WESTPORT, Conn.--Velocity Express Corporation, the nation's largest provider of time definite regional delivery solutions, announced unaudited operating results for the fourth quarter and year ended June 28, 2008.
Revenue for the quarter ended June 28, 2008 was $79.3 million compared to $82.2 million in the March quarter of 2008 and $98.6 million in the June quarter of 2007. The Company reported gross profit for the quarter of $22.3 million, or 28.2% of sales, compared to gross profit of $20.5 million, or 25.0%, in the March quarter of 2008 and $26.4 million, or 26.8% of sales for the same quarter last year. Operating expenses before goodwill impairment were $21.6 million compared to $24.2 million in the March quarter and $26.6 million in the same quarter last year. During the quarter, the Company reported a goodwill impairment of $52.5 million related to a revaluation of the Company’s goodwill asset, principally related to the CD&L acquisition. Total operating loss for the quarter, including the goodwill impairment charge, was $51.8 million compared to a loss of $182,000 in the same quarter last year. Adjusted EBITDA was $2.1 million compared to a loss of $1.7 million in the March 2008 quarter and $2.8 million for the same quarter last year which included a purchase accounting benefit of $1.5 million.
Revenue for the year ended June 28, 2008 was $340.9 million compared to $410.1 million last year. The Company reported gross profit for the year of $86.0 million, or 25.2% of sales, compared to gross profit of $98.0 million, or 23.9% of sales, last year. Operating expenses before goodwill impairment was $95.5 million compared to $117.6 million last year. Adjusted EBITDA was a loss of $1.2 million compared to a loss of $1.7 million last year. Total operating loss for the year, including the $52.5 million goodwill impairment, was $61.9 million compared to $19.6 million last year.
Vincent A. Wasik, Velocity's Chairman and Chief Executive Officer, stated, “We were pleased to achieve positive adjusted EBITDA for the quarter despite the current recessionary environment which has reduced shipping volumes from continuing customers and increased pressure on pricing. With the award in June and start-up in July of a multi-year agreement to provide retail store replenishment and vendor in-bound delivery services to Stage Stores, we made progress in positioning the Company for enhanced growth in the retail segment and long-term profitability. Our gross margins improved sequentially due to the re-alignment of driver settlements with prevailing market rates and renegotiation or exit from unfavorable fuel indexing provisions. In addition, we reduced operating expenses during the quarter in line with lower revenue.”
Mr. Wasik concluded, “We continue to phase out unfavorable low margin contracts and focus on building a pipeline of profitable opportunities in the retail and healthcare sectors, now totaling $170 million. However, we are very concerned about effect of the current economic climate on our delivery volumes.”
Company Files Form 12b-25
Velocity also announced that it has filed for a 15-day extension for filing its Annual Report on Form 10-K for the period ended June 28, 2008 as the company is not able to file the Form 10-K by the prescribed filing date without unreasonable effort and expense.
Damage to the Company’s financial operations center in Houston, TX caused by Hurricane Ike has made it difficult to access some of the Company’s financial records needed to provide information to its independent auditors to permit them to complete certain audit procedures. In addition, management has been involved in negotiating a new senior secured loan facility with a new lender, to replace its existing facility with Wells Fargo Foothill. While no assurances can be given, we believe we will be able to complete the remaining audit procedures, reach a mutually satisfactory new loan agreement and file our Form 10-K on or before October 13, 2008.
Velocity will host a conference call on Tuesday, October 14 at 9:00 a.m. ET to discuss the company’s fourth quarter and year end results. To participate in the call by phone, dial 1-866-585-6398 approximately five minutes prior to the scheduled start time. International callers please dial 416-849-9626. A webcast will be available at www.velocityexpress.com as well as at www.InvestorCalendar.com. A replay of the webcast can be heard by visiting the investor relations section of the Velocity Express website. A replay of the teleconference will be available for 14 days after the call and may be accessed domestically by dialing 866-245-6755 and international callers may dial 416-915-1035. Callers should use passcode 462657.
About Velocity Express
Velocity Express has one of the largest time definite nationwide delivery networks, providing a national footprint for customers desiring sameday service throughout the United States. The Company's services are supported by a customer-focused technology infrastructure, providing customers with the reliability and information they need to manage their transportation and logistics systems, including a proprietary package tracking system that enables customers to view the status of any package via a flexible web reporting system.