Gross Revenues Increase 20%
Generated $55 million of Cash Flow from Operations
HOUSTON, May 10 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that gross revenues increased 20% to $701 million for the quarter
ended March 31, 2005 compared to $585 million in the same quarter of 2004.
Diluted earnings per share for the first quarter of 2005 was $0.14
compared to $0.15 in the first quarter of 2004 and included a net gain of
$0.06 per share ($3.2 million after tax) for the release of excess funds
related to the EEOC matter, partially offset by $0.04 per share for a higher
effective tax rate caused by operating losses, mainly in Europe, and other
charges, which are further detailed below.
The Company's first quarter results were negatively impacted by 1) weaker
net revenue margins, primarily as a result of higher fuel prices, 2) slower
airfreight volume growth, and 3) operating losses in our European operations.
The Company has made progress in re-negotiating customer contracts to recover
rising fuel costs. However, the Company remains exposed to un-recovered fuel
costs as we continue to negotiate a few remaining customer contracts.
Q1 Financial Highlights
-- Gross revenues increased 20% on strong international air, ocean and
logistics activity;
-- Net revenues increased 6% to $213 million, compared to $201 million in
the first quarter of 2004;
-- Net revenue margin declined 3.8 percentage points due to the impact of
fuel surcharges and higher ocean rates, mainly from Asia to the U.S.;
-- Cash flow from operations increased significantly to $55 million
compared to $36 million in the first quarter of 2004
Three Months Ended
$ thousands (except EPS) 3/31/05 3/31/04
Gross revenues $700,666 $584,555
% change + 20%
Net revenues $213,432 $200,741
% change + 6%
Net revenue margin 30.5% 34.3%
Operating income $13,723 $13,603
Net income $7,165 $7,292
Diluted EPS $0.14 $0.15
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 organization
continues to focus on improving yields through management of purchased
transportation costs and fuel surcharges. In Europe, we have made several
management changes to address our weak results."
Gross revenues increased 20% from the first quarter of 2004 to $701
million, reflecting a 16% increase in airfreight revenues, a 35% increase in
ocean revenues, and a 21% increase in customs brokerage and logistics. Gross
revenues outside North America increased 30% due to the higher volumes from
Asia, higher fuel costs and the stronger Euro and Sterling to the dollar.
Net revenues of $213 million in the first quarter of 2005 increased 6%
from the same quarter last year. Net revenue margins of 30.5% declined by 380
basis points from the first quarter of 2004, reflecting the impact of higher
fuel costs that were not absorbed by our customers and increased ocean rates.
Airfreight tonnage increased 6% compared to the first quarter of 2004.
Operating expenses of $200 million include the pre-tax benefit of $6.0
million, reflecting the release of excess funds related to our EEOC
settlement. The first quarter of 2005 also included a $1.4 million pre-tax
expense for a bankruptcy preference claim and $1.2 million of pre-tax
operating losses resulting from a fire at the Company's Thurrock warehouse
facility in the United Kingdom. A business interruption claim related to the
Thurrock fire has been submitted to our insurance carriers with proceeds
expected to be received later in the year for recovery of these losses.
Operating income increased 1% to $13.7 million, as compared to the first
quarter of 2004 and was negatively impacted by continued higher fuel prices,
slower airfreight volume growth and losses in certain European countries.
The Company's effective tax rate in the first quarter of 2005 was 46.2%
which included one time charges related to the write-off of certain deferred
tax assets mainly from operating losses in Europe. The Company expects the
effective tax rate for the last three quarters of 2005 to be between 39% and
41%.
Stock Repurchase Program
Total cash and investments increased to $144 million at March 31, 2005
compared to $111 million at December 31, 2004. As a result of the growing
cash position the Company's Board of Directors has approved a stock repurchase
program. Under the stock repurchase program, the Company may acquire up to
$60 million of the Company's common stock from time to time until August 4,
2005, depending on market conditions, shares prices and other factors.
