HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
today reported net income for the fourth quarter of 2006 of $10.9 million,
or $0.27 cents per diluted share. The results compare to fourth quarter
2005 net income of $19.1 million, or $0.47 cents per diluted share.
Operating income in the fourth quarter of 2006 was $17.9 million, a
decrease of 35% from $27.6 million earned in the fourth quarter a year ago.
For the full year 2006, EGL reported net income of $56.3 million, or
$1.38 per diluted share. This compares with 2005 net income of $58.2
million, or $1.22 per diluted share. Operating income for full year 2006
was $96.5 million, an increase of 1% from $95.4 million earned in 2005.
Q4 Financial Highlights:
* Net revenues increased 3% to $258 million compared with $252 million
in the fourth quarter of 2005;
* Net revenue margin was 30.0% compared with 30.1% in the fourth quarter
of 2005.
2006 Full-Year Financial Highlights:
* Net revenues increased 7% to $1.0 billion compared with $948 million
in 2005;
* Net revenue margin improved to 31.4% compared with 30.6% in 2005.
Three Months Ended Year Ended
$ millions (except EPS) 12/31/06 12/31/05 12/31/06 12/31/05
Gross revenues $861.3 $835.1 $3,217.6 $3,096.5
% change + 3% + 4%
Net revenues $258.4 $251.6 $1,010.8 $948.5
% change + 3% + 7%
Net revenue margin 30.0% 30.1% 31.4% 30.6%
Operating expenses $240.6 $223.9 $914.3 $853.1
Operating income $17.9 $27.6 $96.5 $95.4
Net income $10.9 $19.1 $56.3 $58.2
Diluted EPS $0.27 $0.47 $1.38 $1.22
EGL Chief Executive Officer Jim Crane commented, "Our financial
performance in the fourth quarter was disappointing, especially given the
strong momentum we had earlier in 2006. We generated record revenues in the
quarter in spite of industry-wide softness and the decline in revenue per
shipment in our domestic freight forwarding operations. We are taking the
necessary steps to address the financial performance of our residential
delivery business, align our cost structure and continue to focus on
delivering superior service to our customers. Although we generated record
revenues during 2006, we will remain focused on improving profitability on
each shipment and controlling our operating expenses throughout the
organization."
Gross revenues of $861.3 million in the fourth quarter of 2006
increased 3% from the same quarter last year, with increases in airfreight
forwarding of 1%, ocean freight forwarding of 1%, and customs brokerage,
logistics and other of 11%. Gross revenues outside of North America
accounted for 57% of fourth quarter activity and increased 4% over the same
quarter last year due to higher volumes in Asia Pacific and Latin America.
North America gross revenues accounted for 43% of fourth quarter activity
and increased 1% over the same quarter last year.
Net revenues of $258.4 million in the fourth quarter of 2006 increased
3% from the same quarter last year driven by a 14% increase in ocean
freight forwarding and a 21% increase in customs brokerage, logistics and
other, while airfreight forwarding net revenues decreased 9%. The Company's
fourth quarter net revenue margin decreased to 30.0% compared with 30.1% in
the same quarter last year.
Airfreight net revenues of $137.8 million decreased 9% from the same
quarter last year. The fourth quarter 2006 results were impacted by a $5.4
million decline in domestic airfreight net revenues to $48.7 million
compared with $54.1 million in 2005. The decrease was due to a decline in
net revenue per shipment at the Company's domestic freight forwarding
division due to a greater portion of deferred, as opposed to expedited,
ground and residential shipments during the traditional peak shipping
season. For the quarter, total domestic shipments increased approximately
eight percent over the fourth quarter of 2005. The fourth quarter results
were also impacted by lower than expected international airfreight volumes.
Total operating expenses increased $16.6 million in the fourth quarter
of 2006 to $240.6 million compared to $224.0 million in the same quarter
last year. Of the $16.6 million increase in total operating expenses, $12.5
million ($6.0 million of increased personnel costs and $6.5 million of
other selling, general and administrative expenses) was attributable to new
domestic logistics contracts implemented in the third quarter of 2006. An
increase in logistics revenues in the fourth quarter attributable to the
new domestic logistics contracts more than offset $12.5 million increased
operating expenses.
As part of its annual goodwill and indefinite-lived intangible asset
impairment analysis, the Company concluded that the carrying value of the
net assets assigned to its South America operating segment exceeded the
fair value of the reporting unit and determined $3.8 million ($0.09 cents
per diluted share) of goodwill for the segment was impaired. This
impairment expense is included in operating expenses.
