XPO Inc (XPO) 2008 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Express-1 Expedited Solutions first-quarter 2008 earnings results. At this time, all participants are in a listen-only mode and a brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Curry, President and Secretary of the Board. Thank you Mr. Curry, you may now begin.

Thank you, Jackie. Good morning, everyone, and thanks for joining us on our call today. We appreciate your interest in our company. With me on the call this morning is our CEO, Mike Welsh, and our CFO, Mark Patterson. Also today we have Gerry Post and Tim Hindes, the Presidents of Concert Group Logistics and Bounce Logistics, respectively.

Before I turn the call over to Mike for his remarks, I would like to note that this conference call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The Company has based these forward-looking statements on its current expectations and projections as of today.

These forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions that may cause the Company's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements.

Factors that might cause or contribute to such material difference include, but are not limited to, those discussed in our Form 10-K for the year ended December 31, 2007. So with that, I will now turn the call over to Mike.

Thanks, Jeff. Good morning, everyone. I am pleased to share the results of our historic first quarter with our shareholders this morning. Those of you that read our press release have seen the news of our success. Revenues are up 118% and operating income was up 44%. In today's freight environment, we think those are very strong results.

Our company, Express-1 Expedited Solutions, Inc., is now one of the nation's fastest-growing premium logistics providers. Our services include ground expedited, domestic and international freight forwarding, time-sensitive freight brokerage, and dedicated expedite delivery. We provide these services through our four business segments -- Express-1, Express-1 Dedicated, Concert Group Logistics, and Bounce Logistics. Each of these business units is led by an experienced president and staffed by seasoned professional employees.

The acquisition of Concert Group Logistics, which was effective on January 1 of this year, contributed $10.5 million of our $25 million in consolidated revenues during the quarter. During the first quarter, our Express-1 unit expanded revenues organically by $2.9 million or 28% over the same period during 2007. The Company's other business units, Express-1 Dedicated and Bounce Logistics, also contributed to our recorded year-over-year increase in revenues. Once again, our Company continues to grow at a pace that is greater than the transport sector overall even in the face of a poor economy.

Our income from operations increased by 44% during the quarter compared to the first quarter of 2007 while our net income improved by 40% during the first quarter of 2008. I also want to point out that during the first quarter, we absorb some additional onetime expenses related to the acquisition of Concert Group Logistics and to the start up of Bounce Logistics.

The acquisition of Concert Group Logistics allowed us entry into the freight-forwarding sector. Concert Group Logistics has 25 independent station owners throughout the United States. Their enthusiasm and dedication has been impressive. These 25 independent station owners have greatly enhanced our geographic and operational footprint within the premium transportation market.

The start-up of Bounce Logistics represents a strategic entry into the time-sensitive truckload brokerage arena. We are especially excited about the team of quality employees represented by both companies.

Our two new operating units are complementary to Express-1 and Express-1 Dedicated, and we are now able to offer an expanded array of premium services to a combined base of customers. We have just begun to capitalize on the expansive cross-selling opportunities and anticipate this will rapidly increase in coming quarters.

I will now turn the call over to Mark to add some more details on our financial performance. Mark?

Thanks, Mike, and good morning, everyone. The first quarter of 2008 was very busy by any standard and resulted in some very positive results for our company and our shareholders. Consolidated revenues increased by 118%, came in at $25 million during the quarter, compared to $11.5 million during the same period of 2007.

Driving this increase was the acquisition of Concert Group Logistics and the continued strong growth within our Express-1 business unit. Gerry and Jeff will discuss these items in more specific detail shortly. Fuel prices continued to positively impact our revenue and will be detailed in more depth in our 10-Q. While fuel cost increased approximately 80% year-over-year, it is important to note that each of our business units grew organically, exclusive of the growth attributable to fuel surcharge.

