HOUSTON, March 3 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that gross revenues increased 28% to $2.7 billion for the year ended
December 31, 2004, compared to $2.1 billion in 2003. Diluted earnings per
share for the year were $1.05 compared to $0.50 in 2003.
Gross revenues increased 31% to $802 million for the three months ended
December 31, 2004, compared to $611 million in the corresponding quarter in
2003. Diluted earnings per share for the quarter were $0.26 compared to $0.19
per share in the fourth quarter of 2003 and included a net charge of $0.07 per
share ($3.6 million) for deferred tax charges, mainly in the United Kingdom
and Canada, and expenses of $0.03 per share ($1.4 million after tax) for
consulting and audit fees for Sarbanes-Oxley 404 compliance.
The Company's effective tax rate in the fourth quarter was 51.0% and
included tax charges of $3.6 million to reduce the value of certain deferred
tax assets, primarily in Canada and the United Kingdom, as a result of
continued operating losses. The Company expects the tax rate in 2005 to be
between 38%-39%. During 2004, EGL incurred expenses of $4.3 million for
consulting and audit fees as a result of compliance efforts with respect to
Section 404 of Sarbanes-Oxley. Of the $4.3 million, $2.2 million ($1.4
million after tax, or $0.03 per share) was incurred in the fourth quarter.
For 2005, the Company expects to incur between $1.5 million to $2.0 million
for ongoing compliance.
The Company is restating retained earnings by $6.5 million as of
January 1, 2002 for adjustments to deferred taxes on foreign earnings, accrued
rent on operating leases and other write-offs related to operations in Mexico.
The Company is also restating net income for the nine months ended
September 30, 2004 from $36.2 million to $38.0 million to account for accrued
expenses (earnings per share increased by $0.03).
2004 Financial Highlights
* Gross revenues increased 28% to $2.7 billion, the highest level in the
history of the Company;
* Net income more than doubled to $50.9 million in 2004, compared to
$23.9 million in 2003;
* Completed divestiture of non-core investments (Miami Air and TDS) and
purchase of remaining JV interests in Spain, Portugal and France;
* Purchased $59 million of EGL shares on the open market and converted
$100 million of convertible notes.
* Net revenue margin declined 2.7 percentage points year over year due
to the impact of fuel surcharges and high ocean and airline rates.
Q4 Financial Highlights
* Gross revenues increased 31% on strong international air, ocean and
logistics activity;
* Net revenues increased 16% to $230 million, compared to $198 million in
2003;
* Net revenue margin declined 3.8 percentage points due to high airline
and ocean rates, mainly from Asia to the U.S., and the impact of fuel
surcharges;
* Operating income as a percent of net revenues increased to 12.0%,
including the impact of the abnormally high Sarbanes-Oxley costs,
compared to 8.4% last year.
Three Months Ended Year Ended
$ thousands (except EPS) 12/31/04 12/31/03 12/31/04 12/31/03
Gross revenues $802,075 $611,292 $2,743,360 $2,143,419
% change +31% +28%
Net revenues $230,087 $198,392 $865,824 $735,252
% change +16% +18%
Net revenue margin 28.7% 32.5% 31.6% 34.3%
Operating income $27,595 $16,583 $80,719 $44,765
Net income $12,909 $9,127 $50,897 $23,945
Diluted EPS $0.26 $0.19 $1.05 $0.50
EGL Chief Executive Officer Jim Crane commented, "We continue to see
growth in all international product lines and a continued shift toward a lower
cost deferred ground and ocean product by our customers. Our fourth quarter
performance reflects overall growth, offset by the impact of fuel surcharges,
one-time tax charges and increased expenses related to Sarbanes-Oxley
compliance. Our organization is focused on improving yields through tighter
management of our fuel surcharge by ensuring that our customers are absorbing
these pass-through costs, and effective management of sell rates during peak
seasons, primarily out of Asia."
Gross revenues increased 31% from the fourth quarter of 2003 to
$802 million reflecting a 33% increase in airfreight revenues -- mainly
international, a 31% increase in ocean revenues, 24% increase in customs
brokerage and a 24% increase in logistics. Gross revenues outside North
America increased 45% due to the higher volumes from Asia, higher fuel costs
and the stronger Euro and Sterling to the dollar. Gross revenues increased
28% year over year to $2.7 billion, reflecting strong volumes from Asia to the
United States and a continued recovery of the global economy.
Net revenues of $230 million in the fourth quarter of 2004 increased 16%
from last year and were a record high for the Company. Net revenue margins of
28.7% declined by 380 basis points from the fourth quarter of 2003 reflecting
the impact of fuel surcharges and increased airline and ocean rates, primarily
out of Asia. Net revenues of $866 million for 2004 reflected an 18% increase
from net revenues of $735 million in 2003. Net revenue margins of 31.6%
declined by 270 basis points further highlighted tighter capacity on the
international air and ocean product lines, and higher fuel costs that were not
absorbed by our customers.
