2010 (GlobeNewswire via COMTEX News Network) -- Echo Global Logistics, Inc. (Nasdaq:ECHO), a leading provider of technology-enabled transportation and supply chain management services, today reported financial results for the three months ended June 30, 2010. Summarized financial results for the second quarter of 2010, along with select operating metrics, are as follows:


  Amounts in 000,000 s,      Three months ended June
   except per share data               30,
                            -------------------------

                                                 %
                             2009     2010     change
                            -------  -------  -------
  Revenue:
   Transactional             $ 36.4   $ 66.1    81.6%

   Enterprise                  23.9     43.8    83.3%
                            -------  -------  -------
    Total Revenue              60.3    109.9    82.3%

  Net revenue (Total
   Revenue less
   transportation costs)       13.2     20.0    51.4%

  Operating Expenses
   Commissions                  3.7      6.3    67.9%
   General and
    administrative              7.1      8.9    26.3%
   Depreciation and
    amortization                1.1      1.7    55.7%
                            -------  -------  -------
    Total Operating
     Expenses                  11.9     16.9    42.1%

  Operating Income              1.3      3.1   135.3%


  Interest Expense              0.2      0.0   -76.9%
                            -------  -------  -------

  Income Before Taxes           1.1      3.1   170.2%

  Provision for Income
   Taxes                        0.4      1.2   157.6%

  Net Income                    0.7      1.9   178.4%

  Dividends                     0.3       --  -100.0%
                            -------  -------  -------
  Net income applicable to
   common stockholders        $ 0.4    $ 1.9   348.4%

  Diluted shares (000)         12.8     22.2
  Diluted EPS applicable
   to common stockholders     $0.03    $0.09

  Operating Metrics
   Net revenue margin         22.0%    18.2%    (372)  bps
   Operating margin (% of
    net revenue)              10.0%    15.6%      556  bps

   Shipment volume          153,160  263,565    72.1%
   Number of enterprise
    clients                     107      137    28.0%
   Total employees              700      875    25.0%
   Salaried employees           268      282     5.2%
   Commissioned sales
    employees                   288      409    42.0%
   Sales agents                 144      184    27.8%
   Less Than Truckload
    (LTL) Total Revenue %     45.8%    43.9%    (186)  bps
   Truckload (TL) Total
    Revenue %                 32.1%    37.8%      572  bps

Commenting on the Company's performance, Chief Executive Officer, Doug Waggoner, said, "We are pleased to report a strong second quarter, as we continued to execute our growth strategy to expand our market share in both transactional and enterprise client bases. We delivered our second consecutive quarter of year-over-year revenue growth in excess of 80% and more than doubled our net income as we expanded our enterprise client base by 30 new clients and our shipment volume increased in excess of 72% while we maintained a lean operating environment.

"While we achieved substantial growth in revenue during the second quarter, we continued to experience net revenue margin compression. This was due to a continued tightening in capacity in the truckload market and a higher mix of truckload revenue, which typically has lower net revenue margins than less-than-truckload net revenue. However, our operating margins expanded from 10% to 15.6%, as our continued growth improved our overall operating leverage."

Second Quarter Results

Total revenue of $109.9 million in the second quarter of 2010 increased 82% compared to revenue of $60.3 million in the second quarter of 2009. The majority of this increase was driven by higher volumes, attributable to both an increase in the number of clients served as well as higher volumes per client for our transactional and enterprise clients. Total shipment volume increased by 72% year-over-year. In addition, the Company's revenue per shipment increased by 6% year-over-year.

Transactional revenue of $66.1 million in the second quarter of 2010 increased 82% compared to transactional revenue of $36.4 million in the second quarter of 2009. Echo's transactional client base increased from 8,939 in the second quarter of 2009 to 11,432 in the second quarter of 2010. In addition, revenue per transactional customer increased by 42% on a year-over-year basis, driven by an increased number of transactional sales people and their improved productivity. Additionally, RayTrans, which we acquired in June 2009, contributed $9.1 million of transactional revenue in the second quarter of 2010 compared to $2.1 million in the second quarter of 2009.

