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Echo Global Logistics Reports Third Quarter 2013 Results


Echo Global Logistics Reports Third Quarter 2013 Results

CHICAGO, IL -- (Marketwired) -- 10/24/13 -- Echo Global Logistics, Inc. (NASDAQ: ECHO), a leading provider of technology-enabled transportation and supply chain management services, reported today financial results for the quarter ended September 30, 2013.

For the third quarter of 2013, Echo reported record total revenue of $234.8 million, record non-GAAP net income of $4.4 million and non-GAAP fully diluted EPS of $0.19.

"Echo posted another quarter of double digit growth in revenue and earnings," commented Doug Waggoner, Chief Executive Officer of Echo. "Despite a difficult pricing environment, the consistent execution of our strategy is delivering profitability increases to our bottom line."

Waggoner added, "Our third quarter results are driven by the continued organic growth in our business. Enterprise revenue increased by 18%, while our revenue per transactional sales representative increased by over 23%. This increased productivity of our sales organization is having a strong impact on our ability to improve operating margins."

Third Quarter Highlights


 
--  Total revenue increased 21.8% to $234.8 million from the third quarter
    of 2012.
--  Non-GAAP operating income increased 12.4% to $7.1 million from the
    third quarter of 2012.*
--  Non-GAAP operating margin was 17.6%, up 141 basis points from the
    second quarter of 2013 and 24 basis points from the third quarter of
    2012.*
--  Non-GAAP net income increased 15.0% to $4.4 million from the third
    quarter of 2012.*
--  Non-GAAP fully diluted EPS was $0.19, increasing 12.2% from the third
    quarter of 2012.*

*All non-GAAP financial measures exclude the effects of changes in contingent consideration payable and loss associated with the Shipper Direct acquisition. For a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure, see "Reconciliation to GAAP Operating Income, Operating Margin, Net Income and Fully Diluted EPS" included in this release.

Summarized financial results and select operating metrics follow:


 
                                                                            
                                         Three months ended                 
                                            September 30,                   
                                          2013         2012     % Change    
Amounts in 000,000s, except per share                                       
 data                                        (unaudited)                    
                                      ------------------------  --------    
Revenue                                                                     
  Transactional                       $     163.7  $     132.5      23.5%   
  Enterprise                          $      71.1  $      60.2      18.1%   
                                      -----------  -----------  --------    
    Total Revenue                           234.8        192.7      21.8%   
                                                                            
Net Revenue                                  40.6         36.6      10.9%   
                                                                            
Operating Expenses                                                          
  Commissions                                10.2         10.4      -2.2%   
  Selling, general and administrative        20.6         17.5      17.3%   
  Depreciation and amortization               2.7          2.3      17.5%   
                                      -----------  -----------  --------    
    Total Operating Expenses (1)             33.5         30.2      10.6%   
                                                                            
                                      -----------  -----------  --------    
Non-GAAP Operating Income (1)                 7.1          6.4      12.4%   
                                      -----------  -----------  --------    
                                                                            
Other expense                                 0.0          0.2     -38.2%   
                                      -----------  -----------  --------    
Non-GAAP Income Before Taxes (1)              7.1          6.2      13.4%   
                                      -----------  -----------  --------    
                                                                            
Income taxes (1)                              2.7          2.4      11.0%   
                                                                            
                                      -----------  -----------  --------    
Non-GAAP Net Income (2)                       4.4          3.8      15.0%   
                                      ===========  ===========  ========    
                                                                            
                                      -----------  -----------  --------    
Non-GAAP Fully Diluted EPS (2)        $      0.19  $      0.17      12.2%   
                                      ===========  ===========  ========    
Diluted shares                               23.5         22.9              
                                                                            
Reconciliation to GAAP Operating Income, Operating Margin, Net income and   
 Fully Diluted EPS                                                          
Non-GAAP Operating Income (1)                 7.1          6.4      12.4%   
  Change in contingent consideration                                        
   payable                                   (0.0)        (0.0)   1384.0%   
  Loss associated with Shipper Direct                                       
   acquisition                                  -         (2.5)    100.0%   
                                      -----------  -----------  --------    
Operating Income                              7.1          3.9      84.3%   
                                      -----------  -----------  --------    
                                                                            
