echo-20200205
0001426945FALSE00014269452020-02-052020-02-05

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 5, 2020
 
ECHO GLOBAL LOGISTICS, INC.
(Exact name of registrant as specified in its charter)

Delaware   001-34470    20-5001120
(State or other jurisdiction of
incorporation)   (Commission File Number)  (I.R.S. Employer Identification No.)
 

600 West Chicago Avenue
Suite 725
Chicago, Illinois      60654
(Address of principal executive offices)     (Zip Code)

(800) 354-7993
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per shareECHONASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act (§240.12b-2 of this chapter).
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 



Item 2.02 Results of Operations and Financial Condition.*
 
On February 5, 2020, Echo Global Logistics, Inc. issued a press release announcing financial results for its fiscal quarter ended December 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)
 
Exhibits:
 
  Exhibit No.
 
 
 
Description
 
99.1*
 
 
 
Press Release dated February 5, 2020.
 
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.




Exhibit Index
 
Exhibit No.
 
 
 
Description
 
99.1*
 
 
 
 
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
ECHO GLOBAL LOGISTICS, INC.
Dated: February 5, 2020By/s/ Kyle Sauers
 Name:Kyle Sauers
Title:Chief Financial Officer


Document
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13344608&doc=8
February 5, 2020

Echo Global Logistics Reports Fourth Quarter and Full Year 2019 Results
CHICAGO, Feb. 5, 2020 /PRNewswire/ -- Echo Global Logistics, Inc. (NASDAQ: ECHO), a leading provider of technology-enabled transportation management services, today reported financial results for the quarter and full year ended December 31, 2019.
“I’m proud of the results we posted this year in light of the challenging freight market, triggered by excess truckload capacity throughout much of the year. I am particularly excited about the year over year volume growth we've seen in early January, and believe the freight cycle will improve in 2020,” said Doug Waggoner, Chairman of the Board of Directors and Chief Executive Officer at Echo. “Entering 2020 we will continue to invest in technology to drive interactions with our shippers and carriers, while improving efficiency for our employees.”

Fourth Quarter 2019 Highlights

Revenue decreased 8.8% to $531.7 million from the fourth quarter of 2018; net revenue(1) decreased 12.4% to $89.7 million from the fourth quarter of 2018
Transactional revenue decreased 8.5% to $411.2 million and Managed Transportation revenue decreased 9.8% to $120.5 million from the fourth quarter of 2018
Net income decreased to $1.4 million, compared to $6.9 million in the fourth quarter of 2018
Fully diluted EPS decreased to $0.05 in the fourth quarter of 2019; non-GAAP fully diluted EPS(1) decreased to $0.26 in the fourth quarter of 2019
Adjusted EBITDA(1) decreased to $17.5 million, compared to $25.6 million in the fourth quarter of 2018

Full Year 2019 Highlights

Revenue decreased 10.4% to $2.2 billion from 2018; net revenue(1) decreased 8.2% to $386 million from 2018
Transactional revenue decreased 12.0% to $1.7 billion and Managed Transportation revenue decreased 4.6% to $500 million from 2018
Net revenue margin(1) increased to 17.7% in 2019 from 17.2% in 2018
Net income decreased to $14.8 million, compared to $28.7 million in 2018
Fully diluted EPS decreased to $0.55 in 2019; non-GAAP fully diluted EPS(1) decreased to $1.45 in 2019
Adjusted EBITDA(1) decreased to $84.1 million, compared to $100.2 million in 2018
_______________________________
(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 Press Release.


