HOUSTON, Aug. 6 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that net income increased 96% to $12.7 million for the three months
ended June 30, 2004, compared to $6.5 million in the second quarter of 2003.
Diluted earnings per share for the quarter were $0.27 compared to $0.14 in Q2-
2003.
Q2 Financial Highlights
-- Gross revenues increased 22% over Q2 2003 on improvements across all
product lines and geographic areas
-- Net revenues of $209 million is a record high for the Company
-- Net income improved by $6.2 million to $12.7 million
-- Cash flow from operating activities was $21.4 million
-- Share repurchase program concluded with a total of 3.4 million shares
repurchased at an average price of $17.37 per share over the entire
program
-- U.S. overnight product continues to show improvement
Three Months Ended Six Months Ended
06/30/04 06/30/03 06/30/04 06/30/03
$ thousands
(except EPS)
Gross revenues $641,058 $526,863 $1,227,017 $1,010,513
% change + 22% + 21%
Net revenues $208,661 $185,530 $ 409,034 $ 353,096
% change + 12% + 16%
Net revenue margin 32.5% 35.2% 33.3% 34.9%
Net income $ 12,706 $ 6,467 $ 18,687 $ 9,262
Diluted EPS $ 0.27 $ 0.14 $ 0.40 $ 0.20
EGL Chief Executive Officer Jim Crane commented, "Our second quarter
performance highlights the benefits of our global network. In the North
America forwarding market, improvements in priority volumes and continued
expansion of deferred shipments reflect the strength of our low cost domestic
network. In addition, we continue to see strong growth in our international
business as we leverage our North America network and customer base. As our
domestic priority product shows improvement, we expect our profitability to
accelerate."
Gross revenues increased 22% from the second quarter of 2003 to $641
million, reflecting a 19% increase in airfreight revenues - 26% increase
internationally and 14% increase in North America, a 31% increase in ocean
revenues, and a 24% increase in customs brokerage and logistics. Gross
revenues outside North America increased 29% on strong volumes in China and
the Middle East.
The domestic product in the USA reflected gross revenues increasing by 8%
in the second quarter compared to the same period last year. This was an
improvement from Q1 2004 results which showed a 4% decline from the revenues
over the same period of the prior year. The increase in revenues for Q2 2004
was driven by a 9% increase in total domestic tonnage, and continued recovery
in the overnight product. North America ground shipment volumes continue to
expand, increasing 18% over the second quarter last year. The strength of the
domestic recovery continued into July, with an increase of 6% per day in
overnight shipments as compared to last year.
Q2 2004 net revenues of $209 million increased 12% over last year and
surpassed net revenues for the first quarter of 2004, resulting in a new
record high for the Company. Net revenue margins of 32.5% declined by 270
basis points from the second quarter of 2003 as a result of increased
international charter activity in the second quarter and a decline in ocean
margins due to increasing capacity constraints.
Operating income for the second quarter of 2004 was $13.3 million, an
increase of $1.1 million from the second quarter of 2003. Operating income as
a percent of net revenue was 6.4% for the second quarter of 2004, slightly
down from 6.6% in the second quarter of 2003. Operating income for the second
quarter of 2004 includes a $5.8 million facilities charge for idle facilities,
including the subleasing of an excess facility in Miami. Excluding the
facility charge, operating income would have been $19.1 million, an increase
of $6.9 million from the same period last year and operating income as a
percent of net revenue would have been 9.1%, the highest level since 2000.
The following table sets forth our operating income for the second quarter of
2004, excluding the facilities charges, and provides a reconciliation of
operating income according to U.S. GAAP:
Operating Income Analysis:
(for the three months ended June 30, 2004)
$ (millions) % of Net Revenue
Operating income $13.3 6.4%
Idle facilities charge $ 5.8 2.7%
Operating income excluding
facilities charge $19.1 9.1%
Cash flow from operations was $21 million and $57 million for the three
and six months ended June 30, 2004, respectively, reflecting stronger earnings
and better management of working capital. During the quarter, the Company
concluded its previously announced repurchase program, as authorized by the
Board of Directors, having purchased a total of 3.4 million shares of its
common stock at an average price of $17.37 per share over the course of the
entire program.
In May 2004, the Company sold its interest in Miami Air International for
$6.7 million, resulting in a gain of $6.7 million that is reflected in non-
operating income. The Company had previously written off its investment in
Miami Air in the first quarter of 2002. The sale was completed at a 7% gain
over our original investment. In addition, the Company acquired the remaining
interests in joint ventures in France, Spain and Portugal during the quarter
for a total of $16 million.
CEO Jim Crane added, "Our organization continues to focus on operating
efficiencies and the deployment of our global freight forwarding, accounting
and human resources systems. The systems, re-branded as the EGL Vision suite
of technologies have now been deployed in eight countries, including the
United Kingdom and Hong Kong in August. "Global Vision" is the freight
forwarding system that allows a seamless flow of data across the globe,
eliminating duplicate data entry on multiple systems and improving visibility
of shipment activity. "Financial Vision" is the Oracle-based financial system
that allows global visibility of financial results, streamlined financial
reporting and the ability to automate intercompany transactions. "People
Vision" is the Oracle-based human resources application that allows global
visibility to employee tracking, training and development. The global
deployment of EGL Vision will continue into next year. "
Third Quarter of 2004, Total Year 2004 and Total Year 2005
EGL expects third quarter 2004 diluted earnings per share in the range of
$0.27 to $0.29, compared to $0.12 last year. For 2004, EGL raises its
projections of gross revenues in the range of $2.4 to $2.5 billion and raises
its estimates for diluted earnings per share in the range of $0.95 - $1.00.
