HOUSTON, Nov. 3 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that diluted earnings per share for the third quarter of 2005
increased 18% to $0.40 compared to $0.34 in the third quarter of 2004.
Diluted earnings per share of $0.34 for last year's third quarter included a
$0.06 per share gain from the sale of the Company's interest in TDS (excluding
this gain, earnings per share in last year's third quarter were $0.28). Gross
revenues increased 8% to $780 million for the quarter ended September 30, 2005
compared to $719 million in the same quarter of 2004.
Q3 Financial Highlights:
-- Net revenues increased 9% over the prior year to $247 million on
positive activity across all geographic areas;
-- Net revenue margins improved sequentially by 140 basis points to 31.7%
in the third quarter of 2005 compared to 30.3% in the second quarter
of 2005;
-- Operating income as a percent of net revenues improved to 13.4%
compared to 10.5% in the third quarter of 2004;
-- Net cash flow provided by operating activities increased significantly
to $77 million compared to a use of cash from operating activities of
$15 million in the third quarter of 2004;
-- Free cash flow for the nine months ended September 30, 2005 was $137
million, on working capital improvements. (Free cash flow is defined
as net cash flow from operating activities of $170 million less $33
million of capital expenditures).
Three Months Ended Nine Months Ended
09/30/05 09/30/04 09/30/05 09/30/04
$ thousands (except EPS)
Gross revenues $779,507 $719,417 $2,261,427 $1,941,285
% change +8% +16%
Net revenues $246,960 $225,925 $696,888 $635,737
% change +9% +10%
Net revenue margin 31.7% 31.4% 30.8% 32.7%
Operating income $33,044 $23,825 $67,770 $53,033
Net income $19,232 $16,575 $39,099 $37,988
Diluted EPS $0.40 $0.34 $0.78 $0.79
EGL Chief Executive Officer Jim Crane commented, "Our quarterly results
were bolstered by a very strong September. We remain focused on three key
areas: (1) improving yields by focusing on profitable accounts and enhancing
certain business that does not generate margins we believe to be appropriate
for the services we provide, (2) eliminating operational inefficiencies
through process improvements, and (3) increasing cash flow from operations.
We are seeing the impact of the actions we initiated earlier this year on
recovery of fuel costs, phasing out of marginally profitable accounts,
reducing our cost structure, improving our profitability in Europe and Canada,
and improving our working capital management. The efforts of all our
employees are contributing nicely toward our goals of improving profitability
and enhancing shareholder value."
Gross revenues increased 8% over the third quarter of 2004 to $780
million, reflecting a 10% increase in airfreight revenues and a 10% increase
in customs brokerage and logistics, partially offset by a 2% decrease in ocean
revenues. Gross revenues outside North America increased 12% due to the
higher volumes from Asia and higher fuel costs that were passed on to our
customers.
Net revenues of $247 million in the third quarter of 2005 increased by 9%
from the same quarter last year. Net revenue margins of 31.7% improved by 30
basis points over the third quarter of 2004, due to improvements in ocean and
logistics net revenue margins.
In the third quarter of 2005 operating income increased 39% to $33.0
million, as compared to the third quarter of 2004, while operating expenses
increased by only 6% to $214 million.
Non-operating income of $380,000 in the third quarter of 2005 decreased
significantly from the same quarter last year as the third quarter of last
year included a gain of $5.4 million from the sale of the Company's interest
in TDS.
Third quarter 2005 operating income of $33.0 million was a record high for
the Company. Operating income as a percent of net revenue for the third
quarter of 2005 was 13.4% compared to 10.5% in the third quarter of 2004.
Stock Repurchase Program and Dutch Auction Tender Offer
Total cash, restricted cash and short-term investments increased to $143
million at September 30, 2005 compared to $111 million at December 31, 2004.
During the second and third quarters of 2005, the Company repurchased 4.97
million shares of its common stock in the open market for $94 million.
In addition to these share repurchases, the Company also completed a
modified "Dutch Auction" self-tender offer to purchase up to 9,615,000 million
shares of its common stock on October 4, 2005. In the tender offer, the
Company purchased 8,085,958 shares at a per share purchase price of $26.00 for
a total of $210.2 million. After this repurchase, 39,237,972 shares remained
outstanding. The Company financed the tender offer with the use of cash on
hand and borrowings of $196 million under both a new $300 million line of
credit facility and a $100 million bridge loan that was refinanced by the
issuance of $100 million of floating rate senior secured notes due in October
2012.
