Echo Global Logistics Reports Second Quarter 2020 Results

CHICAGO, July 22, 2020 /PRNewswire/ -- Echo Global Logistics, Inc. (NASDAQ: ECHO), a leading provider of technology-enabled transportation management services, today reported financial results for the quarter ended June 30, 2020.

"The second quarter was one of the most volatile we've ever seen, with market conditions changing dramatically in just three short months," said Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer at Echo. Mr. Waggoner continued, "I'm pleased with our team's ability to respond and encouraged by the increasing business volume we've seen in the second half of the quarter and continuing into July."

Second Quarter 2020 Highlights

    --  Revenue decreased 7.1% to $514.7 million from the second quarter of
        2019; Net revenue((1)) decreased 12.5% to $88.0 million from the second
        quarter of 2019
    --  Truckload ("TL") volume increased 3.3% from the second quarter of 2019
    --  Less than truckload ("LTL") revenue decreased 14.2% to $141.6 million
        from the second quarter of 2019; TL revenue decreased 2.8% to $352.2
        million from the second quarter of 2019
    --  Managed Transportation revenue decreased 6.1% to $117.9 million and
        Transactional revenue decreased 7.3% to $396.8 million from the second
        quarter of 2019
    --  Net revenue margin((1)) decreased to 17.1% in the second quarter of 2020
        from 18.2% in the second quarter of 2019
    --  Net income decreased to $1.0 million, compared to $5.1 million in the
        second quarter of 2019
    --  Fully diluted EPS decreased to $0.04 in the second quarter of 2020;
        non-GAAP fully diluted EPS((1)) decreased to $0.19 in the second quarter
        of 2020
    --  Adjusted EBITDA((1)) declined 35.9% to $14.8 million, compared to $23.1
        million in the second quarter of 2019



     _________________________


                              (1)
                               Represents a non-GAAP financial measure.
                               For the definition and a discussion of each
                               non-GAAP financial measure contained in
                               this release, see "Non-GAAP Financial
                               Measures." For a reconciliation of each
                               non-GAAP financial measure to the nearest
                               comparable GAAP financial measure, see the
                               "Reconciliation of Non-GAAP Financial
                               Measures" section of this release.

Summarized financial results and select operating metrics are as follows:


                                                                  Three Months Ended June 30,


                                 Dollars in millions,
                                  except per share data  2020                                2019        % change


                                                                          (unaudited)


     Transactional revenue                                         $
              396.8                                  $
     428.2           (7.3)
                                                                                                                                           %


     Managed Transportation                             117.9                                      125.6                          (6.1)
      revenue                                                                                                                       %


                  Revenue                               514.7                                      553.8                          (7.1)


                                                                                                                                    %




     Transportation costs                               426.7                                      453.2                          (5.8)
                                                                                                                                    %


                  Net revenue(1)                         88.0                                      100.6                         (12.5)


                                                                                                                                    %




     Commission expense                                  26.6                                       31.1                         (14.4)
                                                                                                                                    %


     Change in contingent                               (0.1)                                       0.2                        (138.1)
      consideration                                                                                                                 %


     Stock compensation                                   2.3                                        2.4                          (4.4)
      expense                                                                                                                       %


     Other selling, general                              46.6                                       46.5                            0.4
      and administrative                                                                                                            %


                  Selling, general and                   75.5                                       80.1                          (5.8)
                   administrative
                   expenses
                                                                                                                                    %




     Depreciation                                         7.0                                        6.8                            4.1
                                                                                                                                    %


     Amortization                                         2.8                                        3.0                          (8.8)
                                                                                                                                    %


                  Depreciation and                        9.8                                        9.8                            0.1
                   amortization
                                                                                                                                    %




                  Income from operations                  2.8                                       10.7                         (74.1)


                                                                                                                                    %




     Cash interest expense                                1.2                                        1.3                         (12.5)
                                                                                                                                    %


     Non-cash interest                                    0.2                                        2.2                         (90.0)
      expense                                                                                                                       %


                  Interest expense                        1.4                                        3.6                         (60.7)


                                                                                                                                    %


                  Income before                           1.4                                        7.1                         (80.8)
                   provision for income
                   taxes
                                                                                                                                    %


     Income tax expense                                 (0.4)                                     (2.1)                        (79.9)
                                                                                                                                    %


                  Net income                                   $
       
                1.0                               $
      
       5.1          (81.2)


                                                                                                                                           %




                  Fully diluted EPS                           $
       
                0.04                              $
      
       0.19          (80.8)


                                                                                                                                           %


     Diluted shares                                      26.2                                       26.8



               Note: Amounts may not foot due to
                rounding.


                            (1)See the "Reconciliation of Non-
                             GAAP Financial Measures" and "Non-
                             GAAP Financial Measures" sections
                             of this release.


