Echo Global Logistics, Inc. (NASDAQ:ECHO) on Friday announced a rise in revenue for the second quarter, but the resulting $245,000 loss for the quarter and a tough environment for supply chain logistics companies led to a sell-off of its stock on Friday. The stock closed at $13.85 and was down about 20% on the day.
Still, the company believes it is in a positive position, and noted that at the first-quarter investment call it was discussing total revenue growth through the first few weeks of April at 3%.
“We ended up the second quarter with year-over-year revenue growth of 6%, reflecting the implementation of some new Managed Transportation wins, rising prices and improved growth later in the quarter,” Douglas R. Waggoner, CEO, said on Friday’s earnings call.
Echo reported 18 cents earnings per share (EPS) for the quarter, missing the Zacks’ Investment consensus of 20 cents. The firm posted revenue of $470.1 million during the quarter, up 5.9% year-over-year.
“Our transactional business grew slightly, which was in part due to intentionally pricing less aggressively on committed freight in the first two quarters of 2017,” Waggoner added. “This had the effect of slowing volume growth, but mitigating the pressure on net revenue margin. In June, when the market tightened up, we saw more spot market volumes at better net revenue margins, so the quarter was a blend of those various factors.”
The company noted that the in the truckload segment, both pricing and demand picked up in June, which helped accelerate the growth rate.
Echo’s managed transportation division was a bright spot, growing over 20% in the quarter.
Net revenue was $81.6 million, down 4% year-over-year but up 10% sequentially, Waggoner said.
“The year-over-year decline in net revenue was the result of margin decrease of 183 basis points, reflecting a difficult year-over-year comparable and primarily driven by the truckload portion of our business,” he noted. “Non-GAAP EBITDA declined by 24% to $14 million. GAAP fully diluted loss was 1 cent per share compared to GAAP fully diluted earnings of 7 cents per share in the prior year period. Non-GAAP fully diluted earnings per share were 18 cents per share.