Express-1 Expedited Solutions CEO Speaks About His Company

May.21.07 | About: XPO Logistics, (XPO)

On May 21, The Wall Street Transcript interviewed Michael R. Welch, Chief Executive Officer of Express-1 Expedited Solutions, Inc. (NYSE:XPO). Key excerpts follow:

TWST: We'd like to begin with a brief historical sketch of Express-1 and a picture of the things you are doing right now.

Mr. Welch: We were founded in May 1989. Keith Avery and myself founded the company and we focused completely on expedited transportation in terms of same day, time critical and high value type shipments. Through 1989 to 2004, we had very solid, consistent growth and grew from a two-truck company to a company with revenues in the mid-$20 million range. We were purchased in August 2004 by Segmentz. They were a company that was looking to buy different types of transportation companies, have them under one umbrella and hopefully find some synergies between the companies. When we were purchased and Segmentz was public, they named me the President, so I became more and more involved in the overall corporate structure of this new business. After a few months, the Board and I saw that it didn't make sense to have all these other entities. Unfortunately, they were losing money and there was a real lack of focus and management depth. We went through a restructuring period and closed all these unprofitable businesses. What was remaining was Express-1, the original privately held company that we worked with. In Evansville, Indiana, we ran a dedicated expedited division that delivers daily to automotive dealerships. So we kept those two seeds of the business and we shed a lot of different ones. We shed airport-to-airport business, and we had pick-up and delivery companies based in six or seven different cities. We also shed a brokerage truckload department that was run out of Florida. We narrowed our focus back to what Express-1 specialized in, and from the fourth quarter of 2005 and through all of 2006, we've been very productive and have turned into a very profitable, growing entity.

TWST: What differentiates you from the competition?

Mr. Welch: The number one difference is our culture, our people and how we treat our customers. We have great technology; it's probably industry class leading technology. We have all the bells and whistles that a FedEx or UPS would have in terms of what we can deliver to the customers with automated PODs, automated shipment tracking and those type of things. The key that we have always believed in was giving the customer an answer quickly - we don't go through a long dried-out answering tree. We have a human who answers the phone. We get the customer to the specialist as quickly as possible, and we try to do it in less than 30 seconds. So we can say yes to a customer in minimal time. When you are dealing with Express-1, we hope we can do it within 30 seconds to a minute, and when people are under the gun and there is a lot of pressure, the quicker we can say "Yes," the quicker the customer can get off the phone and move on to their next challenge. That is important to our customers. We think we are one of the best in our industry at doing that.

TWST: Over the next few years, what are the main items on your strategic agenda?

Mr. Welch: The main item is that we are very goal oriented and focused on growth. Historically, we've grown from the high teens to the low 20s. We continue that growth model and focus, and it's really a two-pronged attack. Number one, you can't grow unless you have quality owner/operators. So we do a very good job in educating, recruiting and retaining our owner/operators or value providers, and that helps fuel our growth. Also, we've expanded our outside sales tremendously over the past few years. We are selling throughout the Southeast, Midwest and even parts of the East where a lot of the expediting occurs. We're starting to reap the benefits of having feet on the street.

TWST: What would be the two or three best reasons for the long-term investor to look very closely at Express-1?

Mr. Welch: The first comment is our structure and the model that we use. It's asset light. We are running value providers. We do bring in a lot of cash, and we can withstand bad times and good times based on the structure and our low overhead cost. Also, I would urge people to continue to look at our continual growth. It's in the high teens to the low 20s - we've been very consistent. When you model that out three to four years ahead, the numbers look really good. We believe we can continue to perform to our historical levels. Lastly, it's our people and culture. We have something dynamic here, and our customers notice the difference. It is strictly by how they are treated both in their professionalism and their knowledge, and you can't put a number on that. But when you stand out and are different from somebody else in that aspect, it can lead to further growth.

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