Fourth quarter 2006 items impacting operating expenses include the
following:
* South America goodwill impairment -- $3.8 million pre-tax ($0.09 cents
per diluted share)
* Reserve for vacated facility in United Kingdom -- $1.4 million pre-tax
($0.02 cents per diluted share)
* Other expenses -- $2.9 million pre-tax ($0.05 cents per diluted share)
* Gain on facility sale in the United Kingdom -- $3.9 million pre-tax
($0.07 cents per diluted share)
Non-operating expense in the fourth quarter of 2006 was $0.7 million
compared with non-operating income of $2.9 million in the same quarter last
year. The change was primarily due to the fourth quarter 2005 gain of $4.0
million from the release of escrow funds related to the sale of the
Company's interest in TDS.
As of January 1, 2006 the Company adopted SFAS 123R, using the modified
prospective method for calculating expense on share-based compensation.
Adoption of SFAS 123R reduced net income for the year by $0.09 cents per
share, and operating income by $5.8 million for the year. Under this
method, prior period results are not restated.
Cash Position
EGL closed the quarter with $141 million in cash, restricted cash and
short-term investments and total debt of $170 million. Full year 2006 cash
flow from operating activities was $75 million compared to $96 million of
operating income for 2006. Capital expenditures for full year 2006 were $48
million compared with $41 million for 2005. Capital expenditures for 2006
and 2005 include $2.4 million and $0.7 million related to capitalized
interest costs.
Earnings Conference Call
EGL, Inc. will host a conference call for shareholders and the
investing community on February 28, 2007 at 11 a.m. Eastern time (8 a.m.
Pacific) to review results for the fourth quarter ended December 31, 2006.
The call can be accessed by dialing (719) 457-2657, access code 1145649 and
is expected to last approximately 60 minutes. Callers are requested to dial
in at least 5 minutes before the start of the call. The call will also be
available through live web cast on the Company's website,
http://www.eaglegl.com , on the Investor Relations page. An audio replay
will be available until Wednesday, March 14, 2007 at (719) 457-0820, access
code 1145649.
Founded in 1984, Houston-based EGL, Inc. operates under the name EGL
Eagle Global Logistics. EGL is a leading global transportation, supply
chain management and information services company dedicated to providing
superior flexibility and fewer shipping restrictions on a price competitive
basis. With 2006 revenues of $3.2 billion, EGL's services include air and
ocean freight forwarding, customs brokerage, local pickup and delivery
service, materials management, warehousing, trade facilitation and
procurement, and integrated logistics and supply chain management services.
The Company's shares are traded on the NASDAQ Global Select Market under
the symbol "EAGL".
CAUTIONARY STATEMENTS
The statements in this press release (and statements in the conference
call referred to above) regarding outlook, diluted earnings per share,
effective tax rate, future results, capital expenditure levels, growth
opportunities, financial performance, cost structure, yield improvement,
increased efficiencies, improvements in operating and financial systems,
effective tax rates, our ability to pass-through fuel costs, expected
insurance recoveries, stock repurchases, the results of government
investigations and other statements that are not historical facts, are
forward looking statements. These statements involve risks and
uncertainties including, but not limited to, market conditions, the
Company's financial results and performance, our ability to manage and
continue growth, risks associated with operating in international markets,
events impacting the volume of international trade, our ability to comply
with rules relating to the performance of U.S. government contracts, fuel
shortages and price volatility of fuel, seasonal trends in our business,
currency devaluations and fluctuations in foreign markets, our effective
income tax rate, our ability to upgrade our information technology systems,
protecting our intellectual property rights, heightened global security
measures, availability of cargo space, increases in the prices charged by
our suppliers, competition in the freight industry and our ability to
maintain market share, material weaknesses within our internal controls,
control by and dependence on our founder, liability for loss or damage to
goods, the results of litigation, exposure to fines and penalties if our
owner/operators are deemed to be employees, failure to comply with
environmental, health and safety, and criminal laws and regulations and
governmental permit and licensing requirements, laws and regulations that
decrease our ability to change our charter and bylaws, the impact of
goodwill impairments, the successful deployment of our global IT
infrastructure, estimated expenses associated with stock option practices
and other factors detailed in the Risk Factors and elsewhere in the
Company's Annual Reports on Form 10-K and other filings with the Securities
and Exchange Commission. Should one or more of these risks or uncertainties
materialize (or the consequences of such a development worsen), or should
underlying assumptions prove incorrect, actual outcomes may vary materially
from those forecasted or expected. The Company disclaims any intention or
obligation to update publicly or revise such statements, whether as a
result of new information, future events or otherwise.
