HOUSTON, May 13 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that it earned $2.8 million of net income for the three months ended
March 31, 2003, compared to a loss of $3.9 million in the first quarter of
2002. Diluted earnings per share for the quarter were $0.06 compared to
diluted loss per share of $0.08 in Q1-2002.
Financial Highlights
-- Gross revenues improved $67 million, or 16%.
-- Net revenues increased 9%.
-- North America gross revenues increased 4% on continued growth of
ground shipment activity.
-- Gross revenues outside North America increased 33% while net revenue
margins decreased from 29.3% to 26.3%.
-- Operating expenses increased 5% (excluding the $2.5 million benefit
in Q1-2002 from temporary salary reductions) compared to an increase
in net revenues of 9%.
-- Losses from two logistics projects in Europe decreased EPS by $0.04.
Quarter Ended
$ thousands (except EPS) 3/31/03 3/31/02
Gross revenues $483,650 $ 417,109
Net revenues $167,566 $154,120
Net revenue margin 34.6% 36.9%
Operating expenses $162,928 $152,584
Operating income $4,638 $1,536
Net income/(loss) $2,795 $(3,917)
Diluted EPS $0.06 $(0.08)
Gross revenues increased 16% from the first quarter of 2002 to
$484 million on stronger activity levels from all product lines in all
geographic areas.
EGL Chief Executive Officer, Jim Crane commented, "We continue to see
improved performance in all geographic areas during a seasonally weak quarter.
Our North America operations have shown growth despite a weak economy and an
uncertain global environment. The modest improvements in North America gross
revenues, stable net revenue margins, and focus on costs have resulted in a
significant swing in profitability for North America compared to last year.
Our overseas operations are leveraging our North America network and continue
to add revenues. Pricing pressures resulting from our customers' focus on
costs and higher surcharges levied by airlines and shipping lines are putting
pressure on our net revenue margins. During the quarter, we ramped up
production of two major logistics projects in Europe that came with some
start-up challenges, resulting in after tax losses of $2.0 million on these
projects. We have a management team focused on getting these projects
profitable."
North America gross revenues of $252 million increased 4% as the deferred
shipment volumes continued to grow (up 24% over Q1-2002). Net revenue margins
of 42.3% were down only slightly from 42.5% last year. The realignment of the
dedicated domestic air network and improved utilization of the U.S.
infrastructure from the growing deferred ground business contributed toward an
improvement in profitability in North America. Net revenues increased
$3.6 million from last year while operating income improved $5.6 million --
from an operating loss last year of $5.3 million to an operating income in
Q1-2003 of $327,000.
Gross revenues outside of North America increased 33% to $231 million, as
Europe/Middle East/Africa, Asia/Pacific and Latin America all reported gross
revenue increases over last year exceeding 30%. Net revenue margins were down
from 29.3% last year to 26.3% in the first quarter of this year reflecting
pricing pressures on both the air and ocean markets and a change in the mix in
the ocean business from direct (down 12%) to consolidations (up 16%). Net
revenues were up 19% over last year. Operating income outside North America
was down from $6.8 million to $4.3 million as a result of start-up losses
incurred on two logistics projects in Europe. These projects started during
December 2002 and ramped up in the first quarter of 2003 with additional
staffing required to meet production targets. Operating losses from the two
projects were $3.2 million ($2.0 million after tax or $0.04 per diluted
share). Without such losses, operating income for the first quarter of 2003
would have been $7.9 million compared to $1.5 million in the same quarter last
year.
Operating income improved by $3.1 million to $4.6 million. Operating
expenses increased 5% over last year (excluding a $2.5 million benefit from
temporary salary reductions in the first quarter of 2002) and compares to a 9%
increase in net revenues. The rate of growth of expenses to net revenues of
58% was slightly above EGL's goal of 50% as a result of the staffing required
on the aforementioned logistics projects.
Net income of $2.8 million improved by $6.7 million over last year's loss
of $3.9 million (which included a $4.5 million after tax, or $0.09 per diluted
share, charge for an investment write-off and a $1.5 million after tax, or
$0.03 per diluted share, benefit from temporary salary reductions). Diluted
earnings per share of $0.06 compares to a loss last year of $0.08 per share.
Second Quarter and Total Year 2003
EGL expects second quarter 2003 diluted earnings per share of between
$0.10-$0.14, compared to $0.02 in the same quarter last year. For the year
2003, EGL expects diluted earnings per share of between $0.65 to $0.75,
compared to $0.20 per diluted share in 2002.