                            Reconciliation of Non-
                             GAAP Financial
                             Measures                                           Three Months Ended June 30,


                                           Dollars in millions,
                                            except per share data   2020                                    2019         % change


                                                                       
          
              (unaudited)


                            Revenue                                      $
          
                514.7                               $
       
       553.8              (7.1)


                                                                                                                                                                %


               Transportation costs                                426.7                                           453.2                            (5.8)
                                                                                                                                                      %


                            Net revenue(1)                                $
          
                88.0                               $
       
       100.6             (12.5)


                                                                                                                                                                %




                            Net income                                     $
          
                1.0                                 $
       
       5.1             (81.2)


                                                                                                                                                                %


               Depreciation                                          7.0                                             6.8                              4.1
                                                                                                                                                      %


               Amortization                                          2.8                                             3.0                            (8.8)
                                                                                                                                                      %


               Non-cash interest                                     0.2                                             2.2                           (90.0)
                expense                                                                                                                               %


               Cash interest expense                                 1.2                                             1.3                           (12.5)
                                                                                                                                                      %


               Income tax expense                                    0.4                                             2.1                           (79.9)
                                                                                                                                                      %


                            EBITDA(1)                                     $
          
                12.6                                $
       
       20.5             (38.6)


                                                                                                                                                                %


               Change in contingent                                (0.1)                                            0.2                          (138.1)
                consideration                                                                                                                         %


               Stock compensation                                    2.3                                             2.4                            (4.4)
                expense                                                                                                                               %


                            Adjusted EBITDA(1)                            $
          
                14.8                                $
       
       23.1             (35.9)


                                                                                                                                                                %




                            Fully diluted EPS                             $
          
                0.04                                $
       
       0.19             (80.8)


                                                                                                                                                                %


               Change in contingent                               (0.00)                                           0.01                          (138.9)
                consideration                                                                                                                         %


               Amortization                                         0.11                                            0.11                            (6.8)
                                                                                                                                                      %


               Non-cash interest                                    0.01                                            0.08                           (89.8)
                expense                                                                                                                               %


               Stock compensation                                   0.09                                            0.09                            (2.3)
                expense                                                                                                                               %


               Tax effect of                                      (0.05)                                         (0.06)                          (26.3)
                adjustments                                                                                                                           %


                            Non-GAAP fully                                $
          
                0.19                                $
       
       0.42             (54.9)
                             diluted EPS(1)

                                                                                                                                                                %




                                           Operating Metrics


               Net revenue margin(1)                                17.1                                            18.2
                                                                       %                                              %                           (106)   
       bps


               Total employees                                     2,450                                           2,672                            (8.3)
                                                                                                                                                      %


               Sales employees and                                 1,586                                           1,805                           (12.1)
                agents                                                                                                                                %


    TL revenue %                                                  68.4                                            65.4
                                                                       %                                              %                             301    
       bps


    LTL revenue %                                                 27.5                                            29.8
                                                                       %                                              %                           (230)   
       bps




               Note: Amounts may not foot
                due to rounding.


                            (1)See the "Non-GAAP
                             Financial Measures" section
                             of this release for the
                             definition and a discussion
                             of each Non-GAAP financial
                             measure.

2020 Third Quarter and Full Year Guidance

"We are encouraged by our continued ability to take market share and expect revenue for the third quarter to be between $565 and $615 million," said Kyle Sauers, Chief Financial Officer at Echo.

Conference Call

A conference call, with accompanying presentation slides, will be broadcast live on July 22, 2020 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer; Dave Menzel, President and 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 "Echo Global Logistics." 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. To listen to an audio replay, call 855-859-2056 (toll free) or 404-537-3406 (toll) and enter conference ID 4959189. The audio replay will be available through July 29, 2020.

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"): Net revenue, net revenue margin, EBITDA, Adjusted EBITDA and Non-GAAP fully diluted EPS. Net revenue is calculated as revenue less transportation costs. Net revenue margin is calculated as net revenue (as previously defined) divided by revenue. EBITDA is defined as net income excluding the effects of depreciation, amortization, cash and non-cash interest expense and income taxes. Adjusted EBITDA is defined as EBITDA (as previously defined) excluding the changes in contingent consideration and stock compensation expense. Non-GAAP fully diluted EPS is defined as fully diluted EPS excluding changes in contingent consideration, amortization, non-cash interest expense, stock compensation expense and the tax effect of these adjustments. We believe such measures provide useful information to investors because they provide information about the financial performance of the Company's ongoing business.

Net revenue, net revenue margin, EBITDA, Adjusted EBITDA 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 of Non-GAAP Financial Measures" included in this release.

