| Contact: | Ray Harlin |
| Chief Financial Officer | |
| (423) 510-3323 | |
U.S. XPRESS REPORTS 91.4% INCREASE IN SECOND QUARTER EARNINGS
Posts 10th Consecutive Quarter of Year-over-Year Improvement
Revises 2004 Guidance Upward on Better-than-Expected Results
CHATTANOOGA, Tenn. (July 15, 2004) — U.S. Xpress Enterprises, Inc. (NASDAQ/NM: XPRSA) announced operating revenue and earnings for the second quarter ended June 30, 2004. Operating revenue, excluding the effect of fuel surcharges, increased 15.1% to $257.4 million, compared with $223.6 million for the second quarter of 2003. Total operating revenue increased 16.5% to $270.3 million, compared with $231.9 million for the second quarter of 2003.
For the six months ended June 30, 2004, operating revenue, excluding the effect of fuel surcharges, increased 11.2% to $482.8 million from $434.0 million in the prior-year period. Total operating revenue increased 11.6% to $505.0 million from $452.6 million in the prior-year period.
Net income for the second quarter increased 91.4% to $4.2 million, or $0.30 per diluted share, from net income of $2.2 million, or $0.16 per diluted share, in the second quarter of 2003. For the first six months of 2004, net income increased 115.7% to $5.0 million, or $0.35 per diluted share, from net income of $2.3 million, or $0.17 per diluted share, for the prior-year period.
During the quarter, truckload revenue, excluding the effect of fuel surcharges, increased 13.6% to $223.8 million. Truckload operating income for the quarter increased 72.4% to $9.9 million on the strength of an 11.0% increase in revenue per loaded mile and a 150-basis point improvement in the Company’s truckload operating ratio over the second quarter of 2003. The growth in dedicated contract and regional operations once again led the way in the second quarter with revenue increases of 61.9% and 38.9%, respectively. Together, they now account for 26.8% of the Company’s truckload revenue compared with 20.3% at this time last year. The Company’s expedited rail program, which was virtually nonexistent a year ago, has grown to account for approximately 10% of truckload revenues.
Co-Chairman, Patrick Quinn, stated, “The significant improvement in our results reflects the success of our efforts in recent years to transition our truckload operations into higher return businesses, a favorable freight environment and more disciplined rate and lane selection. We have now posted year-over-year improvement in earnings for ten consecutive quarters. We believe this performance validates the strategy we have pursued and demonstrates the operating leverage that exists in our business model.
“The accomplishments this quarter were achieved in light of significant cost increases being faced by the truckload industry. The average costs per mile of our truckload operations for the quarter increased 8% over the 2003 second quarter due to higher operating costs, such as fuel prices, which were up approximately 21% over the prior year; driver pay, which reflected an 8% driver wage increase implemented near the end of the first quarter of 2004; purchased transportation, which reflected increased compensation for independent contractors; revenue equipment cost; and insurance and claims expenses. Higher fuel costs, net of the impact of fuel surcharges, and lower fuel efficiencies from the new EGR engines alone increased operating costs in the quarter by over $3.0 million, compared with the 2003 second quarter.
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XPRSA Reports Second Quarter Results
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July 15, 2004
“Our Xpress Global operating segment, which accounts for only 15% of our consolidated revenues, did not achieve the level of financial performance that we had anticipated in the quarter. Although revenue at Xpress Global increased for the quarter to $40.1 million, or 13.3%, operating income declined to $385,000 compared with $1.2 million in the prior-year quarter. The primary factor was lower than anticipated revenue necessary to support the cost of our extensive airport to airport network. As announced this week, we acquired the less-than-truckload airport to airport operations of CRST Van Expedited, Inc. from which we expect to add approximately $7.5 to $10 million in annual revenue to our airport to airport operation.
“Compared with two years ago when a confluence of factors resulted in one of the toughest freight environments in the history of our industry, we are currently experiencing one of the most exciting periods since the founding of the Company in 1986. Both supply and demand equations favor the larger carriers as a critical driver shortage, high costs of entering the business and the exit of substantial capacity from the industry in the last several years continue to constrain available capacity. Over the past two quarters, we have taken a more aggressive stance on freight lane selection and mix, leading to our exiting certain lanes and unprofitable business. This strategy has led to record rate increases and improved yield. We will look to maintain this momentum by continuing to focus on improving our yields and allocating assets to segments that provide the greatest returns.”
