Velocity Express Announces Fourth Quarter and Year End Results
Velocity Express Corporation announced operating results for its fourth quarter and fiscal year ended June 30, 2007.
Highlights:
• Positive adjusted EBITDA in quarter ended June 30, 2007
• Gross margin improved while average driver settlement increased through route engineering
• USD 18 million in annualized new revenue started in September quarter of fiscal 2008, more than offsetting USD 15 million in lost revenue from terminated unfavorable contracts assumed with the CD&L acquisition
• Three new franchise agreements signed in September quarter of fiscal 2008
Finally, Velocity has launched a new franchise strategy to expand its technology-driven service capability into additional areas that enhance and increase service coverage. To date, Velocity has signed franchisees in Fargo, ND; Columbus, OH; St. Louis, MO and Kansas City, MO and expects to sign two more cities before the end of October. The Company expects these first 6 franchisees to provide more than USD 5 million of service for Velocity customers on an annual basis, from which Velocity will record the franchise fee income. Furthermore, Velocity expects to expand its franchise program into three or four additional geographies each quarter, equivalent to USD 15-20 million annual value of service for Velocity customers by June 2008. Beyond the benefit to customers, franchising also allows Velocity to use capital more efficiently by eliminating the expenditures needed to open new markets while earning franchise fees that assure “day one” profitability comparable to a mature direct operation.