Operating income for the quarter increased 66% or $11 million, to
$27.6 million, as compared to the fourth quarter of 2003 due to the $32
million improvement in net revenues versus $21 million growth in operating
expenses. Operating income as a percent of net revenue improved to 12.0%, the
highest levels since 2000, compared to 8.4% in the fourth quarter of last
year.
Update on Section 404 of the Sarbanes-Oxley Act of 2002
In accordance with Section 404 of the Sarbanes-Oxley Act, the Company and
its independent auditors continue to evaluate and assess the internal controls
over financial reporting and its effectiveness. The Company may conclude that
its internal controls over financial reporting for the accounting of deferred
and foreign taxes as of December 31, 2004 was ineffective, but the Company has
not yet made its final assessment with respect to this issue. In addition,
the Company believes it is likely that its independent auditors will issue an
adverse opinion on the Company's internal controls because of this issue.
Subsequent Event
During the first quarter of 2005, in response to a joint motion by EGL and
the U.S. Equal Employment Opportunity Commission (EEOC), a US District Court
ordered the return back to EGL of $5.975 million of the $8.5 million
previously held in an established fund to resolve potential claims in
connection with a 2001 Consent Decree. The joint motion and subsequent order
resulted primarily from a significantly lower number of qualified claimants
than projected and the aggregate amount expected to be paid for all claims -
less than $1 million.
Total Year 2005
For 2005, EGL projects gross revenue growth of 15-20% and raises its
guidance for total year diluted earnings per share in the range of $1.27 to
$1.37 taking into account the return of the excess EEOC funds in the first
quarter. First quarter earnings per share are anticipated to be $0.23 -
$0.26, including the benefit of the aforementioned EEOC funds, compared to
$0.16 in the first quarter of 2004..
Earnings Conference Call
EGL, Inc. plans to host a conference call for shareholders and the
investing community on March 3, 2005 at 11 a.m. Eastern time (8 a.m. Pacific)
to review results for the quarter and year ended December 31, 2004. The call
can be accessed by dialing (719) 955-1565, access code 3146582 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 webcast on the company's website, http://www.eaglegl.com, on the
Investor Relations page. An audio replay will be available until Thursday,
March 17, 2005 at (719) 457-0820, access code 3146582.
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 2004
revenues exceeding $2.7 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 National Market under the symbol "EAGL".
CAUTIONARY STATEMENTS
The statements in this press release (and statements in the conference
call referred to above) regarding projected profitability, adding to growth,
improvement on yields, increased efficiencies, improvements in operating and
financial systems, prior period adjustments, effective tax rate for 2005, 2005
total year and first quarter results and diluted earnings per share, the total
monetary amount of claims expected under the 2001 Consent Decree, whether or
not the Company's independent auditors will issue an adverse opinion with
respect to the Company's internal controls over financial reporting,, expected
Sarbanes-Oxley compliance costs in 2005, and other statements which are not
historical facts, are forward looking statements. Such statements involve
risks and uncertainties including, but not limited to, general economic
conditions, risks associated with operating in international markets, the
results of litigation, the timing and effects of any improvements in the
regions and industry sectors in which the Company's customers operate,
construction of new facilities and other infrastructure improvements, ability
to manage and continue growth, competition and other factors detailed in the
Company's 2003 Form 10-K, proxy statement/prospectus 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 OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Revenues $802,075 $611,292 $2,743,360 $2,143,419
Cost of transportation 571,988 412,900 1,877,536 1,408,167
Net revenues 230,087 198,392 865,824 735,252
Operating expenses:
Personnel costs 126,926 112,032 483,262 422,015
Other selling, general
and administrative
expenses 75,566 69,777 301,843 268,472
Operating income 27,595 16,583 80,719 44,765
Nonoperating income
(expense), net (1,239) (1,901) 7,611 (6,249)
Income before provision
for income taxes 26,356 14,682 88,330 38,516
Provision for income taxes 13,447 5,555 37,433 14,571
Net income $12,909 $9,127 $50,897 $23,945
Basic earnings per share $0.28 $0.19 $1.11 $0.51
Diluted earnings per share $0.26 $0.19 $1.05 $0.50
Basic weighted-average
common shares outstanding 46,806 47,388 45,813 47,204
Diluted weighted-average
common shares outstanding 52,338 53,431 51,914 47,481
Audited financials will be included in the Company's Annual Report on
Form 10-K.
SOURCE EGL, Inc.
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Related links:
http://www.eaglegl.com
CONTACT:
Elijio Serrano, Chief Financial Officer of
EGL, Inc., +1-281-618-3665
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