Outlook
Absent a significant softening in the economic and freight environment in 2004 or a continued acceleration of fuel prices from current levels, the Company expects to report revenues for the third quarter ending September 30, 2004, net of fuel surcharges, in the range of $265 to $270 million and net income per share in the range of $0.35 to $0.38 per diluted share. The Company reported net income of $0.19 per diluted share in the third quarter of 2003. The Company also increased its guidance for fiscal 2004. The Company expects to achieve consolidated revenues of over $1 billion and earnings per share in the range of $1.05 to $1.10 per diluted share for 2004 compared with the Company’s previous guidance of earnings per share in the range of $0.90 to $1.00. The Company reported net income of $0.54 per diluted share in 2003.
Investor Conference Call and Simulcast
U.S. Xpress Enterprises, Inc. will conduct a conference call, at 11:00 am EDT on July 16, 2004, to discuss the second quarter results. The number to call for this interactive teleconference is (913) 981-5571. A seven-day replay of the conference call will be available by dialing (719) 457-0820 and entering the passcode 527716.
The Company will also provide an online Web simulcast and rebroadcast of its 2004 second quarter earnings release conference call. The live broadcast of U.S. Xpress’ quarterly conference call will be available online at the Company’s website, www.usxpress.com, as well as http://phx.corporate-ir.net/phoenix.zhtml?c=80059&p=irol-eventdetails on July 16, 2004, beginning at 11:00 a.m. EDT. The online replay will follow shortly after the call and continue through July 30, 2004.
U.S. Xpress Enterprises, Inc. is the fifth-largest publicly owned truckload carrier in the United States, as measured by revenue. The Company provides regional, dedicated and expedited truckload services throughout North America, with regional capabilities in the West, Midwest and Southeastern United States. The Company is one of the largest providers of expedited and time-definite services in the truckload sector. U.S. Xpress focuses on customers operating in dedicated, just-in-time or deferred airfreight market segments, while utilizing one of the largest team-operated fleets in the industry. Xpress Global Systems, Inc., a wholly owned subsidiary, is a provider of transportation, warehousing and distribution services to the floor coverings industry and provides airport-to-airport transportation services to the airfreight and airfreight forwarding industries through a network of 81 locations in North America. Xpress Global Systems also provides distribution-related services to a number of other industries, including retail, automotive and building materials. The Company also offers logistic services through its joint ownership of Transplace, an Internet-based global transportation logistics company.
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XPRSA Reports Second Quarter Results
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July 15, 2004
This press release contains certain forward-looking information that is subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Without limitation, these risks and uncertainties include economic recession or downturns in customers’ business cycles, rapid fluctuations in fuel pricing or availability, increases in interest rates, the availability of adequate sources of financing and the availability of qualified drivers. Readers are urged to carefully review and consider the various disclosures made by the Company in this press release and in the Company’s periodic reports on forms 10-K and 10-Q.
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XPRSA Reports Second Quarter Results
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July 15, 2004
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
2004 2003 2004 2003
---------------- --------------- --------------- ----------------
Operating Revenue:
Revenue, before fuel surcharge $ 257,387 $ 223,569 $ 482,763 $ 433,968
Fuel surcharge 12,907 8,365 22,202 18,632
---------------- --------------- --------------- ----------------
Total operating revenue 270,294 231,934 504,965 452,600
---------------- --------------- --------------- ----------------
Operating Expenses:
Salaries, wages and benefits 91,772 80,884 172,971 156,475
Fuel and fuel taxes 40,924 32,209 77,068 69,640
Vehicle rents 17,309 19,760 35,954 37,677
Depreciation and amortization 11,778 9,134 22,150 18,282
Purchased transportation 49,876 38,384 91,349 74,591
Operating expense and supplies 18,120 16,811 33,955 32,564
Insurance premiums and claims 13,672 11,779 25,300 22,684
Operating taxes and licenses 3,613 3,519 6,979 6,616
Communications and utilities 2,890 3,037 5,923 6,001
General and other operating 10,056 9,479 19,437 17,963
---------------- --------------- --------------- ----------------
Total operating expenses 260,010 224,996 491,086 442,493
---------------- --------------- --------------- ----------------
Income from Operations 10,284 6,938 13,879 10,107