Non-GAAP Operating Margin (1)                17.6%        17.4%       24 bps
  Effect of change in contingent                                            
   consideration payable and loss                                           
   associated with Shipper Direct                                           
   acquisition                               -0.1%        -6.9%      674 bps
                                      -----------  -----------  --------    
Operating Margin (% of Net Revenue)          17.5%        10.5%      698 bps
                                      -----------  -----------  --------    
                                                                            
Non-GAAP Net Income (2)                       4.4          3.8      15.0%   
  Change in contingent consideration                                        
   payable and loss associated with                                         
   Shipper Direct acquisition, net of                                       
   tax effect                                (0.0)        (1.5)     98.7%   
                                      -----------  -----------  --------    
Net Income                                    4.4          2.3      90.8%   
                                      ===========  ===========  ========    
                                                                            
Non-GAAP Fully Diluted EPS (2)        $      0.19  $      0.17      12.2%   
  Change in contingent consideration                                        
   payable and loss associated with                                         
   Shipper Direct acquisition, net of                                       
   tax effect                               (0.00)       (0.07)     98.8%   
                                      -----------  -----------  --------    
Fully diluted EPS                     $      0.19  $      0.10      86.2%   
                                      ===========  ===========  ========    
                                                                            
Operating Metrics                                                           
  Net revenue margin                         17.3%        19.0%     (170)bps
  Non-GAAP Operating margin (% of net                                       
   revenue) (1)                              17.6%        17.4%       24 bps
  Shipment volume                         480,201      427,147      12.4%   
  Total employees                           1,281        1,286      -0.4%   
  Sales employees and agents                  820          843      -2.7%   
  Less Than Truckload (LTL) Revenue %        40.8%        45.7%     (492)bps
  Truckload (TL) Revenue %                   46.0%        44.7%      135 bps
  Intermodal Revenue %                        6.8%         3.1%      366 bps
                                                                            
 (1) Amounts shown exclude the effects of changes in contingent             
     consideration payable and loss associated with Shipper Direct          
     acquisition.                                                           
 (2) Amounts shown exclude the tax effected changes in contingent           
     consideration payable and loss associated with Shipper Direct          
     acquisition.                                                           

Business Outlook

"Based on the current pricing environment and economic conditions, we anticipate our fourth quarter revenue to be in the range of $230 to $240 million and non-GAAP fully diluted EPS between $0.17 and $0.19, excluding the effects of certain separation costs associated with changes in senior management," stated Kyle Sauers, Chief Financial Officer of Echo.

Conference Call

A conference call, with accompanying presentation slides, will be broadcast live on October 24, 2013 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Doug Waggoner, Chief Executive Officer, Dave Menzel, Chief Operating Officer, and Kyle Sauers, Chief Financial Officer will host the call. To participate in the call, dial (877) 303-6235 (toll free) or (631) 291-4837 (toll) and reference the "Echo Global Logistics" call. To listen to a live webcast of the call, visit the Echo website at http://ir.echo.com. A replay of the webcast will be available for one year following the live webcast in the Investor Relations section of the Echo website.

Non-GAAP Financial Measures

This release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission (the "SEC"): Non-GAAP Operating Income, Non-GAAP Operating Margin, Non-GAAP Net Income and Non-GAAP Fully Diluted EPS. We refer to these Non-GAAP financial measures to describe earnings and earnings per share excluding the effects of changes in contingent consideration payable and the loss associated with the Shipper Direct acquisition. We believe such measures provide useful information to investors because they provide information about the financial performance of the Company's ongoing business.

Non-GAAP Operating Income, Non-GAAP Operating Margin, Non-GAAP Net Income and Non-GAAP Fully Diluted EPS are used by management in its financial and operational decision-making and evaluation of overall operating performance. These measures may be different from similar measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. For a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure, see "Reconciliation to GAAP Operating Income, Operating Margin, Net Income and Fully Diluted EPS" included in this release.

Forward-Looking Statements

This release contains statements relating to future results. These statements are forward-looking statements under the federal securities laws. We can give no assurance that any future results discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of the most recent Form 10-K we filed with the SEC.


