Echo Global Logistics (NASDAQ: ECHO), the Chicago-based freight brokerage, reported financial and operating results for the second quarter of 2021 on Wednesday after markets closed. The continued recovery of freight volumes and much higher trucking rates led to a record-breaking quarter for Echo.
Echo’s non-GAAP fully diluted earnings per share came in at 84 cents, well above Wall Street’s consensus estimate of 54 cents. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 144.5% year-over-year to $36.1 million on the back of gross revenue that jumped 81.5% to $934.5 million.
“Echo’s record setting second quarter results reflect strong execution across our uniquely flexible business model and its ability to create significant value for our customers in the robust yet constrained freight environment,” said CEO Doug Waggoner in a statement.
Echo’s adjusted gross profit margin compressed 255 bps to 14.6%, down from 17.1% a year ago and down from 15% in the first quarter of 2021. It appears that looser capacity and softer rates in January and February — prior to March’s extreme winter weather — were responsible for wider margins in the first quarter.
Echo moves its customers’ freight in two ways: through its Transactional or freight brokerage business and through its Managed Transportation division. Transactional revenue grew 80.7% year-over-year to $716.9 million, while Managed Transportation grew 84.6% to $217.7 million.
While C.H. Robinson pursued less-than-truckload (LTL) volume growth far more aggressively than truckload, Echo grew volumes in both modes at about the same pace. Truckload volumes grew 26.6% year-over-year and revenue grew 95.1% to $687 million. LTL volumes grew 27.4% year-over-year and revenue grew 53.7% to $217.6 million.
A little more than half, or 52%, of Echo’s truckload freight came from the spot market, which helped to contribute to a 54% increase in revenue per truckload shipment.
Total headcount grew by 11.7%; Echo’s sales force of brokers and agents grew by 10.5%. In other words, Echo grew volumes more than twice as fast as headcount.
“Given the strong start to the first half of the year and solid market fundamentals, we are expecting revenue for the third quarter to be between $910 million and $940 million, representing 34% year over year growth at the midpoint,” said Pete Rogers, chief financial officer.
“In addition, we are raising our full year revenue guidance to be between $3.45 billion – $3.55 billion, representing 39% year over year growth and an 8% increase from our most recent guidance.”
Freight volumes are still growing, although year-over-year comparisons are getting tougher. Echo indicated that in July, its truckload shipments per day were up 16% year-over-year, while LTL shipments were up 18%.