Interest Expense, net 2,442 2,510 4,556 5,438
---------------- --------------- --------------- ----------------
Income Before Income Taxes 7,842 4,428 9,323 4,669
Income Tax Provision 3,605 2,214 4,286 2,334
---------------- --------------- --------------- ----------------
Net Income $ 4,237 $ 2,214 $ 5,037 $ 2,335
================ =============== =============== ================
Earnings Per Share - basic $ 0.30 $ 0.16 $ 0.36 $ 0.17
================ =============== =============== ================
Weighted average shares - basic 14,067 13,949 14,065 13,940
================ =============== =============== ================
Earnings Per Share - diluted $ 0.30 $ 0.16 $ 0.35 $ 0.17
================ =============== =============== ================
Weighted average shares - diluted 14,257 14,092 14,250 14,063
================ =============== =============== ================
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XPRSA Reports Second Quarter Results
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July 15, 2004
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
(See Note 1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ -----------------------------------
2004 2003 2004 2003
--------------- ---------------- --------------- ---------------
Operating Revenue 100.0% 100.0% 100.0% 100.0%
--------------- ---------------- --------------- ---------------
Operating Expenses:
Salaries, wages and benefits 35.7 36.2 35.8 36.1
Fuel and fuel taxes 10.9 10.7 11.4 11.8
Vehicle rents 6.7 8.8 7.4 8.7
Depreciation and amortization 4.6 4.1 4.6 4.2
Purchased transportation 19.4 17.2 18.9 17.2
Operating expense and supplies 7.0 7.5 7.0 7.5
Insurance premiums and claims 5.3 5.3 5.2 5.2
Operating taxes and licenses 1.4 1.6 1.4 1.5
Communications and utilities 1.1 1.4 1.2 1.4
General and other operating 4.0 4.1 4.3 4.1
--------------- ---------------- --------------- ---------------
Total operating expenses 96.1 96.9 97.2 97.7
--------------- ---------------- --------------- ---------------
Income from Operations 3.9 3.1 2.8 2.3
Interest Expense, net 0.9 1.1 0.9 1.3
--------------- ---------------- --------------- ---------------
Income Before Income Taxes 3.0 2.0 1.9 1.0
Income Tax Provision 1.4 1.0 0.9 0.5
--------------- ---------------- --------------- ---------------
Net Income 1.6% 1.0% 1.0% 0.5%
=============== ================ =============== ===============
(1) Fuel surcharge revenue is offset against fuel and fuel taxes for the purposes of this table. Management believes that
eliminating the impact of this source of revenue provides a more consistent basis for Company results of operations from
period to period.
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XPRSA Reports Second Quarter Results
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July 15, 2004
U.S. XPRESS ENTERPRISES, INC.
KEY OPERATING FACTORS
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 Change 2004 2003 Change
----------------- ----------------- ------------ ----------------- ---------------- -------------
OPERATING RATIO (1) 96.1% 96.9% -0.8% 97.2% 97.7% -0.5%
OPERATING REVENUE:
US Xpress, net of fuel surcharge $223,799 $197,011 13.6% $421,671 $ 386,911 9.0%
Fuel Surcharge 12,907 8,365 54.3% 22,202 18,632 19.2%
Xpress Global Systems 40,080 35,385 13.3% 74,486 64,494 15.5%
Inter-company (6,492) (8,827) -26.5% (13,394) (17,437) -23.2%
----------------- ----------------- ------------ ----------------- ---------------- -------------
Total Operating Revenue $270,294 $231,934 16.5% $504,965 $452,600 11.6%
OPERATING INCOME:
US Xpress $ 9,899 $ 5,742 72.4% $ 13,263 $ 8,786 51.0%
Xpress Global Systems 385 1,196 -67.8% 616 1,321 -53.4%
----------------- ----------------- ------------ ----------------- ---------------- -------------
Total Operating Income $ 10,284 $ 6,938 48.2% $ 13,879 $ 10,107 37.3%
TRUCKLOAD STATISTICS:
Revenue Per Loaded Mile (2) $ 1.427 $ 1.286 11.0% $ 1.391 $ 1.281 8.6%
Revenue Per Total Mile (2) $ 1.271 $ 1.156 9.9% $ 1.243 $ 1.150 8.1%
Tractors (at end of period)-
Company Owned 4,603 4,425 4.0% 4,603 4,425 4.0%
Owner Operators 832 949 -12.3% 832 949 -12.3%
----------------- ----------------- ------------ ----------------- ---------------- -------------
Total Tractors (at end of period) 5,435 5,374 1.1% 5,435 5,374 1.1%
Average Number of Tractors
in Fleet During Period 5,501 5,484 0.3% 5,472 5,496 -0.4%
Average Miles Per Tractor
Per Period 28,335 27,780 2.0% 54,914 54,442 0.9%
Average Revenue Per Tractor
Per Period $ 40,423 $ 35,724 13.2% $ 76,376 $ 69,715 9.6%
Empty Mile Percentage 10.88% 10.07% 8.0% 10.63% 10.20% 4.2%
June 30, 2004 December 31, 2003
------------------------------------ ------------------------------------
BALANCE SHEET DATA:
Total Assets $509,289 $441,794
Total Equity 171,978 167,239
Long-term Debt, including
Current Maturities 193,722 146,579
(1) Operating ratio as reported in this press release is based upon total operating expenses, net of fuel surcharges, as a
percentage of revenue, before fuel surcharge.
(2) Net of fuel surcharge revenues.
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