Forward-Looking Statements

All statements made in this release, other than statements of historical fact, are or may be deemed to be forward-looking statements. 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. These statements are based on current plans and expectations of Echo Global Logistics and involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. Information concerning these risks, uncertainties and other factors is contained under the headings "Risk Factors" and "Forward-Looking Statements" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019, and other filings with the SEC.


                                                                                   
              
                Echo Global Logistics, Inc.


                                                                         
              
                Condensed Consolidated Statements of Operations




                                                                         Three Months Ended June 30,                                        Six Months Ended June 30,


                                                            2020                          2019                      2020                                         2019


                                In thousands, except per
                                 share data                   
            
             (unaudited)                               
              
                (unaudited)



     Revenue                                                    $
           514,719                                         $
              553,775                         $
        1,065,768  $
         1,091,858





     Costs and expenses:


      Transportation costs                               426,674                                   453,173                                         887,815                     892,489


      Selling, general and
       administrative expenses                            75,481                                    80,138                                         155,135                     160,333


      Depreciation and
       amortization                                        9,804                                     9,793                                          19,596                      19,261


      Income from operations                               2,761                                    10,672                                           3,222                      19,775


      Interest expense                                   (1,398)                                  (3,555)                                        (4,186)                    (6,968)


      Income (Loss) before
       provision for income
       taxes                                               1,363                                     7,117                                           (965)                     12,807


      Income tax expense                                   (412)                                  (2,050)                                        (1,017)                    (4,244)


      Net income (loss)                                              $
           951                                           $
              5,067                           $
        (1,981)     $
         8,564




      Basic earnings (loss) per
       share                                                        $
           0.04                                            $
              0.19                            $
        (0.08)      $
         0.32


      Diluted earnings (loss)
       per share                                                    $
           0.04                                            $
              0.19                            $
        (0.08)      $
         0.32




              Note: Amounts may not foot due to rounding.


                                         
       
          Echo Global Logistics, Inc.


                                     
         
       Condensed Consolidated Balance Sheets




                                                      June 30, 2020                                December 31, 2019


                            In thousands               (unaudited)


     Cash and cash
      equivalents                                                      $
              35,438                     $
          34,626


     Accounts receivable,
      net of allowance for
      doubtful accounts                                     304,865                        286,989


     Other current assets                                    11,744                         14,578


     Total noncurrent
      assets                                                477,616                        490,473


     Total assets                                                     $
              829,664                    $
          826,666




     Accounts payable                                                 $
              213,760                    $
          187,524


     Other current
      liabilities                                            39,633                         42,885


     Long-term debt, net                                    143,822


     Convertible notes, net                                       -                       156,298


     Other noncurrent
      liabilities                                            55,031                         56,646


     Stockholders' equity                                   377,417                        383,312



     Total liabilities and
      stockholders' equity                                            $
              829,664                    $
          826,666



               Note: Amounts may not
                foot due to rounding.


                                                        
      
               Echo Global Logistics, Inc.


                                                      
      
       Condensed Consolidated Statements of Cash Flows




                                                                                                             Six Months Ended June 30,


                                                                                                2020                         2019



     
                
                  In thousands                                              
              
           (unaudited)



     Net cash provided by operating activities                                                        $
         35,760                          $
     51,206



     Net cash used in investing activities                                                 (10,184)                                (13,198)



     Net cash used in financing activities                                                 (24,763)                                (62,266)



     Increase/(Decrease) in cash and cash equivalents                                           813                                 (24,259)



     Cash and cash equivalents, beginning of period                                          34,626                                   40,281



     Cash and cash equivalents, end of period                                                         $
         35,438                          $
     16,022



               Note: Amounts may not
                foot due to rounding.

About Echo Global Logistics

Echo Global Logistics, Inc. (NASDAQ: ECHO) is a leading Fortune 1000 provider of technology-enabled transportation and supply chain management services. Headquartered in Chicago with more than 30 offices around the country, Echo offers freight brokerage and Managed Transportation solutions for all major modes, including truckload, partial truckload, LTL, intermodal and expedited. Echo maintains a proprietary, web-based technology platform that compiles and analyzes data from its network of over 50,000 transportation providers to serve 35,000 clients across a wide range of industries and simplify the critical tasks involved in transportation management. For more information on Echo Global Logistics, visit: www.echo.com.

ECHO: Earnings

INVESTOR RELATIONS CONTACTS:

Kyle Sauers
Chief Financial Officer
Echo Global Logistics
312-784-7695

Zach Jecklin
SVP of Strategy
Echo Global Logistics
312-784-2046

MEDIA CONTACT:

Christopher Clemmensen
SVP of Marketing
Echo Global Logistics
312-784-2132

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SOURCE Echo Global Logistics, Inc.