Enterprise revenue of $43.8 million in the second quarter of 2010 increased 83% compared to enterprise revenue of $23.9 million in the second quarter of 2009. This increase was driven by the net addition of 30 new enterprise clients from the prior year quarter as well as a 43% increase in the average revenue per enterprise client year-over-year. Echo entered into thirteen new enterprise agreements during the second quarter of 2010.

Net revenue, which represents total revenue less transportation costs, increased 51% in the second quarter of 2010 to $20.0 million compared to $13.2 million in the second quarter of 2009. This increase was driven by growth in total revenue, partially offset by lower margins due to tightening truckload capacity and an increase in truckload revenue as a percentage of total revenue. Truckload revenue represented 38% of total revenue in the second quarter of 2010 as compared to 32% in the prior year period. The Company's truckload revenue generally has lower net revenue margins when compared to less-than-truckload revenue.

Commission expense increased by 68% in the second quarter of 2010 compared to the second quarter of 2009. This increase was due to the increase in net revenue, as the Company's commission plans are based on net revenue, and a higher overall effective commission rate as a result of higher revenues generated from outside sales agents. The rates Echo pays outside sales agents are generally higher than its internal commission rates.

The Company's general and administrative expense of $8.9 million increased 26% in the second quarter of 2010 compared to $7.1 million in the second quarter of 2009, driven primarily by an increase in personnel. The total number of employees increased from 700 as of June 30, 2009 to 875 as of June 30, 2010.

The Company's depreciation and amortization expense of $1.7 million increased 56% in the second quarter of 2010 compared to $1.1 million in the second quarter of 2009. This increase in expense was the result of continued investment in technology and the resulting depreciation of capitalized software development costs, as well as an increase in amortization expense of intangibles assets resulting from the acquisitions completed over the past year.

Net income for the second quarter of 2010 was $1.9 million compared to net income of $0.7 million in the second quarter of 2009. Diluted earnings per share of $0.09 in the second quarter of 2010 was an increase of $0.06 per share over diluted earnings per share of $0.03 in the second quarter of 2009.

Business Outlook

"In the second quarter of 2010, we continued to execute our strategy to grow our market share by adding new clients," Mr. Waggoner commented. "Our growth was accelerated sequentially as the broader economy has remained steady and we were aided by a stronger seasonal quarter. We experienced improving trends in sales force productivity as well as improvement in key operating metrics that have enabled us to continue to achieve rapid growth. We anticipate a strong second half of 2010 as we continue to see a steady economic outlook and remain confident that our business model will enable us to continue to capture market share."

Conference Call

A conference call will be broadcast live on Tuesday, August 3, 2010, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). The live webcast discussion, which will include a Q&A session, will be hosted by Douglas R. Waggoner, Chief Executive Officer, and David B. Menzel, Chief Financial Officer. Interested parties are invited to listen to the live webcast by visiting the Investors' "Events" section of Echo's website at www.echo.com. A replay of the webcast will be available later that day in the same section of the website.

About Echo Global Logistics

Chicago-based Echo Global Logistics is a leading provider of technology enabled transportation and supply chain management services, delivered on a proprietary technology platform, serving the transportation and logistics needs of its clients. Echo's web-based technology platform compiles and analyzes data from its network of over 24,000 transportation providers to serve its clients' shipping and freight management needs. Echo procures transportation and provides logistics services for more than 15,600 clients across a wide range of industries, such as manufacturing, construction, consumer products and retail. For more information on Echo, visit: www.echo.com.

The Echo Global Logistics, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5293

Forward-Looking Statements

This release contains statements relating to future results. 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. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of the Form 10-K we recently filed with the SEC.