Along with this rise in revenue, came growth in our gross margin dollars of 47% or $1.4 million. Consolidated gross margin represented 18% of revenue during the first quarter of 2008 versus 26% set of revenue during the first quarter of 2007. As we have discussed in our previous calls this year, our direct expense line item and resulting gross margin percentage has changed. And our operational model, due to our recent acquisition and start-up, Concert Group Logistics, reports a higher cost of sales than what we have historically reported at Express-1, due solely to the classification of commissions paid to CGL's independent station owners and to the costs of sales line item.

Our anticipated gross margin for the full year of 2008 is approximately 17% of revenue and we have exceeded this during the first quarter. Our selling, general, and administrative expenses rose by $1 million during the first quarter of 2008 and came in at $3.3 million for the period, compared to $2.3 million during the first quarter of 2007.

SG&A expense represented 13% of revenue during Q1 of 2008 versus 20% of revenue during Q1 of 2007. Our anticipated SG&A expense for the full year is approximately 12% of revenue and we believe the Q1 number is a pretty good start. Please bear in mind that historically the first quarter represents the lowest revenue quarter during the year and, as a result, typically has the largest SG&A cost as a percentage of revenue.

Also note as Mike previously mentioned, we incurred some additional start-up costs and expenses during the period related to our Concert Group Logistics and Bounce Logistics operations. The impact of these items was between $150,000 and $200,000 during the quarter.

Our interests and other expenses remain in line with our anticipated levels and represented less than $100,000 during the first quarters of both 2008 and 2007. During the first quarter of 2008, the Company took on approximately $11 million of new debt related to the Concert Group acquisition and the payoff of the last earn-out due for the Express-1 and Dasher Express acquisitions.

The ability to hold our interest costs to such a low-level is of significance and speaks to the strength of the Company as viewed by the financial community. Our weighted average borrowing rate during the period was just over 4%. Income from operations, or pretax income, increased by a $324,000, or 44%, during the first quarter compared the previous year and represented over $1 million during the 2008 period.

Net income rose by 40% and came at $643,000, or $0.02 fully diluted share, compared to $461,000, or $0.02 per diluted share, during the same period of 2007. We will be releasing more information on the individual and pro forma results of each of our business segments in our 10-Q late next week. We are committed to delivering this additional detail and believe it helps with the transparency within our consolidated company.

From a top line standpoint, consolidated revenues increased by approximately 16.6% on a pro forma basis during the first quarter of 2008 versus the first quarter of 2007. Gross margin decreased by less than one percentage point and represented 17.7% of pro forma consolidated revenue during the first quarter of 2008 compared to 18.4% of pro forma consolidated revenue during the first quarter of 2007.

Selling, general, and administrative expenses are more difficult to compare on a pro forma basis due to the limitations on adjustments allowed under SEC guidelines for pro forma statements to the operation of Concert Group Logistics in 2007 as a private company and to the addition of some start-up costs associated with the Bounce Logistics operation during the first quarter of 2008. Keeping all these factors in mind, pro forma selling, general, and administrative expenses increased by approximately 2.8% during the first quarter of 2008 versus the first quarter of 2007, and represented 13.4% of revenue in 2008 versus 10.6% of revenue during the same period of 2007.

Our operating company presidents will add even more insight into the actual and pro forma results of their individual business units as they present later today. For the consolidated company, cash flow remains very strong. At the time of the Concert Group Logistics acquisition, we were essentially debt free. As previously mentioned, we borrowed approximately $11 million during the first quarter to fund the Concert Group acquisition and to satisfy our last earn-out obligations on the Express-1 and Dasher acquisitions.

We anticipate retiring a substantial portion of our debt during the remainder of 2008 and still have a significant operating loss carryforward to place. Presently we do not anticipate using a material amount of cash for income taxes until cumulative earnings from December 2007 forward exceed $5 million.

Accounts receivable on March 31, 2008, was $12.3 million and our DSO remains just over 40 days. We believe it is possible to show some slight improvement to DSO during 2008 as we get the Concert Group Logistics and Bounce Logistics operations more integrated into our banking and reporting systems.

