HOUSTON, Nov. 4 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
announced that net income increased 215% to $17.5 million for the three months
ended September 30, 2004, compared to $5.6 million in the third quarter of
2003. Diluted earnings per share for the quarter were $0.36 compared to $0.12
in Q3-2003. Included in the quarter was a $0.06 per share gain on the
previously announced sale of TDS, offset by an unrelated tax charge of $0.01
per share. Excluding those items, diluted earnings per share for the quarter
were $0.31.
Q3 Financial Highlights
-- Gross revenues and net revenues increase to record highs
-- Strong volumes across all product lines and geographic areas,
including a 15% increase in the North America domestic product gross
revenues
-- Operating income as a percentage of net revenues increased to 11.3%
this quarter from 6.2% last year
-- Net income improved by $12.0 million to $17.5 million
-- Gain on sale of TDS of $5.4 million ($0.06/share), excluding sale
proceeds held in escrow
-- Entered into a 5-year, $150 million unsecured revolving credit
facility
Three Months Ended Nine Months Ended
09/30/04 09/30/03 09/30/04 09/30/03
$ thousands (except EPS)
Gross revenues $719,536 $533,616 $1,941,673 $1,533,022
% change + 35 % + 27 %
Net revenues $225,609 $183,764 $634,643 $536,860
% change + 23 % + 18 %
Net revenue margin 31.4 % 34.4 % 32.7 % 35.0 %
Net income $17,512 $5,556 $36,199 $14,818
Diluted EPS $0.36 $0.12 $0.75 $0.31
EGL Chief Executive Officer Jim Crane commented, "Our third quarter
performance demonstrates the scope of our global network with a continued
competitive advantage in North America. 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
continues to improve, we expect our profitability to continue to grow."
Gross revenues increased 35% from the third quarter of 2003 to $720
million, reflecting a 36% increase in airfreight revenues, a 46% increase in
ocean revenues, and a 23% increase in customs brokerage and logistics. Gross
revenues outside North America increased 51% on the continued strength of
volumes in Asia and the Middle East. The growth of the North America domestic
product revenues of 15% was an increase from the Q2 2004 results, which showed
an 8% increase over the same period of the prior year. CEO Jim Crane
remarked, "Our unique business model with a balanced domestic and
international network allows us to weather periods where international pricing
is under pressure by leveraging our competitive advantages in North America."
Third quarter 2004 net revenues of $226 million increased 23% over last
year and surpassed net revenues for the second quarter of 2004, resulting in
another record high for the Company. Net revenue margins of 31.4% were 300
basis points lower than the third quarter of 2003. This reflects an
acceleration of growth in international air and ocean products which carry a
lower net revenue margin but a higher net revenue per shipment, pass-through
of higher fuel and security surcharges without corresponding net revenue
margin and higher transportation costs due to capacity constraints, mainly
from Asia.
Operating income for the third quarter of 2004 was $25.4 million, an
increase of $14.1 million from the third quarter of 2003. Operating income as
a percent of net revenues for the quarter increased 510 basis points to 11.3%
compared to last year.
As previously announced, during the third quarter of 2004, the Company
sold its interest in TDS for $45 million, excluding sale proceeds held in
escrow, resulting in a gain of $5.4 million or $0.06 per share for the
quarter. In addition, the Company also entered into a new 5-year, $150
million unsecured revolving credit facility to replace its $100 million
secured facility which would have expired in December 2004.
A tax adjustment of $305,000, or $0.01 per share, is included in the
quarter primarily due to lower than expected earnings from certain European
countries. The additional tax expense increased the effective tax rate during
the quarter to 38.6%. Management believes that the tax rate for the fourth
quarter will be 37.5%.
CEO Jim Crane added, "Our organization continues to focus on operating
efficiencies, testing our internal controls for compliance with section 404 of
the Sarbanes-Oxley Act of 2002, and the implementation of our Vision Suite of
Technologies, which have now been deployed in eight countries, including the
United Kingdom and Hong Kong during the third quarter of 2004. "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."
For the nine months ended September 30, 2004, gross revenues improved 27%
to $1.94 billion, while net revenues increased 18% to $635 million. Operating
income increased 78% to $50 million from $28 million last year. Net income of
$36 million compares to $15 million in the same period last year. Fully
diluted earnings per share increased to $0.75 from $0.31 last year. Cash
flow from operations for the nine months ended September 30, 2004 was $43
million while capital expenditures were $30.5 million.
