HOUSTON, Nov. 7 /PRNewswire-FirstCall/ -- EGL, Inc. (Nasdaq: EAGL)
today reported net income for the third quarter of 2006 of $19.5 million, a
2% increase, compared with net income of $19.2 million in the same quarter
of 2005. Operating income for the third quarter of 2006 was $30.2 million,
an 8% decline, compared with operating income of $33.0 million in the same
quarter of 2005. Diluted earnings per share for the third quarter of 2006
were $0.48 compared with $0.40 in the third quarter of 2005.
Net income for the nine months ended September 30, 2006 was $45.4
million, a 16% increase, compared with net income of $39.1 million in the
same period of 2005. Operating income for the nine months ended September
30, 2006 was $78.6 million, a 16% increase, compared with operating income
of $67.8 million in the same period of 2005. Diluted earnings per share for
the nine months ended September 30, 2006 were $1.11 compared with $0.78 in
the same period of 2005.
Q3 and Nine Month Financial Highlights:
* Operating income declined 8% to $30.2 million compared with
$33.0 million in the third quarter of 2005;
* Net revenue margin improved to 31.9% compared with 31.7% in the third
quarter of 2005;
* Net revenues increased 7% to $265.5 million compared with
$246.9 million in the third quarter of 2005;
* Operating income increased 16% to $78.6 million compared with
$67.8 million for the nine months of 2005;
* Net revenue margin improved to 31.9% compared with 30.8% for the first
nine months of 2005;
* Net revenues for the first nine months of 2006 increased 8%;
Three Months Ended Nine Months Ended
$ millions (except EPS) 9/30/06 9/30/05 9/30/06 9/30/05
Gross revenues $ 832.7 $ 779.5 $ 2,356.4 $2,261.4
% change +7% +4%
Net revenues $ 265.5 $ 246.9 $ 752.3 $ 696.9
% change +7% +8%
Net revenue margin 31.9% 31.7% 31.9% 30.8%
Operating expenses $ 235.3 $ 213.9 $ 673.7 $ 629.1
Operating income $ 30.2 $ 33.0 $ 78.6 $ 67.8
Net income $ 19.5 $ 19.2 $ 45.4 $ 39.1
Diluted EPS $ 0.48 $ 0.40 $ 1.11 $ 0.78
EGL Chief Executive Officer Jim Crane commented, "Our gross revenues
increased in the third quarter reversing the temporary decline experienced
in the second quarter as we continue to increase revenue with existing
customers and win business from new customers. We also had several very
successful logistics implementations in the quarter that grew our customs,
logistics and other net revenue by 17% during the quarter. We continue to
focus the organization on profitable revenue and operating income growth
across all product lines in all geographic locations."
Gross revenues of $833 million in the third quarter of 2006 increased
7% from the same quarter last year, with increases in airfreight of 5%,
ocean freight of 14%, and customs brokerage and other of 7%. Gross revenues
outside of North America accounted for 56% of third quarter activity and
increased 9% due to higher volumes in Asia Pacific, Europe and Latin
America. North America gross revenues accounted for 44% of third quarter
activity and increased 4%.
Net revenues of $265.5 million in the third quarter of 2006 increased
7% from the same quarter last year driven by a 19% increase in ocean
freight forwarding, a 17% increase in customs brokerage, logistics and
other while airfreight forwarding net revenues were flat. The company's
third quarter net revenue margin increased to 31.9% compared with 31.7% in
the same quarter last year.
Operating income declined 8% to $30.2 million, as compared with the
third quarter of 2005 due to the 7% increase in net revenues while
operating expenses increased 10%. Third quarter operating expenses
increased faster than revenue due to infrastructure investments made for
certain logistics start-up operations in North America and expansion of
existing operations in Asia Pacific. Operating expenses included $2.6
million pre-tax of costs related to FAS 123 stock compensation expense in
the third quarter of 2006. Third quarter operating income as a percent of
net revenues was 11.4% compared with 13.4% in the same quarter last year.
In response to recent publicity regarding stock option practices at
other companies, management under the direction and oversight of the Audit
Committee conducted an internal review of historical stock option grant
practices and related accounting treatment. Based upon this review,
management and the Audit Committee determined that for certain stock option
grants, mainly between 2000 and 2002, the measurement dates for accounting
purposes were different from the recorded grant dates of the awards. The
examination has been completed and the Company has determined that the
cumulative impact of the adjustments related to incorrect measurement dates
resulted in an understatement of compensation expense of $2.1 million
pre-tax that has been recorded as a non-cash charge in personnel costs in
the third quarter of 2006. The Company and the Audit Committee found no
indication of intentional misconduct in the dating of stock options.
Non-operating expense in the third quarter of 2006 was $2.1 million as
compared to non-operating income of $0.4 million in the same quarter last
year. The change was due to an increase in interest expense of $2.4 million
resulting from increased borrowings used to finance the modified "Dutch
Auction" self-tender in October 2005 and third quarter 2006 foreign
exchange losses of $0.2 million compared with $0.2 million of foreign
exchange gains in the same quarter last year.
The Company's effective tax rate in the third quarter of 2006 decreased
due to benefits related to the filing of prior year federal and foreign
income tax returns, state tax refund claims and utilization of foreign net
operating losses. The Company expects the effective tax rate for fiscal
2006 to be between 35%-37%.
Cash Position
EGL closed the quarter with $160 million in cash, restricted cash and
short-term investments and total debt of $207 million. For the first nine
months of 2006, cash flow from operations was $72 million compared to $79
million of operating income for the same period. Capital expenditures for
the first nine months of 2006 were $34 million compared with $33 million
for the same period of 2005.