Thanks, once again, for joining us, everyone. We look forward to continuing our momentum and reporting back to your next quarter. I will now turn the call over to Jeff Curry to add commentary on our Express-1 unit. Jeff?

Thanks, Mark. Revenue growth for Express-1 in the first quarter was strong at about 28% over the same period last year. The growth in revenue drove our gross margin up approximately $389,000 from 2007, or a 14% gain. Helping to drive our revenue higher was our fleet count that grew 30% above the same period in 2008.

For the first time in our company history, our street truck count totaled more than 50% of the fleet and our team truck count was at an all-time high. The higher team truck count helped to drive our loaded miles up nearly 25% in the quarter and increased our average length of call by almost 20%. This gain was achieved despite a drop in the gross margin percentage from 27% to 24% in 2008 and about a 5% drop in the number of runs from the big three domestic automotive companies.

It should be noted that about one point the margin percentage drop was attributed to the increase in fuel. As background, when we bill fuel to our customers, we pay out a similar surcharge to our drivers. As a result, fuel surcharge payments amount to pass-throughs that increase our revenues and our direct expenses by a comparable amount.

Although there is no significant impact on our bottom line it has the effect of reducing gross profit as a percentage of revenue. Keeping our fleet moving and poised for growth once the economy improves is a priority. The weakened economy has resulted in more aggressive pricing and has constricted our margins.

Increased revenue and adherence to budget resulted in SG&A expenses increasing only 7% as compared to last year's period. We've added less than 10 employees to our Express-1 headcount since December of 2006. We've handled our strong growth through increasing efficiencies with things such as scanning driver paperwork and allowing drivers online access to their run information, just to name a few things. Monthly department head budget meetings have helped promote cost containment. As a result, income from operations grew 27% in the first quarter.

The integration of CGL and Express-1 has been very encouraging as cross-selling opportunities have resulted in increased freight at Express-1. We've established a dedicated team within Express-1 to handle calls from the CGL station owners. This dedicated team also coordinates requests coming into Express-1 with our new logistics business, Bounce Logistics. Additionally we will continue to provide the CGL station owners opportunities to sell Express-1 and Bounce services so that they may increase their earnings and our sales penetration throughout the U.S., Canada, and Mexico.

Our international business has increased dramatically with the development of our BEST Team, or Border Expedite Service Team. Our partnership with a major Canadian expedited carrier has resulted in Canadian shipments rising tremendously to about 3% of total loads for the quarter. Our Mexican expedited freight service continued the trend at about 10% of projected growth for 2008.

I'm especially pleased with the growth in our operating income of 27% and the improvement in the composition of our fleet with more straight trucks and teams. Strategically, we are willing to sacrifice some margin in a competitive market in order to gain market share. Our non-asset-based business model enables us to survive and thrive in the most challenging economic conditions. I believe this strategy will position us to capture increased business when the economy improves.

I think we can do two things in periods of low freight. One, batten-down the hatches, squeeze costs, and wait it out. Or we can grown through the low freight volumes and position our company to take advantage of the economic recovery. While cost containment is imperative, we are interested in growing which will allow us to capture more opportunities when freight levels increase and return.

The American Axle strike has caused several plant closings and a reduction in freight volumes, yet we still grew nearly 28%. And we are poised to handle an increase in expedited shipments when companies hurriedly replenish their now low inventories. Our sales staff continues to target growth industries such as large commercial equipment manufacturers and 3PLs associated with non-automotive businesses.

I remain confident that we will achieve our 2008 goals that we established during the fourth quarter of 2007. I will now turn the call over to Gerry Post, President of Concert Group Logistics. Gerry?

Good morning, everyone. Thank you, Jeff. Before I comment about the first-quarter performance of CGL, I would like to point out that comparison to the prior year's same period, particularly operating costs, operating income, and net income, will not be apples-to-apples due to having CGL operated as a private company in 2007 versus a public company in 2008. Certain costs have been removed going forward under Express-1.