Fourth Quarter of 2004, Total Year 2004 and Total Year 2005
EGL expects fourth quarter 2004 diluted earnings per share in the range of
$0.32 to $0.33, compared to $0.19 last year. For 2004, EGL raises its
projections for gross revenues to be in the range of $2.6 to $2.7 billion and
raises its estimates for diluted earnings per share to be in the range of
$1.07 - $1.08, including the $0.06 gain from the aforementioned TDS sale, as
compared to $0.50 last year. For 2005, EGL reiterates its estimate of 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 November 4, 2004 at 10 a.m. Eastern time (7 a.m.
Pacific) to review results for the quarter ended September 30, 2004. The call
can be accessed by dialing (719) 457-2626, access code 810295 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,
November 18, 2004 at (719) 457-0820, access code 820195.
Third 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, our effective tax
rate for 2004, the adequacy of internal controls over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002, third 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, our ability to outperform the economy, and
our ability to retain a competitive advantage in North America, 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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenues $719,536 $533,616 $1,941,673 $1,533,022
Cost of transportation 493,927 349,852 1,307,030 996,162
Net revenues 225,609 183,764 634,643 536,860
Operating expenses:
Personnel costs 126,845 105,931 356,735 309,983
Other selling, general and
administrative expenses 73,348 66,500 227,765 198,695
Operating income 25,416 11,333 50,143 28,182
Nonoperating income
(expense), net 3,091 (2,397) 8,850 (4,348)
Income before provision for
income taxes 28,507 8,936 58,993 23,834
Provision for income taxes 10,995 3,380 22,794 9,016
Net income $17,512 $5,556 $36,199 $14,818
Basic earnings per share $0.39 $0.12 $0.80 $0.31
Diluted earnings per share $0.36 $0.12 $0.75 $0.31
Basic weighted-average
common
shares outstanding 44,801 47,230 45,478 47,151
Diluted weighted-average
common
shares outstanding 51,202 47,536 51,687 47,419
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
September 30, December 31,
2004 2003
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash and short-term investments $111,153 $110,026
Trade accounts receivable, net of
allowance 552,116 447,353
Other current assets 67,406 56,875
Total current assets 730,675 614,254
Property and equipment, net 172,171 164,038
Investments in unconsolidated
affiliates 655 38,957
Goodwill, net 109,190 96,209
Other assets, net 32,406 30,780
Total assets $1,045,097 $944,238
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term notes
payable $15,644 $13,017
Trade payables and accrued
transportation costs 331,772 268,354
Accrued expenses and other
liabilities 141,368 103,247
Total current liabilities 488,784 384,618
Long-term notes payable 109,501 114,407
Other noncurrent liabilities 30,597 23,817
Minority interest 549 6,800
Stockholders' equity 415,666 414,596
Total liabilities and stockholders'
equity $1,045,097 $944,238
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
2004 2003
Cash flows from operating activities:
Net income $36,199 $14,818
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 25,912 23,059
Bad debt expense 4,857 6,174
Transfers to restricted cash (351) (5,383)
Other (11,548) 4,889
Net effect of changes in working
capital, net of assets acquired (11,977) 7,484
Net cash provided by operating
activities 43,092 51,041
Cash flows from investing activities:
Capital expenditures (30,503) (19,507)
Purchase of short-term investment (43) -
Proceeds from sales of other
assets 873 2,623
Proceeds from sale-lease back
transactions - 1,158
Acquisitions of businesses, net of
cash acquired (19,507) (21,084)
Cash received from disposal of
affiliates 52,123 -
Collection of capital leases
issued 552 -
Net cash provided by (used in)
investing activities 3,495 (36,810)
Cash flows from financing activities:
Repayments of notes payable, net (1,190) (1,913)
Repayment of financed insurance
premiums and software, net (4,666) (7,378)
Repayment of capital leases (820) -
Repurchases of common stock (59,079) -
Issuance of common stock 319 272
Proceeds from exercise of stock
options 22,932 3,033
Dividends paid to minority
interest partners (114) (185)
Net cash used in financing activities (42,618) (6,171)
Effect of exchange rate changes on
cash (3,190) (201)
Increase in cash and cash equivalents 779 7,859
Cash and cash equivalents, beginning
of the period 95,916 111,477
Cash and cash equivalents, end of the
period $96,695 $119,336
Third 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 of
EGL, Inc., +1-281-618-3665
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