Exhibit 99.1
Summarized financial results and select operating metrics follow:
Three Months Ended December 31,Year Ended December 31,
20192018% change20192018% change
Dollars in millions, except per share data(unaudited) (unaudited) 
Transactional revenue$411.2  $449.3  (8.5)%$1,684.9  $1,915.6  (12.0)%
Managed Transportation revenue120.5  133.6  (9.8)%500.1  524.1  (4.6)%
Revenue531.7  583.0  (8.8)%2,185.0  2,439.7  (10.4)%
Transportation costs442.0  480.5  (8.0)%1,798.9  2,019.3  (10.9)%
Net revenue (1)
89.7  102.4  (12.4)%386.0  420.4  (8.2)%
Commission expense26.8  31.1  (13.8)%117.0  126.8  (7.8)%
Change in contingent consideration0.5  0.3  95.0 %1.1  0.4  156.2 %
Acquisition-related transaction costs—  0.0  (100.0)%—  0.3  (100.0)%
Stock compensation expense2.4  2.2  10.6 %10.2  9.3  9.7 %
Other selling, general and administrative45.3  45.7  (0.9)%184.9  193.4  (4.4)%
Selling, general and administrative expense75.1  79.3  (5.3)%313.1  330.2  (5.2)%
Depreciation6.7  6.2  8.6 %26.6  23.6  12.6 %
Amortization2.8  3.3  (14.4)%11.8  13.0  (9.4)%
Depreciation and amortization9.5  9.5  0.7 %38.4  36.6  4.8 %
Income from operations5.1  13.7  (62.9)%34.5  53.6  (35.6)%
Cash interest expense1.3  1.5  (18.1)%5.3  6.5  (18.2)%
Non-cash interest expense1.6  2.7  (41.7)%7.3  9.1  (19.1)%
Interest expense, net2.8  4.3  (33.1)%12.6  15.5  (18.7)%
Income before provision for income taxes2.2  9.4  (76.3)%21.9  38.0  (42.5)%
Income tax expense(0.8) (2.5) (68.2)%(7.0) (9.3) (24.4)%
Net income$1.4  $6.9  (79.3)%$14.8  $28.7  (48.3)%
Fully diluted EPS$0.05  $0.25  (78.2)%$0.55  $1.03  (46.2)%
Diluted shares26.6  27.9  26.8  27.9  
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 Press Release.




Exhibit 99.1
Three Months Ended December 31,Year Ended December 31,
Reconciliation of Non-GAAP Financial Measures20192018% change20192018% change
Dollars in millions, except per share data(unaudited)(unaudited)
Revenue$531.7  $583.0  (8.8)%$2,185.0  $2,439.7  (10.4)%
Transportation costs442.0  480.5  (8.0)%1,798.9  2,019.3  (10.9)%
Net revenue (1)
$89.7  $102.4  (12.4)%$386.0  $420.4  (8.2)%
Net income$1.4  $6.9  (79.3)%$14.8  $28.7  (48.3)%
Depreciation6.7  6.2  8.6 %26.6  23.6  12.6 %
Amortization2.8  3.3  (14.4)%11.8  13.0  (9.4)%
Non-cash interest expense1.6  2.7  (41.7)%7.3  9.1  (19.1)%
Cash interest expense1.3  1.5  (18.1)%5.3  6.5  (18.2)%
Income tax expense0.8  2.5  (68.2)%7.0  9.3  (24.4)%
EBITDA (1)
$14.6  $23.1  (36.9)%$72.9  $90.2  (19.2)%
Acquisition-related transaction costs—  0.0  (100.0)%—  0.3  (100.0)%
Change in contingent consideration0.5  0.3  95.0 %1.1  0.4  156.2 %
Stock compensation expense2.4  2.2  10.6 %10.2  9.3  9.7 %
Adjusted EBITDA (1)
$17.5  $25.6  (31.5)%$84.1  $100.2  (16.0)%
Fully diluted EPS$0.05  $0.25  (78.2)%$0.55  $1.03  (46.2)%
Change in contingent consideration0.02  0.01  104.7 %0.04  0.01  166.7 %
Amortization0.11  0.12  (10.1)%0.44  0.47  (5.6)%
Acquisition-related transaction costs—  0.00  (100.0)%—  0.01  (100.0)%
Non-cash interest expense0.06  0.10  (38.8)%0.27  0.33  (15.8)%
Stock compensation expense0.09  0.08  16.1 %0.38  0.33  14.2 %
Tax effect of adjustments(0.07) (0.08) (11.9)%(0.23) (0.30) (21.6)%
Non-GAAP fully diluted EPS (1)
$0.26  $0.47  (44.9)%$1.45  $1.88  (22.7)%
Operating Metrics
Net revenue margin (1)
16.9 %17.6 %(70) bps  17.7 %17.2 %44  bps  
Total employees2,539  2,595  (2.2)%2,539  2,595  (2.2)%
Sales employees and agents1,669  1,716  (2.7)%1,669  1,716  (2.7)%
Truckload (TL) revenue %66.2 %68.0 %(176) bps  65.8 %69.1 %(333) bps  
Less than Truckload (LTL) revenue %29.9 %28.2 %172  bps  29.6 %26.2 %343  bps  
Note: Amounts may not foot due to rounding.
(1) See the "Non-GAAP Financial Measures" section of this Press Release for the definition and a discussion of each Non-GAAP financial measure.