CGL reported revenue of $10.5 million, which is 4.9% more than we had the same period last year. Gross profit was $987,000 or over 4.1% more than the same period last year. Like everyone in the transportation business, we were impacted by higher fuel costs, the general economy, and a shift by clients to non-premium domestic transportation service to lower their costs. Fortunately, we offer a full range of transportation services and are able to retain the business, albeit at lesser revenue and margin.

During the first quarter we experienced a 36% increase in active clients. This is a measurement we use to monitor the broadening of the base of clients using our services. This positive trend (technical difficulty) percentage of revenue generated by our top 10 clients from 30% in the first quarter of 2007 to 20% in 2008. Expanding our active clients base with our existing stations is a key sales objective.

Revenue for international air and ocean services grew by more than 300% over the same period in 2007 and now represents 24% of our revenue for the quarter. This is a dramatic increase and we are pleased with the momentum of our global positioning initiative. We are enjoying the benefit of the decline of the dollar against world currencies, trading more air and ocean export opportunities.

During the quarter we opened two new stations, Omaha and Tampa, and we continue to seek opportunities to bring on new independent participant stations in those markets where we do not currently have a local presence.

Our general and administrative expenses for the quarter were 2.2% more than the same period in 2007. Some transactional costs associated with the acquisition of the Concert Group assets impacted income during the quarter. We anticipate the SG&A line items to begin to stabilize going forward as we begin to operate as a public company.

With the acquisition of CGL by Express-1 occurring during the quarter, we are proud of the way our station owner network and employees adapted to the transition. We experienced no disruption in service to our clients and no disruption in service to CGL by our suppliers. Now as part of the Express-1 family, we are actively seeking ways to do business with our sister companies, Express-1 and Bounce Logistics. In February and March, we saw significant gains in activity between CGL and it sister companies simply by the affiliation. We see this trend continuing.

In conclusion, while there certainly are causes for concern in the freight transportation world -- security, fuel costs, airline industry volatility, capacity shortages -- we remain positive about the business opportunities and meeting our 2008 objectives as part of the Express-1 family.

I will now turn the call over to Tim Hindes to briefly discuss the Bounce Logistics operations. Tim?

Thank you, Gerry, and good morning, all. Since Bounce is a start-up company with only one month of operation in Q1, I will briefly outline the Company's success to date. We're very pleased with the model's reception in the marketplace and are projecting April to be our first profitable month.

After spending January and February getting set, we began operating the third week in February. Our total start-up expenses were less than $125,000 and we project the retirement of all start-up debt later this year. As a result of initial marketing strategies, we've already booked 370 shipments with 54 individual customers since we began operation.

Our monthly revenue is currently running four months ahead of our pro forma projections. As of right now, year-to-date revenue is indeed a head of estimates and we are well on a pathway to achieving the results we anticipated when we planned the start-up business. We will spend Q2 and Q3 assembling the sales staff and we look forward to growth and success.

With that, I'll turn the call back over to the operator for our team and we will open the call for some questions. Jackie?

(OPERATOR INSTRUCTIONS) Tony Tristani, Astral Capital Management.

Thank you very much. A couple questions. First off, congratulations on a great quarter. It looks like you guys have a lot of momentum throughout the rest of the year and in to 2009. One thing I just want to point out on the calculations, your EPS was up 46%. If you take it out a couple digits it kind of looks like $0.02 versus $0.02, but if you take it out a digit or two its actually very impressive.

My first question is on the CGL. You're at 25 offices. You've talked that you guys could get -- maybe there would be room for 100 offices over time. Can you talk about your expansion plans in '08 and '09, please?

Gerry, you want to handle that one?

This is Gerry Post. 100 stations would be a considerable amount. I think we were looking more in the area of 50 viable markets to support an independent type structure that we have. We are constantly recruiting and there are some opportunities right now on the market with some changes with some of our competitors that we're hoping we can take advantage of, but typically we've opened between three and five new locations per year. We would like to see that continue and hopefully accelerate.

