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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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EXPRESS-1 EXPEDITED SOLUTIONS, INC.
 
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Express-1 Expedited Solutions Reports Second Quarter 2011 Results
SAINT JOSEPH, Mich. — August 15, 2011 — 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.
About Express-1 Expedited Solutions, Inc.
Founded in 1989, Express-1 is a non-asset-based, third-party logistics services provider that uses a network of relationships with ground, sea and air carriers to find the best transportation solutions for its customers. The Company offers its services through three distinct business units: Express-1, Inc. (expedited transportation solutions), the fifth largest U.S. expedited

 

 

freight service provider, according to The Journal of Commerce; Concert Group Logistics, Inc. (domestic and international freight forwarding); and Bounce Logistics, Inc. (premium truckload brokerage). The Company serves more than 4,000 retail, commercial, manufacturing and industrial customers through six U.S. operations centers and 23 agent locations. www.xpocorporate.com
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.
Contact:
Express-1 Expedited Solutions, Inc.
Mike Welch, 269-429-9761
Mike.Welch@xpocorporate.com

 

 

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 %