Fourth Quarter of 2005 Earnings Guidance
EGL expects diluted earnings per share in the range of $0.38 to $0.42 for
the fourth quarter of 2005 compared to $0.26 in the fourth quarter of last
year.
Earnings Conference Call
EGL, Inc. plans to host a conference call for shareholders and the
investing community on November 3, 2005 at 11 a.m. Eastern time (8 a.m.
Pacific) to review results for the quarter ended September 30, 2005. The call
can be accessed by dialing (719) 457-2600, access code 8045306 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, November 18,
2005 at (719) 457-0820, access code 8045306.
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 (including guidance), growth opportunities, 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, 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 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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues $779,507 $719,417 $2,261,427 $1,941,285
Cost of transportation 532,547 493,492 1,564,539 1,305,548
Net revenues 246,960 225,925 696,888 635,737
Operating expenses:
Personnel costs 129,349 126,555 390,473 356,336
Other selling, general and
administrative expenses 84,567 75,545 238,645 226,368
Operating income 33,044 23,825 67,770 53,033
Nonoperating income, net 380 3,121 2,242 8,942
Income before provision for
income taxes 33,424 26,946 70,012 61,975
Provision for income taxes 14,192 10,371 30,913 23,987
Net income $19,232 $16,575 $39,099 $37,988
Basic earnings per share $0.41 $0.37 $0.78 $0.84
Diluted earnings per share $0.40 $0.34 $0.78 $0.79
Basic weighted-average
common shares outstanding 47,300 44,801 49,974 45,478
Diluted weighted-average
common shares outstanding 47,602 51,202 50,316 51,687
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
September 30, December 31,
2005 2004
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash and short-term investments $142,857 $110,509
Trade accounts receivable, net of
allowance 541,242 611,594
Other current assets 68,777 56,034
Total current assets 752,876 778,137
Property and equipment, net 190,317 178,218
Investments in unconsolidated affiliates 553 619
Goodwill, net 110,960 108,470
Other assets, net 37,267 29,419
Total assets $1,091,973 $1,094,863
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $13,492 $19,426
Trade payables and accrued
transportation costs 363,230 337,137
Accrued expenses and other liabilities 160,765 134,107
Total current liabilities 537,487 490,670
Long-term debt 19,817 12,752
Other noncurrent liabilities 37,570 38,207
Minority interest 1,419 802
Stockholders' equity 495,680 552,432
Total liabilities and stockholders'
equity $1,091,973 $1,094,863
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
Cash flows from operating activities:
Net income $39,099 $37,988
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 26,860 25,912
Bad debt expense 6,412 4,857
Transfers (to) from restricted cash 5,042 (351)
Other (403) (11,548)
Net effect of changes in working
capital, net of assets acquired 92,970 (15,204)
Net cash provided by operating
activities 169,980 41,654
Cash flows from investing activities:
Capital expenditures (32,623) (31,448)
Purchase of short-term investments 540 (43)
Proceeds from sales of other assets 1,456 873
Acquisitions of businesses, net of
cash acquired - (16,216)
Earnout payments (4,186) (3,291)
Cash received from disposal of affiliates - 52,123
Collection of notes receivable 1,618 552
Net cash provided by (used in)
investing activities (33,195) 2,550
Cash flows from financing activities:
Issuance of debt, net (4,834) 2,234
Repayment of financed insurance
premiums and software, net (2,251) (4,666)
Repayment of capital leases (1,525) (781)
Repurchases of common stock (94,293) (59,079)
Payment of deferred financing fees (1,055) (1,067)
Issuance of common stock 535 319
Proceeds from exercise of stock options 6,206 22,932
Cash received from a minority
interest partner 636 -
Dividends paid to minority
interest partners (82) (114)
Net cash used in financing activities (96,663) (40,222)
Effect of exchange rate changes on cash (2,163) (3,203)
Increase in cash and cash equivalents 37,959 779
Cash and cash equivalents, beginning
of the period 92,918 94,099
Cash and cash equivalents, end of the
period $130,877 $94,878
Third 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 of
EGL, Inc., +1-281-618-3665
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