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
Revenues $861,260 $835,089 $3,217,636 $3,096,516
Cost of transportation 602,836 583,503 2,206,863 2,148,042
Net revenues 258,424 251,586 1,010,773 948,474
Operating expenses:
Personnel costs 139,777 131,542 558,227 522,015
Other selling, general
and administrative
expenses 100,776 92,404 356,064 337,024
EEOC legal settlement --- --- --- (5,975)
Operating income 17,871 27,640 96,482 95,410
Nonoperating (income)
expense, net 673 (2,905) 8,825 (5,147)
Income before provision for
income taxes 17,198 30,545 87,657 100,557
Provision for income taxes 6,263 11,484 31,327 42,397
Net income $10,935 $19,061 $56,330 $58,160
Basic earnings per share $0.27 $0.48 $1.39 $1.23
Diluted earnings per share $0.27 $0.47 $1.38 $1.22
Basic weighted-average
common shares outstanding 40,647 39,912 40,465 47,442
Diluted weighted-average
common shares outstanding 40,899 40,427 40,818 47,832
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
December 31, December 31,
2006 2005
ASSETS
Current assets:
Cash, cash equivalents, restricted cash
and short-term investments $141,422 $123,254
Trade accounts receivable, net of
allowance 623,558 560,954
Other current assets 70,570 70,230
Total current assets 835,550 754,438
Property and equipment, net 188,498 185,906
Goodwill, net 112,498 113,048
Other assets, net 46,228 35,849
Total assets $1,182,774 $1,089,241
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $12,739 $15,967
Trade payables and accrued transportation
costs 373,970 342,351
Accrued expenses and other liabilities 161,341 150,166
Total current liabilities 548,050 508,484
Long-term debt 157,157 214,555
Other noncurrent liabilities 57,754 42,858
Minority interest 1,761 1,616
Shareholders' equity 418,052 321,728
Total liabilities and shareholders'
equity $1,182,774 $1,089,241
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Twelve Months Ended
December 31,
2006 2005
Cash flows from operating activities:
Net income $56,330 $58,160
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 32,722 35,932
Bad debt expense 6,888 8,630
Impairment of goodwill 3,837 ---
Other 9,397 3,998
Net effect of changes in working capital,
net of assets acquired (33,762) 49,374
Net cash provided by operating activities 75,412 156,094
Cash flows from investing activities:
Capital expenditures (47,534) (41,160)
Decrease in restricted cash 2,332 5,322
Proceeds from sales of other assets 23,607 4,327
Proceeds from property insurance 517 673
Acquisitions of businesses, net of
cash acquired (1,476) (56)
Earnout payments --- (4,404)
Cash received from disposal of affiliates 1,254 2,787
Other 2,109 3,148
Net cash used in investing activities (19,191) (29,363)
Cash flows from financing activities:
Proceeds from issuance of debt 481,824 495,597
Repayment of debt (547,153) (309,297)
Issuance (repayment) of short-term debt with
maturities of less than three months, net 2,825 (2,744)
Repayment of financed insurance premiums
and software, net (4,363) (3,364)
Payments on capital lease obligations (1,873) (2,245)
Repurchases of common stock --- (305,318)
Payment of financing fees (110) (3,454)
Issuance of common stock for employee
stock purchase plan 1,237 1,135
Proceeds from exercise of stock options 15,013 21,176
Excess tax benefit of employee stock plans 5,389 ---
Other (115) 802
Net cash used in financing activities (47,326) (107,712)
Effect of exchange rate changes on cash 11,513 (430)
Increase in cash and cash equivalents 20,408 18,589
Cash and cash equivalents, beginning of
the period 111,507 92,918
Cash and cash equivalents, end of the period $131,915 $111,507
Fourth quarter 2006 product and geographic data and air freight
statistics are
available on EGL's website, http://www.eaglegl.com on the Investor
Relations
page.
SOURCE EGL, Inc.
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Related links:
http://www.eaglegl.com
CONTACT:
Mike Slaughter, Vice President Finance of
EGL, Inc., +1-281-618-3428
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