Echo Global Logistics has a strong second quarter

By Jeff Berman, Group News Editor
July 29, 2011 - LM Editorial

Second quarter earnings for Echo Global Logistics, a non-asset based freight brokerage company and a provider of technology-enabled transportation and supply chain management services, were strong, with total revenue up 37.9 percent at $151.5 million.

Quarterly operating income at $4.7 million was up 64.8 percent, and net income at $2.9 million was up 50.3 percent. And net revenue, which is comprised of total revenue less transportation costs, was up 46.1 percent at $29.3 million.

In terms of revenue, the company’s Transactional business took in $103 million for a 55.9 percent annual increase. This unit is comprised of business that is not under a long-term contract such as a brokerage-type shipment or an existing relationship without a contract.

And Echo’s Enterprise business earned $48.5 million, god for a 10.6 percent year-over-year gain. This unit focuses on three-year deals with customers (but sometimes less than three years and sometimes more up to five years) and on contractually agreed upon transportation management programs including technology services, staffing, training, and implementation.

Shipment volume—at 350,662—was up 33 percent compared to the second quarter of 2010. The majority of these shipments came from small-to-mid-size companies that lack deep resources in their transportation management operations and processes.

Echo CEO Doug Waggoner told LM that the company’ strong numbers in the second quarter are due in large part to taking market share, adding new customers, and sales staff in conjunction with increasing volumes.

“Out of the [38 percent] total revenue growth, 28.6 percent of that growth was organic and not acquired,” said Waggoner. “It was mostly due to increased volumes and small amount was increased business on a per-customer basis, as well as adding more customers.”

The increased revenue in Echo’s Transactional business over the last few quarters came from shedding some unprofitable business from one of its larger Enterprise accounts during the third quarter of 2010, and acquisitions on the Transactional side also brought in more revenue.

He pointed out that while the Transactional business, which currently represents about 60 percent of total business, has higher margins, it also has higher operating costs, whereas the Enterprise business has lower margins but is more highly automated. What’s more, he said that both segments ultimately contribute equal value to the company.

Less-than-truckload (LTL) and truckload revenue accounted for 48.1 percent and 43.4 percent of quarterly revenue, respectively, according to Echo. Waggoner explained that when looking at these numbers along with the 37.9 percent revenue growth, 34 percent of that 37.9 percent can be attributed to increased shipments and the remaining 4 percent is due to pricing increases.

Discussing truckload capacity, Waggoner said there were several times in 2010 when truckload capacity was much tighter than it is today.

“It does not seem that way now,” he said. “It could be, because the economy has softened a little bit, creating more capacity. But it seems like there is a fair bit of equilibrium right now. We appear to be in a more normal environment right now.”

Looking ahead, Waggoner said that while the economic recovery is anemic at the moment, he does not believe a double-dip recession is on the horizon either.



About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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Article Topics

News · 3PL · Truckload · LTL · Echo Global Logistics · All topics

About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.

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