Okay, thank you. Next question is for Jeff Curry. You mention on the -- when you announced the acquisition, had your conference call, that CGL did a lot of business with one of your competitors. Has any of the business started transitioning over to the Express-1 side yet because of the new relationship? The acquisition?

Okay, Tony, the quick answer is yes. We have got the dedicated team within Express-1 that handles the station owner calls and we have seen a marked increase in the number of call that we receive and ones that we book. So the answer to that is yes.

Okay, thank you. Last question, I got is for Mark Patterson. Can you talk -- what was the D&A in the quarter and what to project at for the year? And also CapEx.

Yes, the D&A in the quarter -- if you'll look at the bottom of our press release, we had $242,000 worth of depreciation and amortization. We had less than $100,000 of interest expense.

For the year, I can't give you a solid number until the valuation analysis is complete, but certainly I think it will be to close to $1 million on the D&A line and interest will probably be $450,000/$500,000 based on the current level that we are seeing.

What about capital expenditures?

We think, combined, it will probably be less than $0.5 million by probably a significant amount. Internally, Express-1 this year is going to do a little bit of office expansion due to the growth. They will buy a few satellites. Concert Group Logistics will buy some office PCs and stuff like that, maybe a server upgrade. But we're talking about very small dollars in relation to the balance sheet.

Okay, so your D&A is significantly higher than your CapEx, so EBITDA is an important number I guess still for your company.

Yes, but we've been advised not to comment on EBITDA in public communications anymore.

Okay. Thank you very much, guys. Keep it up.

[Mike McCorden, Cross River Partners.]

Hi, guys. I have a few questions. The first is -- I'm a little confused on the CGL. You talked about that it's from January 1 but I was under the impression the transaction closed on January 31. So these numbers have a full quarter of CGL?

Mark, do you want to handle that for Mike?

The transaction -- as you know, we were in the discussions with CGL starting in about August of last year. We had an effective date of the transaction of December 31, or actually January 1, 2008, but we didn't have an actual contract signing until their audit for 2007 was complete so that any adjustments in working capital or any of the asset balances were completed. But within the quarter results you have one full quarter, three months, of Concert Group Logistics included and you will for the full year.

Okay, that's helpful. Did you -- what was the year-over-year revenue growth for CGL?

Gerry, you can handle that -- Gerry, you want to handle that one?

Yes, it was 4.9% for the quarter over the prior quarter.

Year-over-year? First quarter to first quarter?

Last year, 10.5 last year was just almost $10 million.

Okay, then Gerry, can you talk a little bit about the seasonality of that business what the sort of normal quarterly pattern is?

Typically in years past, we've seen somewhere around close to 55% of our revenue in the second half of the year, but that's actually changed over the past year to two years. And I think that kind of natural in the industry. The typical rush at the end of the year before the holidays has not occurred as it has in past years. So I believe this year we're kind of looking at a 47% first half, 53% second half.

Okay, thanks. And then, Mark, can you walk me through the share count just --? It seems like adding a low $27 million plus 4.8 got to over 32 and you came in diluted just over 30. What am I missing there as far as adding the acquisition shares?

Well, we didn't add the acquisition shares. We didn't issue those until January 31, so what you're seeing on the actual press release is the weighted average as you always see. I think your math is correct on an absolute number of shares outstanding. I think it is roughly $31,400,000 give or take a small margin. And it will increase over time.

And then on a diluted basis, only the shares that are actually in the money fall into the calculation for dilution. So our stock price remains very cheap buy our viewpoint. So we have very few options and warrants that are in the money at the current time.

Okay, thank you.

Kristina Whitehead, Thompson Davis.

Good morning. Calling in for David Campbell. Just had one question, did the early Easter affect March revenues and how is the second quarter going thus far?