 
                                                                            
                                                                            
                        Echo Global Logistics, Inc.                         
              Condensed Consolidated Statements of Operations               
                                                                            
                                                                            
                         Three Months Ended           Nine Months Ended     
                            September 30,               September 30,       
                         2013          2012          2013          2012     
                             (Unaudited)                 (Unaudited)        
                     --------------------------  -------------------------- 
REVENUE              $234,842,526  $192,737,761  $662,870,833  $546,537,567 
                                                                            
COSTS AND EXPENSES                                                          
  Transportation                                                            
   costs              194,259,277   156,145,239   544,176,331   442,475,163 
  Selling, general,                                                         
   and                                                                      
   administrative                                                           
   expenses            30,810,112    30,468,339    92,097,832    82,815,184 
  Depreciation and                                                          
   amortization         2,660,755     2,264,608     7,868,534     6,480,261 
                     ------------  ------------  ------------  ------------ 
INCOME FROM                                                                 
 OPERATIONS             7,112,382     3,859,575    18,728,136    14,766,959 
OTHER EXPENSE             (75,328)     (121,857)     (276,274)     (359,831)
                     ------------  ------------  ------------  ------------ 
INCOME BEFORE                                                               
 PROVISION FOR                                                              
 INCOME TAXES           7,037,054     3,737,718    18,451,862    14,407,128 
INCOME TAX EXPENSE     (2,674,729)   (1,451,412)   (6,990,288)   (5,406,198)
                     ------------  ------------  ------------  ------------ 
NET INCOME           $  4,362,325  $  2,286,306  $ 11,461,574  $  9,000,930 
                     ============  ============  ============  ============ 
                                                                            
Basic net income per                                                        
 share               $       0.19  $       0.10  $       0.50  $       0.40 
Diluted net income                                                          
 per share           $       0.19  $       0.10  $       0.49  $       0.39 
                                                                            
                                                                            
                                                                            
                         Echo Global Logistics, Inc.                        
                    Condensed Consolidated Balance Sheets                   
                                                                            
                                                 September 30,  December 31,
                                                      2013          2012    
                                                  (Unaudited)               
                                                 ------------- -------------
  Cash and cash equivalents                      $  53,340,621 $  41,780,984
  Accounts receivable, net of allowance for                                 
   doubtful accounts                               114,819,705    96,623,553
  Prepaid expenses                                     233,708     2,491,955
  Other current assets                               1,407,913       843,009
  Total long term assets                            78,460,524    77,743,563
                                                 ------------- -------------
Total assets                                     $ 248,262,471 $ 219,483,064
                                                 ============= =============
                                                                            
  Accounts payable - trade                       $  71,762,231 $  58,889,437
  Current maturities of capital lease                                       
   obligations                                               -        24,086
  Other current liabilites                          12,892,470    12,074,645
  Deferred income taxes                              3,260,118     1,915,847
  Long term liabilities                              4,535,490     5,593,639
  Stockholders' equity                             155,812,162   140,985,410
                                                 ------------- -------------
Total liabilities and stockholders' equity       $ 248,262,471 $ 219,483,064
                                                 ============= =============
                                                                            
                                                                            
                                                                            
                        Echo Global Logistics, Inc.                         
              Condensed Consolidated Statements of Cash Flows               
                                                                            
                                                     Nine Months Ended        
                                                       September 30,            
 
                                                    2013           2012     
                                                        (Unaudited)        
                                               ---------------------------- 
Net cash provided by operating activities      $  21,742,005  $  13,045,705 
                                                                            
Net cash used in investing activities             (8,897,053)   (10,435,299)
                                                                            
Net cash used in financing activities             (1,285,315)    (1,450,082)
                                               -------------  ------------- 
                                                                            
Increase in cash and cash equivalents             11,559,637      1,160,324 
Cash and cash equivalents, beginning of period    41,780,984     47,007,309 
                                               -------------  ------------- 
Cash and cash equivalents, end of period       $  53,340,621  $  48,167,633 
                                               =============  ============= 

About Echo Global Logistics

Echo Global Logistics, based in Chicago, is a leading provider of technology-enabled transportation and supply chain management services. Echo maintains a proprietary web-based technology platform that compiles and analyzes data from its network of over 24,000 transportation providers to serve its clients' transportation and supply chain management needs. Echo services clients across a wide range of industries, such as manufacturing, construction, consumer products and retail. For more information on Echo, visit: www.echo.com.

Echo: Earnings

INVESTOR RELATIONS CONTACT: Suzanne Karpick Echo Global Logistics (312) 784-7414

MEDIA CONTACT: Hanni Itah SSPR (847) 415-9324

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