                   Echo Global Logistics, Inc.
               Condensed Consolidated Balance Sheets


                                   December 31,      June 30,
                                       2009            2010

                                                   (unaudited)
                                  --------------  --------------
    Cash and cash equivalents       $ 47,803,704    $ 39,103,489
    Accounts receivable, net of
     allowance for doubtful
     accounts                         43,689,684      58,726,239
    Prepaid expenses                   6,420,750       7,303,407
    Other current assets                 735,171         649,439

    Total long term assets            34,025,979      40,287,370
                                  --------------  --------------

  Total assets                     $ 132,675,288   $ 146,069,944
                                  ==============  ==============

    Accounts payable -- trade       $ 27,039,510    $ 35,204,774
    Current maturities of
     capital lease obligations           302,518         313,546
    Other liabilities                  3,775,840       5,279,517
    Deferred income taxes              1,894,204       2,071,080
    Long term liabilities              5,873,143       5,138,197

    Stockholders' equity              93,790,073      98,062,830
                                  --------------  --------------
  Total liabilities and
   stockholders' equity            $ 132,675,288   $ 146,069,944
                                  ==============  ==============


                    Echo Global Logistics, Inc.
               Consolidated Statements of Operations


                                     Three Months Ended June 30,      Six Months Ended June 30,
                                         2009           2010            2009            2010

                                             (Unaudited)                    (Unaudited)
                                    -----------------------------  ------------------------------



  REVENUE                            $ 60,290,183   $ 109,904,864   $ 109,353,931   $ 199,008,888

  COSTS AND EXPENSES:
    Transportation costs               47,050,451      89,856,074      85,100,397     161,915,561
    Selling, general, and
     administrative expenses           10,812,372      15,212,579      20,664,317      28,547,696

    Depreciation and amortization       1,099,004       1,710,660       2,138,781       3,393,246
                                    -------------  --------------  --------------  --------------
  INCOME FROM OPERATIONS                1,328,356       3,125,551       1,450,436       5,152,385

  OTHER EXPENSE                         (187,846)        (43,411)       (264,524)        (93,127)
                                    -------------  --------------  --------------  --------------
  INCOME BEFORE PROVISION FOR
   INCOME TAXES                         1,140,510       3,082,140       1,185,912       5,059,258

  INCOME TAX EXPENSE                    (448,800)     (1,156,107)       (466,666)     (1,897,254)
                                    -------------  --------------  --------------  --------------
  NET INCOME                              691,710       1,926,033         719,246       3,162,004

  DIVIDENDS ON PREFERRED SHARES         (262,153)              --       (527,187)              --
                                    -------------  --------------  --------------  --------------
  NET INCOME APPLICABLE TO COMMON
   STOCKHOLDERS                         $ 429,557     $ 1,926,033       $ 192,059     $ 3,162,004
                                    =============  ==============  ==============  ==============

  Basic net income per share               $ 0.03          $ 0.09          $ 0.02          $ 0.15
  Diluted net income per share             $ 0.03          $ 0.09          $ 0.02          $ 0.14


                          Echo Global Logistics, Inc.
                     Consolidated Statements of Cash Flows

                                                  Six Months Ended June 30,
                                                    2009            2010

                                                        (Unaudited)
                                               ------------------------------

  Net cash used in operating activities         $ (1,530,355)   $ (1,422,578)

  Net cash used in investing activities           (7,773,879)     (7,322,704)

  Net cash provided by financing activities         9,286,660          45,067

  Decrease in cash and cash equivalents              (17,574)     (8,700,215)
  Cash and cash equivalents, beginning of
   period                                           1,872,922      47,803,704
                                               --------------  --------------

  Cash and cash equivalents, end of period        $ 1,855,348    $ 39,103,489
                                               ==============  ==============


This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Echo Global Logistics, Inc.

CONTACT:  Echo Global Logistics, Inc.
Heather Mills
312-276-3222
hmills@echo.com

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