Repurchases of the Company's common stock may occur in the open market, via
block purchases, in privately negotiated transactions or otherwise. The stock
repurchase program may be suspended or discontinued at any time.
Earnings Conference Call
EGL, Inc. plans to host a conference call for shareholders and the
investing community on May 10, 2005 at 11 a.m. Eastern time (8 a.m. Pacific)
to review results for the quarter ended March 31, 2005. The call can be
accessed by dialing (719) 457-2684, access code 2484866 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 Tuesday,
May 24, 2005 at (719) 457-0820, access code 2484866.
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 revenue growth, profitability and
earnings per share, growth opportunities, yield improvement, increased
efficiencies, improvements in operating and financial systems, effective tax
rates for 2005, our ability to pass-through fuel costs (including the effects
thereof), expected insurance recoveries, potential stock repurchases, 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, ability to
renegotiate customer contracts and other factors detailed in the Company's
2004 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
March 31,
2005 2004
Revenues $700,666 $584,555
Cost of transportation 487,234 383,814
Net revenues 213,432 200,741
Operating expenses:
Personnel costs 125,202 114,214
Other selling, general and
administrative expenses 80,482 72,924
EEOC legal settlement (5,975) -
Operating income 13,723 13,603
Nonoperating expense, net (403) (942)
Income before provision for income taxes 13,320 12,661
Provision for income taxes 6,155 5,369
Net income $7,165 $7,292
Basic earnings per share $0.14 $0.15
Diluted earnings per share $0.14 $0.15
Basic weighted-average common
shares outstanding 52,051 46,894
Diluted weighted-average common
shares outstanding 52,595 52,872
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
March 31, December 31,
2005 2004
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash and short-term investments $144,441 $110,509
Trade accounts receivable, net of
allowance 542,070 611,696
Other current assets 66,325 56,034
Total current assets 752,836 778,239
Property and equipment, net 190,601 178,218
Investments in unconsolidated affiliates 540 619
Goodwill, net 107,953 108,470
Other assets, net 29,855 29,419
Total assets $1,081,785 $1,094,965
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $20,964 $19,426
Trade payables and accrued
transportation costs 319,103 337,137
Accrued expenses and other liabilities 122,707 134,107
Total current liabilities 462,774 490,670
Long-term debt 16,843 12,752
Other noncurrent liabilities 38,291 38,207
Minority interest 1,157 802
Stockholders' equity 562,720 552,534
Total liabilities and
stockholders' equity $1,081,785 $1,094,965
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended
March 31,
2005 2004
Cash flows from operating activities:
Net income $7,165 $7,292
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,634 8,278
Bad debt expense 2,661 2,212
Transfers (to) from restricted cash 7,482 (639)
Other 3,200 315
Net effect of changes in working
capital, net of assets acquired 26,344 18,242
Net cash provided by operating activities 55,486 35,700
Cash flows from investing activities:
Capital expenditures (18,694) (8,397)
Purchase of short-term investments (8) (55)
Proceeds from sales of other assets 782 182
Net cash used in investing activities (17,920) (8,270)
Cash flows from financing activities:
Issuance (repayment) of debt, net (2,758) 6,940
Repayment of financed insurance
premiums and software, net (643) (1,386)
Repayment of capital leases (243) (123)
Repurchases of common stock - (38,109)
Payment of deferred financing fees (13) -
Proceeds from exercise of stock options 5,377 202
Cash received from a minority
interest partner 142 -
Dividends paid to minority interest partners - (16)
Net cash provided by (used in)
financing activities 1,862 (32,492)
Effect of exchange rate changes on cash 1,963 (634)
Increase (decrease) in cash and cash
equivalents 41,391 (5,696)
Cash and cash equivalents, beginning
of the period 92,918 94,099
Cash and cash equivalents, end of the
period $134,309 $88,403
First quarter 2005 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:
Elijio Serrano, Chief Financial Officer, EGL,
Inc., +1-281-618-3665
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