2020 Full Year and First Quarter Guidance
"We expect full year 2020 revenue to be in the range of $2.25 billion to $2.45 billion," said Kyle Sauers, Chief Financial Officer of Echo. "We also expect first quarter revenue to be between $530 million and $570 million."



Exhibit 99.1
Conference Call
A conference call, with accompanying presentation slides, will be broadcast live on February 5, 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 5145418. The audio replay will be available through February 12, 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 effects of acquisition-related transaction costs, 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, acquisition-related transaction costs, 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, 2018, and other filings with the SEC.





Exhibit 99.1

Echo Global Logistics, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended December 31,Year Ended December 31,
2019201820192018
In thousands, except per share data(unaudited)(unaudited)
Revenue$531,677  $582,978  $2,184,977  $2,439,701  
Costs and expenses:
Transportation costs441,995  480,546  1,798,944  2,019,337  
Selling, general and administrative expenses75,074  79,289  313,129  330,160  
Depreciation and amortization9,532  9,470  38,387  36,638  
Income from operations5,076  13,673  34,517  53,566  
Interest expense, net(2,850) (4,262) (12,639) (15,546) 
Income before provision for income taxes2,226  9,411  21,878  38,020  
Income tax expense(787) (2,475) (7,032) (9,296) 
Net income$1,439  $6,935  $14,846  $28,723  
Basic EPS$0.05  $0.25  $0.56  $1.04  
Diluted EPS$0.05  $0.25  $0.55  $1.03  
Note: Amounts may not foot due to rounding.


Echo Global Logistics, Inc.
Condensed Consolidated Balance Sheets
December 31, 2019December 31, 2018
In thousands(unaudited)
Cash and cash equivalents$34,626  $40,281  
Accounts receivable, net of allowance for doubtful accounts286,989  337,426  
Other current assets14,578  16,025  
Total noncurrent assets490,473  484,593  
Total assets$826,666  $878,325  
Accounts payable$187,524  $216,280  
Other current liabilities42,885  50,627  
Convertible notes, net156,298  183,168  
Other noncurrent liabilities56,646  38,319  
Stockholders’ equity383,312  389,932  
Total liabilities and stockholders’ equity$826,666  $878,325  
Note: Amounts may not foot due to rounding.





Exhibit 99.1
Echo Global Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
Year Ended December 31,
20192018
In thousands(unaudited)
Net cash provided by operating activities$84,532  $94,245  
Net cash used in investing activities(23,959) (31,821) 
Net cash used in financing activities(66,229) (45,657) 
(Decrease) Increase in cash and cash equivalents(5,656) 16,766  
Cash and cash equivalents, beginning of period40,281  23,515  
Cash and cash equivalents, end of period$34,626  $40,281  
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