Velocity Express, the US regional time-critical delivery company, saw its losses increasesubstantially in the second quarter and first half-year. But it said it is making good progress on
integration of CD&L, the rival firm it acquired last August.In the quarter ending December 30, 2006, revenue was $102.3 million compared to pro formarevenue of $107.5 million in the second quarter of last year and $111.1 million in the firstquarter of fiscal 2007. The lower revenue reflects the loss of two customers, Office Depot andWachovia, the company said. The operating loss rose to $8.7 million from $1.6 million and the netloss more than doubled to €13.4 million. Losses increased due to the costs of merging operationsand higher operating costs.
Over the half-year ending on December 30, 2006, Velocity Express had revenue of $213.4million compared to pro forma revenue of $217.2 million in the first six months of last year. Thedecrease reflects the same two customer losses. The operating loss rose to $13.1 million and thenet loss was $24.1 million compared to $14.5 million one year earlier.
Vincent A. Wasik, Velocity’s Chairman and Chief Executive Officer, stated: “While we are notpleased with the results in the quarter, the revenue decline was expected and the integrationactions we took were costly and necessary to drive the substantial financial benefits we expect toachieve over the course of calendar 2007.” Other than Office Depot and Wachovia, revenue had beenstable and the sales proposal pipeline was robust, he added.
Referring to the integration of CD&L, he added: “During our first full quarter as acombined company, we made considerable progress in all aspects of our integration strategyincluding sales and service stabilization, facility consolidation, operating system migration, andIC contract conversion. As expected, these accomplishments resulted in only modest cost savings inthe December quarter but laid the foundation for actions already taken in January and February tooptimize corporate and field staffing and other expenses, to begin the design and roll-out of newroute structures across the Velocity network and to accelerate our new sales programs.”
Velocity Express has also launched a new national branding campaign under the banner of “RealTime Delivery from Velocity Express”, and has increased its salesforce by 20% to drive growth.