In addition, for 2005, EGL projects diluted earnings per share in the range of
$1.20 - $1.30.
Earnings Conference Call
EGL, Inc. plans to host a conference call for shareholders and the
investing community on August 6, 2004 at 11 a.m. Eastern time (8 a.m. Pacific)
to review results for the quarter ended June 30, 2004. The call can be
accessed by dialing (719) 457-2679, access code 560167 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 Friday, August 20,
2004 at (719) 457-0820, access code 560167.
Second quarter 2004 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 2003
revenues exceeding $2.1 billion, EGL's services include air and ocean freight
forwarding, customs brokerage, local pick up 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 improvements in priority product volumes,
projected profitability, adding to growth, increased efficiencies, the
timing, scope and impact of deployment of operating and financial systems,
whether or not such deployment will be completed in a timely manner, second
quarter and total year results and diluted earnings per share, 2005 total year
results and diluted earnings per share, projected results for 2004, whether or
not operating costs can be reduced, projected accretive impact of facilities
accruals, our ability to outperform the economy 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,
infrastructure improvements, ability to manage and continue growth,
competition and other factors detailed in the Company's 2003 Form 10-K, proxy
statement 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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenues $641,058 $526,863 $1,227,017 $1,010,513
Cost of transportation 432,397 341,333 817,983 657,417
Net revenues 208,661 185,530 409,034 353,096
Operating expenses:
Personnel costs 115,768 105,941 229,890 204,052
Other selling,
general and
administrative expenses 79,614 67,378 154,417 132,195
Operating income 13,279 12,211 24,727 16,849
Nonoperating income
(expense), net 6,731 (1,809) 5,759 (1,951)
Income before provision
for income taxes 20,010 10,402 30,486 14,898
Provision for
income taxes 7,304 3,935 11,799 5,636
Net income $ 12,706 $ 6,467 $ 18,687 $ 9,262
Basic earnings
per share $ 0.28 $ 0.14 $ 0.41 $ 0.20
Diluted earnings
per share $ 0.27 $ 0.14 $ 0.40 $ 0.20
Basic weighted-average
common
shares outstanding 44,744 47,154 45,819 47,110
Diluted weighted-average
common shares
outstanding 50,944 47,424 51,872 47,355
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
June 30, December 31,
2004 2003
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash
and short-term investments $ 86,531 $ 110,026
Trade accounts receivable, net of
allowance 489,405 447,353
Other current assets 55,214 56,875
Total current assets 631,150 614,254
Property and equipment, net 170,461 164,038
Investments in unconsolidated
affiliates 41,095 38,957
Goodwill, net 108,749 96,209
Other assets, net 32,195 30,780
Total assets $ 983,650 $ 944,238
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term notes
payable $ 24,305 $ 13,017
Trade payables and accrued
transportation costs 315,324 268,354
Accrued expenses and other
liabilities 119,986 103,247
Total current liabilities 459,615 384,618
Long-term notes payable 109,487 114,407
Other noncurrent liabilities 30,831 23,817
Minority interest 619 6,800
Stockholders' equity 383,098 414,596
Total liabilities and stockholders'
equity $ 983,650 $ 944,238
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months Ended
June 30,
2004 2003
Cash flows from operating activities:
Net income $ 18,687 $ 9,262
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 17,030 15,377
Bad debt expense 2,601 4,457
Transfers to restricted cash (759) (3,286)
Other (6,643) 3,425
Net effect of changes in working
capital, net of assets acquired 26,347 (24,020)
Net cash provided by operating
activities 57,263 5,215
Cash flows from investing activities:
Capital expenditures (21,827) (10,832)
Purchase of short-term investment (54) --
Proceeds from sales of other
assets 749 540
Proceeds from sale-lease back
transactions -- 1,158
Acquisitions of businesses, net of
cash acquired (19,416) (21,084)
Cash received from disposal of
affiliate 6,738 --
Net cash used in investing activities (33,810) (30,218)
Cash flows from financing activities:
Issuance of notes payable, net 5,229 31
Collection of notes receivable 346 --
Repayment of financed insurance
premiums and software
maintenance, net (2,198) (4,553)
Repayment of capital leases (371) --
Repurchase of common stock (59,079) --
Issuance of common stock 319 272
Proceeds from exercise of stock
options 10,150 1,247
Dividends paid to minority
interest partners (18) (93)
Net cash used in financing activities (45,622) (3,096)
Effect of exchange rate changes on
cash (2,072) (894)
Decrease in cash and cash equivalents (24,241) (28,993)
Cash and cash equivalents, beginning
of the period 95,916 111,477
Cash and cash equivalents, end of the
period $ 71,675 $ 82,484
Second quarter 2004 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,
+1-281-618-3665, or Mike Slaughter, Investor Relations,
+1-281-618-3428, both of EGL, Inc.
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