This is Mike, Kristina. Obviously the early Easter did fall in March this year, so there is anywhere from a day and a half less of good business in March, so it does have an affect. But on the flip side, it also affects your April. So yes, it did.

And, secondly, as far as this quarter, we are just not going to comment on it at this time. But we -- our number one comment is we stick -- we are sticking with our guidance throughout the year. So we feel confident looking forward for the full year to hit our numbers.

Okay, thank you very much.

A follow-up from Tony Tristani, Astral Capital Management.

I have got two questions, thanks. One, I want to clarify when I said EPS was up 46% that was backing out the onetime expenses. Next question is for Mark. You guys still have a significant amount of warrants. Are there any significant warrants that are going to expire this year? Can you kind of talk about that a little bit? I guess I can go through the K, but just if you have it off the top of your head.

Yes, I don't know if I have it on top of my head, but I have it in front of me. The number of warrants outstanding, as of March 31, is about 11,700,000. And during 2008, predominantly clustered in July and August of 2008, we'll have approximately 6.5 million of those warrants expire, which is 56%.

During 2009, we'll have about 3.1 million expire, which is an additional 26%. The weighted average strike price on those is somewhere around $1.49, so 82% of the warrants and options that are outstanding will expire between now and the end of 2009, with right at half, 56%, expiring in 2008.

They will expire -- unless your stock price obviously goes through that, but you are significantly out of the money right now.

Well, we are at a $1.49 and our stock price is trading at the $1.20 range, so most of those are out of the money. And my phone has not been ringing off the hook with people that wanted to send me some cash at a $1.50 for stock that currently is at a $1.20.

I understand. Okay, thank you very much.

Thank you. [Newjick Robert, Katana Capital.]

] Or [Robert Niewyke], either way. Hi, guys. Two quickies. One, have you calculated the size of the fuel surcharge effect on the gross margin?

Yes, we have. Mark, do you want to comment on that or Jeff, especially on the Express-1 side since that's where the pass-through goes through?

Yes, Robert, I will comment on the consolidated. We are still pulling that number and it will be in the Q as best we can identify it. We've got a couple of operations now that significantly mix fuel surcharge revenue and fuel surcharge payments in with their regular costs, so it's a little bit more difficult. But certainly on the Express-1 side, we have identified, I think Jeff mentioned it, but he could give a little more commentary on what it means to Express-1.

Robert, identified that as about a one-point effect, based on fuel.

Okay, I am running out of questions on these calls. The only other one I have for today is how come the press release didn't say Buchanan? Did you guys move headquarters to a beach house?

We do, with the purchase of CGL and the start-up of Bounce, we have three offices in Saint Joe, Michigan. It is close to the beach, but unfortunately is not on it.

All right, that's all I got.

[Sam Robodsky, SER Asset Management.]

Good morning, gentleman. Good quarter. The deferred tax asset of $1.372 million in current and the long-term, is that equivalent to the $5 million? Is that an NOL, or is that not fully reflected in your balance sheet? The $5 million number?

Mark?

Well, I think that the $5 million may not be completely reflected in the balance sheet. You have got a little over $5 million when we started the year in net operating loss carryforwards and each quarter we'll actually record a current provision which increases the asset.

So I don't know that you're going to be able to actually look at it and back in to exactly where we stand on the net operating loss on a quarter-by-quarter basis. But it is going to reduce down frown $5.2 million or $5.3 million at the start of 2007. And it will reduce, not on a dollar-for-dollar basis, but very closely in line with our pretax earnings until zero sometime probably late this year.

Okay, so you will fully utilize that $5 million NOL?

Well, we plan on it.

That's good, that's good. All right, good luck.

(OPERATOR INSTRUCTIONS) Tony Tristani, Astral Capital Management.

Thanks, I promise this is my last question. On CGL, growing 5% in the quarter, I know that it has grown a lot faster historically. And I know your goals are to grow it faster in the future. Can you talk about why growth was only 5% in the first quarter? And then about your plans to re-accelerate that growth back to historically or the higher growth that you expect of that business?