Earnings Conference Call
EGL, Inc. plans to host a conference call for shareholders and the
investing community on May 13, 2003 at 11 a.m. Eastern time (8 a.m. Pacific)
to review results for the quarter ended March 31, 2003. The call can be
accessed by dialing (913) 981-5508, access code 768463 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 27, 2003 at
(719) 457-0820, access code 768463.
First quarter 2003 product and geographic data and air freight statistics
are available on EGL's website, http://www.eaglegl.com on the Investor Relations
page.
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 2002
revenues exceeding $1.87 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 and timing of
profitability on logistics projects in Europe, second quarter and total year
results, and other statements which are not historical facts, are forward
looking statements. Such statements involve risks and uncertainties and other
factors detailed in the Company's 2002 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 INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended
March 31,
2003 2002
Revenues $483,650 $417,109
Cost of transportation 316,084 262,989
Net revenues 167,566 154,120
Operating expenses:
Personnel costs 96,815 85,360
Other selling, general and
administrative expenses 66,113 67,224
Operating income 4,638 1,536
Nonoperating expense, net (142) (8,306)
Income (loss) before provision
(benefit) for income taxes 4,496 (6,770)
Provision (benefit) for income
taxes 1,701 (2,640)
Income (loss) before cumulative
effect of change in accounting
for negative goodwill 2,795 (4,130)
Cumulative effect of change in
accounting for negative goodwill --- 213
Net income (loss) $2,795 $(3,917)
Basic earnings (loss) per share $0.06 $(0.08)
Diluted earnings (loss) per
share $0.06 $(0.08)
Basic weighted-average common
shares outstanding 47,066 47,859
Diluted weighted-average common
shares outstanding 47,277 47,859
Certain 2002 amounts have been reclassified to conform to the 2003
presentation
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
March 31, December 31,
2003 2002
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash and short-term investments $123,240 $127,487
Trade accounts receivable, net of
allowance 384,484 371,024
Other current assets 52,718 53,412
Total current assets 560,442 551,923
Property and equipment, net 154,174 157,403
Assets held for sale 644 644
Investments in unconsolidated
affiliates 40,046 40,042
Goodwill, net 82,249 81,881
Other assets, net 19,019 18,414
Total assets $856,574 $850,307
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term notes
payable $5,419 $5,639
Trade payables and accrued
transportation costs 236,285 232,324
Accrued expenses 38,714 39,445
Other liabilities 64,195 73,004
Total current liabilities 344,613 350,412
Long-term notes payable 104,845 103,993
Other noncurrent liabilities 5,811 3,720
Deferred income taxes 12,164 6,789
Minority interest 9,169 8,852
Stockholders' equity 379,972 376,541
Total liabilities and stockholders'
equity $856,574 $850,307
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended
March 31,
2003 2002
Cash flows from operating activities:
Net income (loss) $2,795 $(3,917)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 7,729 7,479
Bad debt expense 1,753 3,171
Amortization of unearned compensation --- 159
Deferred income tax expense (benefit) 1,614 (2,745)
Tax benefit of stock options exercised 75 58
Equity in earnings of affiliates,
net of dividends received (4) (669)
Minority interests, net of
dividends paid 263 319
Transfer to restricted cash (7,182) (109)
Cumulative effect of change in
accounting for negative goodwill --- (213)
Impairment of investment in an
unconsolidated affiliate --- 6,653
Other (360) 73
Net effect of changes in working
capital, net of assets acquired (12,075) 21,592
Net cash provided by (used in)
operating activities (5,392) 31,851
Cash flows from investing activities:
Capital expenditures (4,313) (3,705)
Proceeds from sales of other assets 324 2,820
Proceeds from sale-lease back
transactions, net --- 2,462
Acquisitions of businesses, net
of cash acquired (1,733) ---
Net cash provided by (used in)
investing activities (5,722) 1,577
Cash flows from financing activities:
Issuance (repayment) of notes
payable, net 321 (2,551)
Issuance of common stock for
employee stock purchase plan --- 469
Proceeds from exercise of stock options 598 146
Net cash provided by (used in)
financing activities 919 (1,936)
Effect of exchange rate changes on cash (1,227) (1,911)
Increase (decrease) in cash and cash
equivalents (11,422) 29,581
Cash and cash equivalents, beginning
of the period 119,669 77,440
Cash and cash equivalents, end of the
period $108,247 $107,021
First quarter 2003 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 of
EGL, Inc., +1-281-618-3665
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