Earnings Conference Call
EGL, Inc. will host a conference call for shareholders and the
investing community on November 8, 2006 at 11 a.m. Eastern time (8 a.m.
Pacific) to review results for the third quarter ended September 30, 2006.
The call can be accessed by dialing (719) 457-2638, access code 6214881 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 web cast on the company's website,
http://www.eaglegl.com , on the Investor Relations page. An audio replay
will be available until Wednesday, November 22, 2006 at (719) 457-0820,
access code 6214881.
Founded in 1984, 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 2005 revenues of $3.1 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 Global Select 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), capital expenditure levels,
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, the results of government investigations and other statements
that are not historical facts, are forward looking statements. These
statements involve risks and uncertainties including, but not limited to,
our ability to manage and continue growth, risks associated with operating
in international markets, events impacting the volume of international
trade, our ability to comply with rules relating to the performance of U.S.
government contracts, fuel shortages and price volatility of fuel, seasonal
trends in our business, currency devaluations and fluctuations in foreign
markets, our effective income tax rate, our ability to upgrade our
information technology systems, protecting our intellectual property
rights, heightened global security measures, availability of cargo space,
increases in the prices charged by our suppliers, competition in the
freight industry and our ability to maintain market share, material
weaknesses within our internal controls, control by and dependence on our
founder, liability for loss or damage to goods, the results of litigation,
exposure to fines and penalties if our owner/operators are deemed to be
employees, failure to comply with environmental, health and safety, and
criminal laws and regulations and governmental permit and licensing
requirements, laws and regulations that decrease our ability to change our
charter and bylaws, the impact of goodwill impairments, the successful
deployment of our global IT infrastructure, estimated expenses associated
with stock option practices and other factors detailed in the company's
Annual Reports on 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 INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Revenues $832,720 $779,507 $2,356,376 $2,261,427
Cost of transportation 567,245 532,547 1,604,027 1,564,539
Net revenues 265,475 246,960 752,349 696,888
Operating expenses:
Personnel costs 143,491 129,349 418,450 390,473
Other selling, general and
administrative expenses 91,772 84,567 255,288 244,620
EEOC legal settlement --- --- --- (5,975)
Operating income 30,212 33,044 78,611 67,770
Nonoperating income (expense),
net (2,052) 380 (8,152) 2,242
Income before provision for
income taxes 28,160 33,424 70,459 70,012
Provision for income taxes 8,675 14,192 25,064 30,913
Net income $19,485 $19,232 $45,395 $39,099
Basic earnings per share $0.48 $0.41 $1.12 $0.78
Diluted earnings per share $0.48 $0.40 $1.11 $0.78
Basic weighted-average
common shares outstanding 40,613 47,300 40,404 49,974
Diluted weighted-average
common shares outstanding 40,954 47,602 40,850 50,316
EGL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash, cash equivalents, restricted
cash and short-term investments $160,193 $123,254
Trade accounts receivable, net of
allowance 616,515 560,954
Other current assets 83,246 70,230
Total current assets 859,954 754,438
Property and equipment, net 185,932 185,906
Investments in unconsolidated affiliates --- 534
Goodwill, net 115,666 113,048
Other assets, net 53,678 35,315
Total assets $1,215,230 $1,089,241
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $13,892 $15,967
Trade payables and accrued
transportation costs 378,500 342,351
Accrued expenses and other
liabilities 173,325 150,166
Total current liabilities 565,717 508,484
Long-term debt 193,328 214,555
Other noncurrent liabilities 42,652 42,858
Minority interest 2,080 1,616
Stockholders' equity 411,453 321,728
Total liabilities and stockholders' equity $1,215,230 $1,089,241
EGL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended
September 30,
2006 2005
Cash flows from operating activities:
Net income $45,395 $39,099
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 24,524 26,860
Bad debt expense 3,054 6,412
Other 12,965 (35)
Net effect of changes in working
capital, net of assets acquired (14,199) 92,992
Net cash provided by operating activities 71,739 165,328
Cash flows from investing activities:
Capital expenditures (33,846) (32,991)
(Increase) decrease in restricted cash (2,425) 5,042
Proceeds from sales of other assets 3,522 761
Proceeds from property insurance 517 673
Acquisitions of businesses, net of
cash acquired (1,476) ---
Earnout payments --- (4,186)
Cash received from disposal of affiliates 1,254 ---
Other 1,113 2,158
Net cash used in investing activities (31,341) (28,543)
Cash flows from financing activities:
Proceeds from issuance of debt 335,570 186,373
Repayment of debt (364,196) (193,254)
Issuance (repayment) of short-term
debt with maturities of less than
three months, net (242) 2,048
Repayment of financed insurance
premiums and software, net (3,454) (2,252)
Payments on capital lease obligations (1,464) (1,525)
Repurchases of common stock --- (94,293)
Payment of financing fees (107) (1,055)
Issuance of common stock for employee
stock purchase plan 615 535
Proceeds from exercise of stock options 14,491 6,206
Excess tax benefit of employee stock
plans 5,579 ---
Other (116) 554
Net cash used in financing activities (13,324) (96,663)
Effect of exchange rate changes on cash 7,398 (2,163)
Increase in cash and cash equivalents 34,472 37,959
Cash and cash equivalents, beginning
of the period 111,507 92,918
Cash and cash equivalents, end of the
period $145,979 $130,877
Third quarter 2006 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:
Mike Slaughter, Vice President Finance of
EGL, Inc., +1-281-618-3428
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