2023 Starts with Agreement To Acquire Severance Trucking
JUPITER, FL / ACCESSWIRE / January 26, 2023 / Transportation and Logistics Systems, Inc. (OTC PINK:TLSS), ("TLSS" or the "Company"), a logistics service provider, is pleased to issue the following update to its stakeholders from its Chairman and Chief Executive Officer, Mr. Sebastian Giordano.
Dear Valued Stockholders, Investors and Interested Third-Parties
From the Board of Directors and Management of TLSS, we extend to each of you a very happy, healthy and prosperous New Year.
Fresh off a foundation building year in 2022 that saw the:
- expansion of our Board of Directors and corporate governance;
- enhancement of our executive management team in finance, operations and human resources;
- acquisition of JFK Cartage and consolidation with Cougar Express in New York;
- acquisition of Freight Connections ("FC") based in New Jersey;
- commencement of various integration initiatives; and
- negotiation of two additional acquisition opportunities,
we now enter 2023 with the "out-of-the-gate" announcement of the execution of a stock purchase agreement for the acquisition of Severance Trucking Company, Inc., a 120-year old LTL trucking business with locations in Dragut, Massachusetts and North Haven, Connecticut ("Severance"). The closing date is scheduled for January 31, 2023, subject to the completion of various conditions. On a purely acquired basis, the Severance transaction is expected to increase our annualized revenues to approximately $30 million.
The September 2022 acquisition of FC was an important turning point and a key catalyst for our future growth and expansion that then made Severance an ideal opportunity and fit for our business. Prior to the acquisition of FC, the Company's early 2022 operations were primarily broker driven (Cougar and JFK) and single source (Shyp FX), as a Federal Express provider with limited growth opportunities. As such, the decision to sell the Shyp FX business was an easy one, as it did not align with our long-term vision for the Company.
Since its inception in 2016, FC's business model was structured to be nimble and adaptable to changing transportation and logistics market conditions. Having the ability, infrastructure and industry relationships to offer a broad array of services, FC has steadily achieved double-digit growth each year, while simultaneously shifting, as needed, and expanding, where appropriate, its sources of revenue, in response to where the most profitable opportunities existed. This approach is an integral component of how we intend to organically grow our business and leverage the companies we acquire. In fact, after the initial consolidation and integration of the Cougar/JFK operations, we are already in the process of transitioning from our primarily broker-driven Cougar/JFK revenue model, to newer and higher margin revenue opportunities, in part through coordination with FC, as well as long-standing industry relationships being pursued by our senior operating executives. In Q4, we launched an aggressive campaign to develop our own pipeline of new customers, especially as it relates to Cougar/JFK. As a result, a number of these have already commenced in the new year, and our expectation is that these organic efforts will continue to grow.
Likewise, we believe that the Severance acquisition provides us with another excellent opportunity for organic growth. First and foremost, the deal establishes us as a regional carrier in the Northeast US, up through New England and Canada. While Severance has been predominantly an LTL carrier, we intend to expand Severance's services in its region with FC capabilities. This should enable us to extend the reach for both our existing customers and Severance customers, while opening up the opportunity to target larger customers given our expanded geographic footprint. Of further significance is the fact there is virtually no customer overlap, so Severance provides an entirely new customer base for us.
Upon acquiring two companies and adding three new members to our management team at the end of Q3 and the beginning of Q4 2022, we commenced the implementation of several integration and cost savings initiatives.
Most notably, a substantial reorganization of our Cougar/JFK operation, resulting in:
- a $400,000 decrease in annual rent;
- more than a 41.5% reduction in payroll costs; and
- dramatic improvement in gross profit margins, as reported in our last Form 10-Q.
Other overall changes completed, or underway, include:
- implementing our new NetSuite platform to simplify and upgrade our internal accounting and reporting capabilities;
- establishing uniform operating procedures;
- consolidating three payroll services into one;
- eliminating duplicative third-party support services;
- undertaking a complete assessment of our insurance program through a new relationship with a nationwide broker that has extensive expertise in the transportation industry;
- creating consistency in and implementing new personnel and human resource policies and procedures; and
- conducting an evaluation of all employee benefit plans to create uniformity in such programs.
As the above will continue to flush out and lead to further cost savings and efficiencies, we plan the continuation of additional operational integration initiatives in 2023, including uniformity and deployment of operational technologies, including, but not limited to, the extension of the following enhancements into all operations:
- warehouse system;
- in-vehicle driver safety;
- fleet management system;
- real-time point-of-delivery capabilities; and
- common operating system (currently three different systems).
Moreover, the Severance transaction will give us a substantial vehicle repair and maintenance facility that will enable us to, not only service, but to refurbish existing vehicles in-house, thus extending their useful life, something that Severance has successfully implemented in recent years, thus significantly reducing the capital outlay for vehicles and reducing overall vehicle replenishment costs.
In the interim, we continue to pursue and evaluate additional acquisition targets and believe such discussions will lead to further growth and expansion in 2023.
The Board and management fully expect to meet our 2023 goals and will continue to report on the Company's progress, if/when deals are formalized and we extend our sincere appreciation to all of our shareholders and look forward to your continued support.
Chairman and Chief Executive Officer
About Transportation and Logistics Systems, Inc.
TLSS, through its wholly owned operating subsidiaries, Cougar Express, Inc., Freight Connections, Inc. and JFK Cartage, Inc., operates as a full-service logistics and transportation company.
For more information, visit the Company's website, www.tlss-inc.com.
Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not directly or exclusively relate to historical facts. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expects," "plans," "anticipates," "intend," "plan," "goal," "seek," "strategy," "future," "likely," "believes," "estimates," "projects," "forecasts," "predicts," "potential," or the negative of those terms, and similar expressions and comparable terminology. These include, but are not limited to, statements relating to future events or our future financial and operating results, plans, objectives, expectations, and intentions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not be achieved. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to known and unknown risks, uncertainties and other factors outside of our control that could cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks described above, these risks and uncertainties include: our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; customers' cancellation on short notice of master service agreements from which we derive a significant portion of our revenue or our failure to renew such master service agreements on favorable terms or at all; our ability to attract and retain key personnel and skilled labor to meet the requirements of our labor-intensive business or labor difficulties which could have an effect on our ability to bid for and successfully complete contracts; the ultimate geographic spread, duration and severity of the coronavirus outbreak and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or ameliorate its effects; our failure to compete effectively in our highly competitive industry could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance; our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry's and customers' evolving demands; our history of losses, deficiency in working capital and stockholders' equity and our ability to achieve sustained profitability; remaining weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our remaining liabilities and indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; unanticipated and materially adverse developments in our few remaining litigations; the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.
These forward-looking statements represent our estimates and assumptions only as of the date of this release and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this letter. Given these uncertainties, you should not place undue reliance on these forward-looking statements and should consider various factors, including the risks described, among other places, in our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the Securities and Exchange Commission.
SOURCE: Transportation & Logistics Systems