Gerry?

The first quarter, we were impacted -- we had a large customer in 2007, one of our largest accounts, that was acquired and moved their operation out of Puerto Rico. We had an operation in Puerto Rico in 2007 to service this client. The plant and facility moved into Mexico during the year and we tried to retain the business in Mexico, but we were not successful.

So it had an impact on us in the first quarter comparison to comparison, but we have since recovered and it took us a little bit to regain some business. As I mentioned in my comments, we're not quite as reliant on major companies as bigger chunks of our business any longer. So by spreading the account base out we have been able to kind of regain the momentum here.

Tony, I think the other thing you have to look at it is when you look at CGL's growth, historically it is organic through their existing station owners plus it's also the addition of additional stations. So the stations that Gerry and his group added this year, we'll start seeing some positive effects going forward. These are the Greensboro, Tampa, and Omaha.

All right, thank you.

[John Janick, National City.]

Nice job on the quarter. I've got a question for Jeff or Mark. On the 28% revenue increase for Express-1 Expedited, I see that is a combination of a couple of factors. One, the fuel surcharge is built in there. You also had some synergies from the CGL pickup and some international. Do you have an idea out of that 28%, how much is attributable to fuel surcharge, Concert Group, and International?

John, we really haven't given a number for the impact of fuel surcharge on a overall basis and I don't think our revenue for Express-1 Expedited Inc. was up 28%. I think that the revenue for Express-1, Inc., which is one of our operating units, was up 28%. Jeff can certainly talk to the impact of CGL and fuel surcharge within that operation.

John, I be glad to. The [headhog] growth, as I call it, exclusive of fuel was still very strong. I don't know if we have reported it so I don't know if I want to give it exactly, but I can tell you it was strongly in excess of 16%, but in excess of that. It was very, very encouraging. And that is exclusive of fuel.

Okay, so that's the good core growth that's there.

That is the core growth that is there, correct.

John, the other thing I think you need to keep in mind, who knows what is going to go on with fuel as we move forward here? But if fuel were to start to drop, then I think that that also then could relate to some rate negotiations then or rate increases possibly. Because shippers have increased their cost of shipping tremendously through fuel and if fuel ever comes back down to levels that we've seen in the past, then we actually may be able to transfer some of the increase in fuel back into the increase in just rate.

It certainly wouldn't equate to what we've seen in the increase in fuel over the last six months here, but I would anticipate that could start kicking in, too. Because on my end, I see demand probably going up here once this American Axle thing and all of these plant openings -- plant closings, when they open back up there's going to be a lot of depleted inventories that are going to -- that need to be restocked. So, we're looking forward to that over here.

And on top of that, John, the American Axle strike, that is basically shut down or severely crippled 29 General Motors plants -- which as many of you guys know we do quite a bit of business with GM -- which has basically cut that by 75%. On top of that, it's also cut a lot of the suppliers and its added a lot more capacity into the expedited environment.

So if you really look at what happened with the American Axle strike and GM and to grow -- for Express-1 to grow that much in this environment, it really is somewhat amazing. And Jeff sort of hinted to the fact, when the GM strike ends or the American Axle strike ends, the suppliers are really going to have to ramp up. The capacity is going to go down again, which will also cause more expedites.

So we are really excited about the future of this year, not 2009 to do what we did in 2008. So there was a lot of high-fives going around when we pulled the 2008 with GM and American Axle shutdowns, so we did a fantastic job.

Good job, guys.

(OPERATOR INSTRUCTIONS) Gentlemen, there are no further questions at this time. I would like to hand the floor back over to you for any closing comments.

Again, I would like to thank everybody for taking time to listen to our conference call this quarter. We are very, very excited about our future. We think we have certainly turned the corner and we're going to start generating even bigger revenue increases and we hope, and we believe, we're going to continue the path of profitability. So again thank you and we wish everybody a great day.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.